Hong Kong’s ESG bond issuance quadruples to almost US$35 billion as city takes shape as Asia’s hub for green finance

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As many as 90 ESG bonds raised HK$270 billion in Hong Kong this year, four times the HK$67 billion raised by 18 issuers last year

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The Exchange Square complex, which houses the Hong Kong Stock Exchange, on March 23, 2021. Photo: Bloomberg.

Enoch Yiu

Published: 6:05pm, 6 Dec 2021

Hong Kong is staking a claim as Asia’s green finance hub, as the number and value of bonds related to environment, social and governance (ESG) quadrupled over the past year.

As many as 90 ESG bonds were issued this year, raising a combined HK$270 billion (US$34.62 billion), four times what was sold last year, according to Nicolas Aguzin, chief executive of Hong Kong Exchanges and Clearing Limited (HKEX), the operator of the city’s bourse.

“HKEX has turned climate risk into opportunities by providing a fundraising platform for projects related to environmental protection, substantiality and diversity,” Aguzin said during a seminar in the city.

ESG-related debt, also called sustainable bonds, are fixed-income financial products that raise capital for the purpose of financing projects that have environmental or social benefits. Their proceeds are also earmarked for renewable energy projects, conservation or energy efficient projects that help reverse climate change or halt the emission of greenhouse gases.

Nicolas Aguzin, chief executive officer of Hong Kong Exchanges & Clearing Limited (HKEX), speaking during the Hong Kong Fintech Week in Hong Kong on November 4, 2021. Photo: Bloomberg.

Hong Kong, which has a sound capital market infrastructure and a big pool of financial liquidity provided by international investors, can live up to its mission as the international fundraising hub in the Greater Bay Area (GBA) to promote low carbon emission projects and other ESG projects, he said. The outline development plan for the GBA released in 2019 supported Hong Kong’s role as the green financing hub.

The HKEX itself is investing for the future, paying 210 million yuan (US$32.45 million) this year for 7 per cent of a newly created Guangzhou Futures Exchange to develop products that can be traded onshore and offshore in Hong Kong by international investors.