The pandemic has prompted the world to rethink sustainability and put more of a focus on our relationship with the natural ecosystem that surrounds us. Global green bond issuance reached a record high of record high of USD290 billion according to the Climate Bonds Initiative Sustainable Debt Global State of the Market report for 2020. This is the highest level since the first green bond was issued in 2007 and also maintains a trend of nine consecutive years of increased green market growth.
Hong Kong issuers were responsible for USD1.95 billion of these green bonds issued in 2020. Although this featured 15 aligned green bonds as a record high number of deals, there was in fact a 24 per cent decrease from the volumes seen in 2019. While 2019 was characterised by issuances from a range of issuer types, 2020 volumes were dominated by the government-backed entity, MTR, with small volumes from non-financial and financial corporates. In 2020, the cumulative figure of issuance in Hong Kong reached USD9 billion overall as the city continues to develop as a hub.
In the report, Climate Bonds Initiative expect that the trend will continue with green and sustainability bond issuance in Hong Kong further increasing in the future. There is also new support for the market from the grant scheme established for green and sustainable bonds that is set to provide financial support towards the expenses relating to issuance and external review, and it will further enrich the green and sustainable finance ecosystem in Hong Kong.
The Hong Kong Green Bond Market Briefing 2020, in partnership with HSBC, supported by the Hong Kong Monetary Authority and the Hong Kong Green Finance Association, continues to examine the range of green bond and loan deals coming from domestic issuers as well as the growing suite of sustainable finance product offerings that are available. The Briefing highlights major focus area in also identifies the major focus areas in green and sustainable finance for Hong Kong such as closer collaboration with the Greater Bay Area. And it shows that apart from green buildings, there is also a huge potential for growing green securitisation in the GBA. And the briefing also shows that Hong Kong could play a crucial role in lending a voice of support Asia’s carbon neutrality goals.