Hong Kong Exchanges and Clearing Limited (HKEX) has announced plans to launch a new Sustainable and Green Exchange (STAGE), representing the first-of-its-kind in Asia. The new information platform will act as a central hub for data on green finance investments in Hong Kong’s securities markets, as well as seek to engage stakeholders in sustainable finance. It comes as the financial industry in the city and across the world begins to price in climate risks.
The new sustainable finance platform STAGE is expected to launch later this year, and will provide a repository of sustainable, green and social bonds and ESG-related exchange traded products (ETPs). The database will help promote the transparency and accessibility of green finance across asset classes and product types, as well as act as an advocacy platform to promote greater engagement amongst Asian investors and stakeholders in the sector.
“Our goal is to help issuers raise awareness of their sustainable and green financial products, whilst also offering investors and asset managers easy access to information for their due diligence, selection and monitoring,” said Grace Hui, the head of STAGE.
In its initial phase, STAGE will provide information and data on such bonds and products listed on HKEX. Issuers are able to display its products on the database if they have met international standards and principles, and provide post-issuance reports annually.
Later on, HKEX plans to expand its coverage to include more asset classes and products, such as derivatives linked to relevant sustainability or ESG indices.
The launch of STAGE comes after the Hong Kong Monetary Authority (HKMA) and Securities and Futures Commission (SFC) established a green finance steering group in May. The new cross-agency steering group aims to coordinate between different financial sectors and ensure that companies disclose climate impacts, risks and factors into their investment processes.
It demonstrates that the banking and financial sector is finally turning its head and recognising the enormous risks posed by the climate crisis to financial market stability and long-term profits.
“By encouraging issuers, investors, asset managers, market participants and advisors to play an active role in enhancing the sustainable and green finance ecosystem in Hong Kong and the region, we are in turn reinforcing the sustainability of our own market,” explained Hui.
According to HKEX, the past year has seen significant growth in sustainable and green investment funding in Asia. Green bond issuances in Asia-Pacific raised a record-breaking US$18.89 billion in 2019. The trend has accelerated amidst the coronavirus pandemic, with ESG investments proving more popular amongst Asian investors due to its crisis-resilience to external shocks, whether it be a public health emergency or climate change.
Just last week, Link REIT, the first real estate investment trust in Hong Kong and the largest in Asia as measured by market capitalisation, disclosed that it had secured a five-year sustainability-linked loan of HKD$1 billion (US$129 million) from OCBC bank, a show of strengthened commitment to green finance in Hong Kong.
Lead image courtesy of HKEX.