Green bonds

Hong Kong property firm New World Development joins green financing trend with US$459 million loan

The money, from a group of banks including HSBC, is the first green loan in the city, which is aiming to turn itself into a regional hub for such financing

PUBLISHED : Wednesday, 21 March, 2018, 10:05pm
UPDATED : Wednesday, 21 March, 2018, 11:37pm

Hong Kong property firm New World Development said it had taken out city’s first green loan, borrowing HK$3.6 billion (US$458.8 million) from a group of local and international banks and joining the growing pack of companies to tap capital through green financing.

It said the loan would be used for a commercial redevelopment project on the King’s Road in the city’s North Point area, and would be the first step in a plan to develop sustainable buildings in both Hong Kong and China through green bonds or loans.

Hong Kong is aiming to turn itself into a regional green finance hub, particularly as the popularity of the form of financing grows in mainland China.

The Hong Kong government launched in early March a grant scheme for green bond issuance, and announced an up to HK$100 billion green paper programme to be issued by the government itself.

Last year, mainland Chinese issuance of so-called labelled green bonds – those that have met certain verifiable standards – amounted to 248 billion yuan (US$39.2 billion), or around 22 per cent of global issuance. Of that total, 204.5 billion yuan was issued in the mainland and the rest in offshore markets such as Hong Kong.

HSBC is the adviser and lender to New World, along with Australia and New Zealand Banking Group, Bank of China (Hong Kong) and Hang Seng Bank, among others. The North Point development is scheduled for completion next year.

How Hong Kong can be the bridge to the world for mainland China’s green bond market

Separately, Chan Wai-shin, head of the HSBC Climate Change Centre of Excellence, said in an interview that Hong Kong was also looking at establishing certain definitions and standards for green financing that would drive growth in the market.

“It’s about investing in cleaner energy, lower-carbon technologies and projects which are consistent with the aim of the Paris climate agreement,” Chan said, speaking after attending the UK government’s GREAT Festival of Innovation in Hong Kong.

Chan also said that companies needed to be prepared for the consequences of climate change by embedding resilience into their projects.

“Generally speaking, about half of the managed assets in Europe include environmental and social governance factors in their decision-making processes … The figure from the US is roughly about a fifth. In Asia, at the moment, we are very much at the 1 per cent level,” he said, noting that the figures were from 2016, the latest available.