The Hong Kong Special Administrative Region is home to 7.5 million people. During the UN meetings, Hong Kong suffered an especially destructive super typhoon; these recurring storms mean that the government and citizens well understand the imperative of climate adaptation. Over decades, the city authorities have undertaken enormous projects to redevelop the land and the harbor, and in so doing have learned a great deal about the interplay of nature and human activity in a dense urban area. On top of these local opportunities to progress, Hong Kong has been constantly deepening ties with Mainland China and its multi-trillion-dollar green investment opportunity. The Hong Kong case study illuminates the lessons and possibilities of “local” and “global” work.
The first parts of this opinion highlight the preparation of businesses in Hong Kong for ESG work as necessary knowledge and expertise were built, and then the financial services offer.
Background
ESG is not a new topic for Hong Kong. By the early 2000s, the fundamentals of ESG began to be written into the Hong Kong Exchange’s listing requirements. The Hong Kong government went on to align policy targets with global initiatives such as the Paris Agreement in 2015.
In January 2017, the Hong Kong government unveiled the “Climate Action Plan 2030+,” targeting a 65 percent to 70 percent reduction in carbon intensity by 2030 compared to the 2005 baseline.[1]
In November 2020, the SAR’s chief executive outlined the path for Hong Kong to achieve carbon neutrality before 2050, the English version being a one-page diagram summarizing milestones to cover over the 25-year timespan. The government has earmarked around HK$240 billion (US$31 billion) for climate change mitigation and adaptation over the next 15 to 20 years.[2]
This robust public commitment positioned Hong Kong as a proactive player in the global ESG landscape. The government’s financial products set a public price and counterparty risk foundation for exploring the very large business opportunities the private sector brings to the mix.
Hong Kong's ESG regulatory framework
The tone is set by the regulatory framework in place across the Hong Kong market, which puts the accent on listed companies, banks, and asset managers. Listed companies in Hong Kong are obligated to report on key aspects of ESG, predominantly following comply-or-explain approach.
Hong Kong regulatory bodies have led the market forward with proactive communication on ESG regulatory developments. In May 2022, the Hong Kong Securities and Futures Commission hosted a global conference of Principles of Responsible Investment, and the chair’s address spoke both of what the SFC and IOSCO intended to do.[3] Similarly, the Stock Exchange’s newsletter has offered detailed recommendations for listed companies to address forthcoming requirements related to ESG reporting, and, like the SFC, it has proceeded step by step with market consultations and a long lead time for actors to become compliant: the 2023 post-consultation ESG Reporting Code came into effect at the start of 2025.
ESG reporting: key requirements
The corporate information to be disclosed covers descriptions of management’s approach to ESG, the progress made since the prior reporting period or longer, the investment focus, the use of assessed ESG risks in strategy, actions taken for conserving biodiversity, and an inventory of sustainable investment actions.
Hong Kong's reporting framework places significant responsibility on board members as the leaders of their enterprise. Companies are required to anticipate sustainability challenges and proactively devise strategies to address them. Many stakeholders are involved in the evaluation of risks.
The authorities also prescribed a process to be followed for correct, comparable disclosure across businesses. The process is launched by the board of directors. The reporting assessment reviews the company’s processes and includes a materiality filter to identify key reporting topics. The working party moves on to develop a comprehensive strategy to address current and anticipated challenges. Finally, a clearly written and comprehensive report is presented to stakeholders.
Impact on business reporting
Simultaneously and in complementary fashion, corporate compliance requirements shifted upwards in the preparation of work plans and relevant training for boards of directors and employees for the International Sustainability Standards Board (ISSB) Climate Standard. The ISSB standard, known for its specificity[4], requires detailed disclosures on Scope 3 emissions, transition plans, carbon credits usage, and their impact on financial positions and performance. Companies are encouraged to ensure that capital expenditures for emissions reduction and carbon offset purchases are reflected in financial statements. The ISSB's proposals emphasize focus on the links between climate strategies and financial performance.
Hong Kong’s green and sustainable finance
The emphasis on corporate reporting has generated a great deal of globally comprehensible “green information” in business. It is on that corporate information base that financial products can flourish.
Offerings in Hong Kong’s capital market include green bonds, sustainability bonds, social bonds, and sustainability-linked bonds. The government has led by example, and in so doing has stimulated the market: the HKSAR Government's Green Bonds had an outstanding amount of approximately HK$203.686 billion (USD 26.09 billion equivalent) as of December 31, 2024. This amount reflects the bonds issued under the Government Sustainable Bond Program, with proceeds paid to the Capital Works Reserve Fund.[5] Issuance is split across USD, EUR, HKD, and RMB. These sums of money raised and deployed make the Hong Kong financial services sector a regional leader.
Following the government’s lead on bonds, private sector entities, particularly corporations beyond real estate and financial institutions, came forward, accounting for the great majority of this decade’s corporations tapping the market.
In addition to bonds, the bank debt market activity has also been robust. The active market for green and sustainable loans further propels Hong Kong's position as a hub for environmentally conscious financing. In 2024, the total volume of green, social, sustainability, and sustainability-linked (GSS+) bonds arranged in Hong Kong was $43.1 billion. Hong Kong is the largest arranger of international GSS+ bonds in Asia.
Hong Kong and beyond for ESG opportunities
The Hong Kong Monetary Authority's green classification system was aligned with international standards, and this step minimized greenwashing risks. It also enabled investors around the world to evaluate the information based on familiar metrics. Notably, the focus on integrating resilience into green investments acknowledges Hong Kong's susceptibility to extreme weather events.
Commercially, for years Hong Kong has been progressively integrated into the Guandong-Hong Kong- Macao Greater Bay Area, with those vast opportunities. The region shares the Pearl River Delta and the same weather event risks.
Building on decades of experience with ESG questions, Hong Kong financial service professionals have in place the ecosystem on which to advance and also to scale evolving green finance products.
[1] https://www.hkgbc.org.hk/eng/engagement/file/ClimateActionPlanEng.pdf
[2] https://cnsd.gov.hk/wp-content/uploads/pdf/CAP2050_leaflet_en.pdf
[3] https://www.sfc.hk/-/media/files/ER/PDF/Speeches/Speech-27-May-2022.pdf
[4] It has taken decades to build up a robust set of data, in order to provide metrics for corporations.
[5] https://www.budget.gov.hk/2024/eng/pdf/cwrf-mem.pdf