Hong Kong needs to move faster to join in the $440bn green bond market to help it fund environmental improvements, one of the leading figures in the fast-growing asset class has told GlobalMarkets.
The city has been dallying with the idea of selling a green bond for a year. The issuance is understood to be awaiting approval from the legislature, and is widely expected to hit the market by the end of the year.
Sean Kidney, chief executive of the Climate Bonds Initiative, an NGO, said that was not nearly enough. “The trouble for the Hong Kong government is that they don’t really need the money,” he told GlobalMarkets during the Tri Hata Karana Forum on Sustainable Financing in Bali.
“But Hong Kong could do anything with the money it’s already got in the bloody bank. It has trillions of Hong Kong dollars sitting in bonds and a huge current account surplus. It could finance a proper waste water system. It is an outrage that a rich city like Hong Kong is still pouring sewage into the river where people swim.”
Kidney said the environmental situation in Hong Kong “remains an embarrassment” and that proper sewage systems should be the “norm” for the city. He added that pollution levels were far worse in Hong Kong than across the border in Shenzhen.
Hong Kong’s green financing programme could help with improving living conditions. The city’s 2018-19 budget announcement included plans to issue green bonds of up to HK$100bn linked to financing green infrastructure projects.
The hope is that Hong Kong uses its own green bond to invest in a sewage plant, according to Kidney, although details are still limited. “That would be a signal they are really getting their shit together.”
Would this mean Hong Kong could yet meet its ambitions of being Asia’s regional green hub, and a link to China?
The one big advantage Hong Kong has is that it is already a renminbi hub, and as the RMB goes green, Hong Kong will likely be able to leverage that to become a green hub.
“There are already green bond funds setting up shop in Hong Kong to invest in Bond Connect to access China’s domestic market,” said Kidney. “RMB issuance internationally is there, but light. But green is a nice spearhead for change in China.”