Distinguished guests, ladies, and gentlemen,
Good afternoon. It is my great pleasure to join you at this year’s GBA Green Finance Alliance Annual Forum.
Let me begin by congratulating Hong Kong Green Finance Association on assuming the Chairmanship of the GBA Alliance. I must also commend our hosts on the official launch of the Green Accelerator programme this morning. Hong Kong will continue to support these joint efforts, and provide a premium platform to elevate GBA’s collective voice on the regional and global stage.
While we gather to celebrate our achievements, we must also keep a level head in today’s challenging times. Geopolitical tensions, market volatilities, and technological abruptions create real headwinds to global climate actions. But for Asia — a region responsible for over 60% of global GHG emission1 and among the most vulnerable to climate hazards — climate transition and resilience are far more than environmental goals.
They represent our hedge against energy shocks and supply chain disruptions, as well as economic strategy for long-term stability and competitiveness. China’s transition story offers a compelling example. From solar to EV, clean energy sectors drove more than one third of the economic growth in Chinese Mainland last year, and enabled the economy to weather energy shocks when geopolitical tensions ran high.
Across Asia, ambition to drive transition and build resilience is strong – but capital has been lagging to follow. The barrier is not a shortage of liquidity or ignorance of the urgency. Rather, it is the high premium of uncertainty — capital hesitates when rules are inconsistent, standards are fragmented, and transition pathways are unclear.
Removing this barrier is precisely where the HKMA focuses its efforts. By establishing clear definitions, setting transparent regulatory expectations, and deploying useful tools, we aim to give global capital the certainty it needs to flow at scale towards Asia’s transition and adaptation.
The Phase 2B Taxonomy prototype published this morning is our latest step towards delivering that certainty.
Let me start with why a taxonomy matters.
There is no shortage of ambition for the transition ahead. Nor is there a shortage of capital ready to finance it. What is needed is a bridge between the two — and that bridge is confidence. Confidence that what is labelled as green is genuinely green, and that transitions are credible. Confidence cannot be negotiated deal by deal; it must be built into the system itself. This is the role a taxonomy plays, for Hong Kong, for Asia, and beyond.
Get the definition right, and capital flows with confidence. Leave it ambiguous, and the results may be hesitation, fragmentation, and risks of greenwashing. The Hong Kong Taxonomy for Sustainable Finance is our answer: a robust, credible, and practical framework that gives the market a common language for what is green, and what credibly counts as transition. As an international financial centre, Hong Kong’s advantage and uniqueness lie in connecting capital across borders. That is why we have built that common language with interoperability in mind — so that what is recognised as green, or as credible transition, here is trusted as such elsewhere.
We have been building that common language step by step — Phase 1 in May 2024, Phase 2A in January this year. Today, we took the next step: the HKMA published the Phase 2B Taxonomy prototype for consultation, and it speaks directly to both halves of today’s theme — transition and resilience.
On transition, new activities that are paramount to the decarbonisation of the region are added to the Taxonomy, working in two directions. First, the enablers, including the manufacture and recycling of batteries, and the manufacture of low-carbon technologies — the building blocks without which there is no electrified, low-carbon economy. Second, the hard-to-abate sectors, including air transport and iron & steel, where emissions are hard to cut and capital needs are large. A taxonomy that finances only what is already green will not get Asia to net zero; it must finance the enablers and the hard cases alike.
On resilience, we start close to home. Phase 2B expands adaptation measures for the climate risks most dire to Hong Kong – beginning with shoreline protection and flood management – and introduces a process-based approach, designed to be practical to apply, to help the market identify and finance adaptation efforts that build resilience to physical climate risks.
A framework’s value is proven in use. I am encouraged that banks and corporates are integrating the Taxonomy into financing and investment decisions, and into their sustainable finance frameworks. We have also seen other Taxonomy-aligned bonds and loans coming to market. I look forward to seeing more institutions follow these early movers and put the Taxonomy to work.
Adoption is taking hold. The task now is to scale. This means working with the industry to build the know-how and share the practical experience, so that Taxonomy alignment becomes the “go-to” for assessing green and sustainable investments, rather than the exception.
And the Taxonomy itself will not stand still. Phase 2B is a milestone, not a destination. As markets move, policies advance, and technologies mature, we will keep the Taxonomy evolving to keep pace. Nor does our work stop at Hong Kong’s boundaries. We will continue to participate in, and contribute to, international efforts to enhance taxonomy interoperability and adoption, so that the common language we are building here is spoken and trusted across markets, and the Taxonomy remains a tool that the market can grow with, and grow on.
While the Taxonomy provides the clear definitions for what to finance, turning those definitions into widespread market practice requires the other two pillars we set out to build.
First, to establish the regulatory expectations for transition planning. Transition planning guides us from where we are today to where we need to be and to translate ambition into action. Over the past few years, the HKMA has been helping the banking sector build capacity for transition planning through high-level principles and sharing of good practice. To provide the industry with further guidance, we have been working on the transition planning guidelines to assist banks in managing both transition and physical risks while capturing the opportunities.
Client engagement is an integral part of the guidelines. The reason is straightforward — a bank’s transition planning depends to a large extent on the transition of its clients. This is particularly important and relevant in Asia, where corporates in the region face greater exposure to climate hazards than their global peers.2 But at the same time, this presents opportunities for banks to support clients’ transition through financing, thereby facilitating the transition of the real economy.
Second, to provide enabling tools for physical risk assessment. The Physical Risk Assessment Platform, launched in 2024, is a prime example of the HKMA’s work in this area. All banks in Hong Kong can access this cloud-based platform and obtain analysis of the impact of physical risks on the assets. Over the past two years, we have seen a steady increase of usage, with approximately 2 million assets being analysed to date. Earlier this year, we expanded the data coverage from Hong Kong-only to a global scope. Banks can now look up information of assets located in the GBA, Asia, and beyond.
Through these efforts, Hong Kong is establishing the institutional foundation for a conducive sustainable finance ecosystem that channels capital towards Asia’s transition and adaptation.
But this is only half the battle. Real change requires active market participation.
I call upon the policy makers, financial leaders, and industry pioneers gathering here today to move beyond vision to action. Let us leverage Hong Kong’s platform to build robust project pipelines and pioneer innovative financing solutions. Let us also deepen regional collaboration to align our standards and frameworks, enabling climate capital to flow seamlessly across borders.
I wish you all a productive and fruitful forum. Thank you.