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Following is the speech by the Chief Executive, Mr John Lee, at the Future Investment Initiative (FII) PRIORITY Summit today (December 7):
Your Excellency Chairman Yasir Al-Rumayyan (Chairman of FII Institute), Your Excellency Minister Khalid Al-Falih (Minister of Investment of the Kingdom of Saudi Arabia), Your Royal Highness Prince Faisal bin Bandar bin Sultan (Chairman, Saudi Esports Federation), Mr Richard Attias (CEO of FII Institute), Mrs Laura Cha (Chairman of the Hong Kong Exchanges and Clearing Limited), distinguished guests, ladies and gentlemen,
Good morning. It gives me great pleasure to be here with you today for the inaugural FII PRIORITY Hong Kong Summit. For our guests from the Middle East and around the world, welcome to Hong Kong!
I am very delighted that the Future Investment Initiative Institute has chosen Hong Kong to host its first-ever PRIORITY Summit in Asia. The Public Investment Fund and the Ministry of Investment, of the Kingdom of Saudi Arabia, are the Summit’s founding and vision partners. The Institute’s influence has long transcended the realms of the Middle East, and it has become one of the most important forces globally in driving a brighter future for humanity.
In partnership with the Hong Kong SAR Government and the HKEX (Hong Kong Exchanges and Clearing Limited), this two-day global gathering is yet another significant step forward, in the deepening ties between Hong Kong and the Middle East, particularly the Kingdom of Saudi Arabia.
The Belt and Road Initiative proposed by President Xi Jinping celebrates its 10th anniversary this year. The Initiative has become a key pillar in building a global community of shared future.
This February, I led a high-profile Hong Kong business delegation to the Kingdom of Saudi Arabia and the United Arab Emirates, both of which are key nodes on the Belt and Road.
That visit yielded a series of business and institutional agreements, and Hong Kong and Saudi Arabia are now formally negotiating on an Investment Promotion and Protection Agreement.
Just last week, we celebrated the opening of Asia’s first Saudi Arabian exchange-traded fund (ETF). The ETF, I’m pleased to say, was launched right here in Hong Kong, on our Stock Exchange.
And today, we proudly welcome to Hong Kong the FII PRIORITY Summit. Over these next two days, some 1,000 of you, from all over the world, will hear from 100 prominent speakers.
“Megatrends Shaping Humanity” is the theme of this Summit. From technology and climate change, to financial equity and quality of life, these far-reaching trends are driving transformation across communities and economies.
That includes Hong Kong. In international trade, finance and more, we have long played a role much larger than our geographical size would suggest.
We are one of the world’s most competitive and freest economies. Our free flow of capital and information, buttressed by a robust common law system and a multi-talented, multilingual workforce, contributes to our longstanding status as a major international financial centre.
Hong Kong is the world’s pre-eminent gateway, and a “super value-adder” for economies, cultures and peoples, East and West.
Of course, all this is made possible by the unique “one country, two systems” principle. It affords us unparalleled access to the Mainland of China and the rest of the world. And we will continue to play an engaging role in defining and shaping the megatrends of this 21st century.
Allow me now, for the next few minutes, to speak about how Hong Kong addresses today’s megatrends in three areas: finance, innovation, and sustainability.
Today, about 1,000 fintech companies operate in Hong Kong. That’s up 25 per cent over just a year ago.
These start-ups are inspiring groundbreaking solutions in such areas as digital payment technology, decentralised finance and digital identity.
Hong Kong’s Faster Payment System heralds tomorrow’s cross-border payment. The real-time online transfer and payment service, since a few days ago, has extended its coverage to ASEAN (Association of Southeast Asian Nations) economies, linking up with Thailand’s PromptPay system.
Visitors from Thailand can now scan and pay conveniently in Hong Kong – and vice versa. More than benefiting travellers, it means merchants receive funds immediately.
Then there’s the mBridge development. The multi-central bank digital currency project, or CBDC, is a collaboration with the central banks of Mainland China, Thailand, the UAE (United Arab Emirates) and the Bank for International Settlements Innovation Hub Hong Kong Centre.
It speeds up cross-border payments at reduced cost – and with enhanced transparency. We strive to realise the gradual commercialisation of mBridge. The goal is within our grasp: making cross-border payments immediate and inexpensive, universally accessible, and realised within a secure and stable environment.
Our ambitions extend well beyond finance. Hong Kong is also determined to help drive the future of innovation and technology (I&T).
Hong Kong is the only city in the world with five top 100 universities. Hong Kong is home to numerous award-winning scholars, and blessed with world-class research capabilities. In recent years, we have invested over 25 billion US Dollars in I&T.
And, thanks to Hong Kong’s prowess as an international financial centre, tech companies can tap into our capital market and continue to grow.
Collins Dictionary has named “AI” (artificial intelligence) this year’s “word of the year”. Interestingly, Merriam-Webster’s word of the year is “authentic”. Make of that what you will. But know that Hong Kong believes in AI, authentically, sincerely.
Next year, we will establish an AI supercomputing centre. It will support the huge demand for computing power from our R&D (research and development) and other sectors.
Our InnoHK research clusters take AI and robotics, as well as healthcare, as our primary areas of focus. We are establishing a third cluster on advanced manufacturing, and, very importantly, energy and sustainable development. Yes, Hong Kong is committed to the global green revolution.
Hong Kong’s Climate Action Plan 2050 sets out two clear targets: achieving carbon neutrality before 2050 and cutting carbon emissions by half before 2035. We are devoting some 30 billion US Dollars to achieve these goals.
We will also come up with a development strategy for hydrogen. We aspire to make good, and safe, use of this important form of energy for a sustainable future.
We are committed to mobilising sustainable finance at scale. Last year, the total amount of green and sustainable debt arranged or issued in Hong Kong exceeded 80 billion US Dollars. And our green bond issuance accounted for about one-third of Asia’s market share.
As the FII Institute has underlined, “a collaborative framework is more essential than ever, requiring co-operation between governments, businesses and international organisations”.
Hong Kong believes in collaboration. Hong Kong’s “one country, two systems” framework enables it. Our East-meets-West connectivity thrives on it.
Ladies and gentlemen, we look forward to building a future that rewards us all.
I wish you all a memorable Summit and a new year full of promises and possibilities.
Thank you.
Following is the speech by the Secretary for Environment and Ecology, Mr Tse Chin-wan, at the China Corner’s Side Event of the 28th Conference of the Parties to the United Nations Framework Convention on Climate Change (COP28) co-organised by Friends of the Earth (HK) and the Financial Services Development Council in Dubai, the United Arab Emirates, yesterday (December 6, Dubai time):
Salina (Permanent Secretary for Financial Services and the Treasury (Financial Services), Ms Salina Yan), Plato (Secretary General of the Treelion Foundation and Chairperson of Friends of the Earth (HK), Mr Plato Yip), Daniel (Vice-Chairman of the Financial Services Development Council, Mr Daniel Fung), distinguished speakers, ladies and gentlemen,
I am very happy to see many friends here in Dubai. Special thank goes to Friends of the Earth (HK) and the Financial Services Development Council for organising today’s platform. Talking about climate change, I think we all know that China has pledged to achieve carbon neutrality before 2060 and carbon peak before 2030. For Hong Kong, as we have reached our peak in 2014, we believe we should contribute more, and therefore we set the target to achieve carbon neutrality before 2050. Because of our efforts over the years, our carbon emissions has reduced by a quarter, as at today, the per capita emission is about 4.5 tonnes. You may wonder what does the 4.5 tonnes mean, as a reference, the United States’ carbon emission is 14.4 tonnes per capita, the European Union is 7.7 tonnes per capita, we are not doing bad.
Nevertheless, we need to look to the future, how are we going to further reduce our carbon, I think you have this pamphlet with you, Hong Kong’s Climate Action Plan 2050, that is our plan on how to further reduce our carbon, looking at the sources of carbon emissions in Hong Kong, we have developed a four-pronged strategy. The first is we have to achieve a net-zero electricity generation in Hong Kong. The second one is to promote green buildings and energy efficiency. The third one is to promote green transport. The fourth is to reduce our waste.
You may wonder why waste is an issue relevant to carbon emissions, because in Hong Kong, we still use landfill for disposal of our waste, when the garbage is in the landfill, they will decay and emit methane, which is a very strong greenhouse gas, therefore we have to deal with this problem also.
And I can tell you about three indicators of these strategies. One is that we already stopped the building of new coal-fired power plants since 1997, therefore as at today, the contribution of coal in our fuel mix for electricity generation in Hong Kong has been reduced to about a quarter, with half using natural gas, and the remaining quarter by nuclear power supplied from the mainland. We will stop using coal for power generation before 2035.
As for promoting green transport, we have set our target to stop the registration of new fossil-fuel powered private cars before 2035, including hybrid. How well we are doing on that? In the first half of this year, out of 10 new private cars in Hong Kong, six or seven are EVs (electric vehicles).
To deal with the greenhouse gas emissions from landfill, we have set a timetable, to stop using landfills before 2035, that is difficult. We are investing lots of money to build waste-to-energy incinerators in Hong Kong, we have to build sufficient waste-to-energy incinerators before 2035 so that we can stop using all the landfills.
On adaptation, we experienced two super typhoons this year, and also record-breaking rainstorms that caused serious flooding in the city. Therefore, the Government has set up a taskforce led by the Civil Engineering and Development Department to look at our critical infrastructure, where they are, what they are, what are the design standards, the engineering standard they have to apply so that in the future they can stand for extreme weather brought about by climate change.
And I can assure you, whether or not the world can achieve carbon neutrality before 2050, the climate will continue to change in the next 15 years. We must be well prepared for it.
And the last one is we also need to deal with what we call resilience problem. I have mentioned about the two typhoons and the flooding for this year in Hong Kong. Therefore, we need to have a contingency plan which will help us to mobilise our different departments for different workplaces, to rescue people, to recover those damages, etc. And we have set up a task force to look into this matters. And also, why our Hong Kong Observatory is now working with the Drainage Services Department to work on a model using big data and artificial intelligence so that in future, we can try to predict flooding risks a few hours before they actually happen, so that we can mobilise our staff to get prepared for it. That model is expected to come into operation before the typhoon season in next year.
Whilst Hong Kong is working hard to combat climate change, what Hong Kong can do to contribute to other parts of the world? This morning I had a meeting with the Secretary General of the Executive Council of Dubai and he told me Hong Kong actually is a regional hub, a gateway from China to other parts of the world. He has visited Shenzhen earlier on, and he saw many innovative products, many new technologies which can help greening our future, reducing our carbon emissions, and help building our cities, our infrastructure in low carbon, green and safe way.
He said Hong Kong is a gateway for these green products to other parts of the world. He also named Hong Kong is an international finance hub, international financial centre. That is indeed what he and I believe. He has a lot of new ideas, insightful messages about fintech, about blockchain, about our green bond, about all sorts of green financial tools.
We can help managing the issue of climate change. Some people are very pessimistic on whether eventually we will be able to win the battle. I want to put one example here. Some of you may remember the term, ozone hole. Do you remember it? Actually, 40 years ago, people on earth were very worried about the ozone hole issue because the ozone layer got a big hole and if the hole got bigger and bigger, human kind may extinct from the earth. Therefore, in 1987, all the countries worked together and we had the Montreal Protocol. And after three decades of effort, the ozone hole has stabilised. And the scientists had told us that the ozone hole will recover within four decades. I think that is a very good example. If we are determined, if we are willing to accept innovative ideas, if we work together, we can save the earth, and guard against what happened because of climate change. And therefore, ladies and gentlemen, we have all the innovations here and we have all the talents here. We can work together and contribute. Let us work together and fight the climate change battle. We will win again. Thank you. read more
Attention duty announcers, radio and TV stations:
The fire danger situation today (December 7) is red and fire risk is extreme. The countryside is extremely vulnerable to fire. If you are planning to spend the day in the countryside, please take pre-cooked food for a picnic and take all measures to prevent hill fires. The penalty for lighting fires illegally in the countryside is $25,000 and a year’s imprisonment. read more
Following is the speech by the Permanent Secretary for Financial Services and the Treasury (Financial Services), Ms Salina Yan, under the theme “Leveraging Green Finance Strengths for a Sustainable Future: The Unique Role of Hong Kong in Leading the Regional Green Development” at the China Corner’s Side Event of the 28th Conference of the Parties to the United Nations Framework Convention on Climate Change (COP28) co-organised by Friends of the Earth (HK) and the Financial Services Development Council in Dubai, the United Arab Emirates (UAE), today (December 6, Dubai time):
Secretary Tse (Secretary for Environment and Ecology, Mr Tse Chin-wan), Plato (Secretary General of the Treelion Foundation and Chairperson of Friends of the Earth (HK), Mr Plato Yip), Daniel (Vice-Chairman of the Financial Services Development Council, Mr Daniel Fung), distinguished guests, ladies and gentlemen,
Good afternoon.
It is my great pleasure to join this event on “Hong Kong’s Drive Towards Green and Sustainable Development and Cutting-Edge Innovations” here in Dubai where COP28 is currently taking place. Thank you to Friends of the Earth (HK) and the Financial Services Development Council of Hong Kong for their great job in organising it. Our appreciation also goes to the Ministry of Ecology and Environment in supporting the Hong Kong Special Administrative Region’s participation in this round of COP which has reached a critical moment in determining the way forward for climate change.
Over the past few days, we have heard statements from government leaders, including the one delivered by Vice Premier Ding Xuexiang highlighting the efforts our country has made in promoting green development, advocating multilateralism in accelerating green transformation, and calling for strong actions by parties to implement pledges made. Important pronouncements have also been made including the conclusion of the Loss and Damage Fund, the launch of the Industrial Transition Accelerator driven by the host country, the UAE, and a summit co-led by our country to accelerate actions to reduce methane and other greenhouse gases. On the first ever Health Day in COP28, the Hong Kong Jockey Club Philanthropy Club also pledged to contribute to advance the course of climate change and health as a matter of priority. Naturally all eyes are on the first Global Stocktake to be undertaken during this round of COP, the results of which will tell the world how far economies have progressed towards the goal of net zero.
Immense need of green finance arising from sustainable development
With its ability to make fund flows towards low greenhouse gas emissions and climate-resilient development, climate finance has an important role to play in helping the transition. According to the Asia Securities Industry & Financial Markets Association (ASIFMA), in the next 30 years, the Asian region will require US$66 trillion in climate investment. Where would the funding come from and what would be the capital cost? The financial sector would be part of the solutions by facilitating matching capital funding and quality projects that propel transformation through mitigation and adaptation. And this is precisely where Hong Kong’s distinct strengths as an international financial centre with its dynamic capital markets, deep liquidity pool and diversified product types can contribute as a green finance hub. To give you some examples of our thriving green and sustainable finance market:
(i) As of end-September 2023, there were more than 200 SFC-authorised ESG (environmental, social and governance) funds, with a total AUM (assets under management) of around US$160 billion, representing a year-on-year increase by 36 per cent and 28 per cent respectively;
(ii) Since 2019, we have issued around US$24 billion of green bonds under the Government Green Bond Programme. Our issuances included the longest tenor USD and Euro government green bonds ever in Asia. In fact, last year, the total green and sustainable debt (including both bonds and loans) issued in Hong Kong increased by over 40 per cent from 2021 to reach US$80.5 billion. Among this, the volume of green and sustainable bonds arranged in Hong Kong accounted for one-third of the Asian green and sustainable bond market, topping the chart;
(iii) The Hong Kong Exchanges and Clearing Limited (HKEX) launched an international carbon marketplace, Core Climate, in October 2022, which is currently the only carbon marketplace that offers HKD and RMB settlement for the trading of international voluntary carbon credits. It has recently signed a Memorandum of Understanding (MoU) with the China Emissions Exchange Shenzhen to jointly explore opportunities in cross-boundary carbon market connectivity and climate finance, especially the Guangdong-Hong Kong-Macao Greater Bay Area, or GBA. I will come back to the GBA concept in a minute; and
(iv) Hong Kong is also a global risk management centre with a robust insurance market that can offer a wide array of risk management solutions to organisations and enterprises, providing protection against disaster risks. Shock-absorbing ability is indeed an important part of the transition. For this, we established a bespoke regulatory regime and launched a Pilot Insurance-linked Securities Grant Scheme in 2021. Since then, there have been four catastrophe bonds issued in Hong Kong, with a total amount of about US$560 million, providing protection from losses inflicted by natural catastrophes, such as typhoons and earthquakes.
Hong Kong has already set itself the target to achieve carbon neutrality before 2050 and reduce Hong Kong’s carbon emissions by 50 per cent before 2035. Before other speakers take us through various trending topics concerning the arena of green and sustainable development, I would like to share with you our vision and plans in promoting green and sustainable finance under the four headings of institutional setup, innovation, information and inclusiveness.
Hong Kong Special Administrative Region (HKSAR) Government’s efforts in promoting green and sustainable finance
Institutional setup
On institutional setup, we have set up a high-level Green Technology and Finance Development Committee, chaired by the Financial Secretary, to foster the development of a vibrant green ecosystem in Hong Kong. Areas being looked at include development of green certification and alignment with international standards, promotion of commercialisation of R&D (research and development) outcomes, green finance application and innovation and talent development, etc. At the inter-agency level, the Financial Services and the Treasury Bureau, the Environment and Ecology Bureau and our financial regulators have formed a Green and Sustainable Finance Cross-Agency Steering Group to co-ordinate and formulate specific measures and responses.
Of course, the greatest institutional strength Hong Kong enjoys is the “one country, two systems” arrangement, under which Hong Kong continues to be an open economy buttressed by the common law system while serving as a gateway to the vast Mainland China market. For example, Hong Kong has a high concentration of international banks’ presence while also managing the largest offshore RMB liquidity pool outside of Mainland China, totalling more than RMB1,100 billion. The recently introduced Dual Counter Model allows the issuance and trading of stocks in both Hong Kong dollar and RMB. And green bonds issued by the HKSAR Government have also included tranches denominated in RMB, in addition to USD, Euro and Hong Kong dollar.
As I mentioned just now, Hong Kong also enjoys direct access to the GBA, which comprises nine cities in the southern part of China and the two Special Administrative Regions of Hong Kong and Macao. With a population of over 86 million, combined GDP (gross domestic product) reaching over RMB13 trillion, and diverse and vibrant economic activities, the GBA is a good test bed for green solutions to satisfy the huge demand. One of the Mainland cities in the GBA, Shenzhen, for example, has issued three rounds of municipal government green, blue and social bonds in Hong Kong totalling around RMB10 billion. The Outline Development Plan for the GBA has indeed clearly indicated support for the development of Hong Kong into a green finance centre and a platform for investment and financing serving the Belt and Road Initiative.
Innovation
Turning to innovation, the presence of promising start-ups from Hong Kong in the Green Zone of the COP campus testifies to our innovation spirit and ability. Hong Kong start-ups can offer electricity free cooling coating technology, biomimic tiles for restoring degraded marine system, and equipment and software for collecting carbon emission data in residential or commercial settings for better monitoring and data analytics. In fact, just two days ago, a Hong Kong-based climate technology company was awarded the UAE Techsprint Award at the COP28 “Global Climate Action Through Fostering Sustainable Finance” event for its artificial intelligence solutions in sustainable finance to help entities scale up climate action.
Another good example of green finance and fintech working together is the pilot issuance of the world’s first-ever government tokenised green bond under the Hong Kong Government’s Green Bond Programme in February this year, applying the Distributed Ledger Technology (DLT) to primary issuance, settlement of secondary trading, coupon payment, and maturity redemption. This issuance has demonstrated the feasibility of deploying DLT to real capital market transactions under our existing legal and technological framework, with enhanced efficiency and reduced cost. With this successful first attempt, we are now in discussion with market participants on expanding the DLT use cases, including a second tokenised government green bond issuance.
It makes perfect sense to combine our advantages in fintech with green finance, in building Hong Kong as a green fintech hub. Therefore, as announced by our Chief Executive in his Policy Address in October this year, we will launch a proof-of-concept scheme for the development of green fintech in Hong Kong, with the objective of providing early-stage funding support for pre-commercialised green fintech, thereby expanding the green fintech ecosystem. The figures are in fact encouraging. There are currently around 1 000 fintech companies in Hong Kong with many specialising in the field of green fintech, providing technological solutions on ESG data analytics, ESG reporting preparation, etc. Furthermore, to provide one-stop information on the current status of green fintech companies in Hong Kong and related services, we will be publishing a Hong Kong Green Fintech Map to raise these companies’ profile and enable users to conveniently locate suitable green fintech services for their operations and businesses.
The same innovative spirit is also shown in financial product development. For example, just last week, we saw the first Saudi Arabian ETF (exchange-traded fund) listed in Hong Kong, offering global and regional investors unique Middle East exposure in Hong Kong. We have also put in place a regime for the issuance of Islamic bonds in Hong Kong. I am confident that we will see the demand and supply of green products originating from the Middle East in Hong Kong soon.
Information
Thirdly, on information. Investors are growing ever more mindful of the impact of climate change on their investments, and demand more consistent and accurate information to help them assess which company is building a more sustainable business and putting ESG principles into practice. Many companies also look for a set of global common standards for sustainability disclosures as they would not want to risk having international capital bypass them if they fail to meet investors’ expectation in sustainability disclosures. In this regard, the Stock Exchange of Hong Kong Limited (SEHK) released a public consultation in April 2023 on enhancement of climate-related reporting requirements for Hong Kong listed companies and recently announced that the Listing Rule amendments are expected to be implemented from January 2025. Meanwhile, the International Sustainability Standards Board, or ISSB, published the International Financial Reporting Standards (IFRS) Sustainability Disclosure Standards in June this year as a global baseline of sustainability reporting standards designed to meet investor needs. Hong Kong, as an international financial centre according priority to sustainable finance, will align corporate sustainability-related disclosures with this global baseline. Specifically, we have already set up a working group with financial regulators and key stakeholders to craft a comprehensive roadmap to guide the appropriate adoption of the IFRS Sustainability Disclosure Standards in Hong Kong, taking account of our position on the global green finance map and local circumstances.
Information is also essential to defining what qualifies as “green” and preventing greenwashing practices. In this connection, we are in the process of putting in place a local green classification framework for use across financial sectors, so as to facilitate easy navigation among mainstream taxonomies including Mainland China’s and the European Union’s taxonomies, as well as the Common Ground Taxonomy. The work has been guided by the principles of interoperability, comparability and inclusiveness, with a view to reducing transaction costs by avoiding unnecessary duplication of verifications and potential fragmentation challenges across markets.
We are also keen on promoting information exchange and dissemination. For example, the Hong Kong Monetary Authority (HKMA) has launched a Green Fintech Competition to promote the adoption of green fintech solutions in the Hong Kong banking industry. Winners will be invited to join and host exhibition booths in the Green and Sustainable Banking Conference to be held this month. The Securities and Futures Commission has also hosted a forum on sustainability disclosure to bring together leaders and industry experts to exchange views and information on building an effective ecosystem for sustainability disclosure. Looking ahead, the Government will organise a series of green finance and green tech-related events and conferences in the first quarter of 2024. Stay tuned.
Inclusiveness
Last but not least, inclusiveness. Undoubtedly, combatting climate change needs joint and proactive efforts. The element of inclusiveness is therefore crucial. Recognising the importance of engaging members of the public to directly participate in greening Hong Kong, we have issued two rounds of retail government green bonds totalling HK$40 billion for subscription by Hong Kong residents, which offer investment options with steady returns while enabling participants to join and benefit from green finance. The inaugural issuance in May 2022 was the world’s largest retail green bond issuance then. The proceeds raised are used to finance or refinance green projects that provide environmental benefits. These projects are covered by one or more of the nine eligible categories under our Green Bond Framework, i.e. renewable energy; energy efficiency and conservation; pollution prevention and control; waste management and resource recovery; water and wastewater management; nature conservation/biodiversity; clean transportation; green buildings; and climate change adaptation.
Inclusiveness also covers growing the pool of talent in our green finance industry. To build up the capacity in green and sustainable finance, we launched a subsidy scheme last year to support market practitioners and related professionals, as well as students and graduates of relevant disciplines, to participate in relevant training or accomplish qualifications. As of late November, there are 40 eligible programmes under the scheme and we have approved over 560 applications from individuals taking part in the courses with total subsidy amount of about HK$3.6 million while many are being processed.
Conclusion
Ladies and gentlemen, I am sure you agree with me that together, we have the power to shape the future for the continued existence of humankind. Hong Kong, with its unique and robust institutional setup, is committed to leading the way in green and sustainable finance, fostering innovation, promoting information flow, and embracing inclusiveness for a greener tomorrow.
May our collective efforts serve as a foundation for safeguarding the well-being of planet Earth. With this, I wish the event every success and the best of sustainable business and health for all of you. Thank you.
