HKMA joins new alliance on green financing as US$29 trillion in opportunities expected over next decade
- Alliance for Green Commercial Banks will help lenders address unmet green financing needs, HKMA says
- About US$18 trillion in green and climate-related financing opportunities are expected in the next decade in Asia
The Hong Kong Monetary Authority (HKMA) is teaming up with the International Finance Corporation (IFC) to help commercial banks address climate change, as it seeks to cement the city’s place as a hub for green financing as US$29 trillion in green and climate investment opportunities are expected globally over the next decade.
The HKMA, Hong Kong’s de facto central bank, is a founding member and first regional anchor of the new Alliance for Green Commercial Banks, an initiative the IFC hopes will bring together financial institutions, research groups and technology providers to tackle the climate crisis.
The initiative is designed to help lenders address their own knowledge gaps in green financing and tap unmet needs for sustainable and climate-focused financing, the HKMA said at a press conference and signing ceremony on Monday.
“This is a tremendous business opportunity, given so much investment is needed,” said Edmond Lau, the HKMA’s senior executive director overseeing external affairs, financial infrastructure and research.
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About US$18 trillion in green and climate-related financing opportunities are expected to emerge in Asia in the next decade, Lau said.
Those opportunities include the development of environmental friendly buildings, electric vehicles, better waste management and more efficient energy usage, according to Darryl Chan Wai-man, a HKMA executive director responsible for the city’s development as an international financial centre.
“We should encourage the private sector, the financing sector, i.e. banks, to provide financing,” Chan said. “There is such a demand in the market.”
Vivek Pathak, the IFC’s regional director for East Asia and Pacific, said there is a “huge opportunity” for further green development in Hong Kong, but it has not always been viewed as viable from a financial perspective in the past.
“It is imperative, from a business sense, in my view,” Pathak said.
That could include teaming up with universities as manpower remains a problem for the industry, Chan said.
The HKMA also is in the middle of a three-phase effort designed to assess the “greenness” of banks in the city and develop supervisory requirements for the banking industry around sustainable financing.
“The supervisory framework in the future wouldn’t be a ‘one-size, fits all’ [approach],” Lau said. “It will vary with banks.”
