Q: Hi Johnson, thanks for chatting with us. So, tell us a bit about Our Hong Kong Foundation.

A: Our Hong Kong Foundation is a leading policy think tank based in Hong Kong, ranked 131st among 8,162 think tanks in the 2018 “Top Think Tanks Worldwide” Index. We conduct research and offer policy recommendations on a wide range of topics, where green finance has been one of our areas of focus. We published a report on green bond back in 2017, produced a ESG strategy paper with the Financial Services Development Council last year, and launched another report on ESG disclosure recently in May. All these create significant momentum for green finance development in the city. OHKF is also the chair of the policy working group of the Hong Kong Green Finance Association.

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

A: A bridge is two-way. To certain extent, Hong Kong is already a bridge for mainland issuers to tap into the global green capital market, as evidenced in the rising issuance of green bond by mainland corporates in Hong Kong. There is obviously more to do to ‘green’ the Bond Connect. The divergence between mainland and international green bond standards is a major hurdle for international investors, and Hong Kong should play an intermediate role in connecting, or even harmonizing, the green bond standards on issues such as clean coal. The Southbound Trading should also be launched as soon as possible to connect mainland investors with international green investment market. As a leading offshore RMB center with well-established financial infrastructure and free flow of capital, Hong Kong should leverage its competitive advantages to make itself a global green bond hub.

Q: In Hong Kong, ESG Reporting is something quite new for public companies. How does this compulsory reporting compare to other countries policies, and how has the response been from the companies in Hong Kong?

A: The current ESG reporting regulation in Hong Kong is characterized by the “comply-or-explain” requirement: listed companies either disclose the required information or explain non-disclosure. It is not as stringent as those imposed by the European ESG leaders, where certain ESG information is reported on a mandatory basis, but at the same time not as lax as those in some other jurisdictions. Yet, as there are always ways to get around rules and regulations, the key to a thriving ESG ecosystem is to have smarter, not necessarily tighter, regulation that encourages and enables strategy-driven ESG reporting which can create value for corporates.

I observe that many Hong Kong listed companies treat ESG reporting as a box-ticking exercise simply for compliance purpose, instead of seeing it as a value-creating practice that can inform strategic planning. Refining, and potential narrowing, ESG disclosure requirements with a focus on material industry-specific metrics will help companies see ESG issues from a strategy perspective. It is equally important for policymakers to strengthen the role of board in ESG governance and improve ESG-related infrastructure, particularly talents and data, thereby facilitating corporate assessment of ESG risks and opportunities.

Q: What do you think the next 5-10 years will look like in the energy and energy tech space?

A: According to the IPCC report, there is an annual investment need of USD 2.4 trillion for climate mitigation, where energy and energy tech undoubtedly play an important role. To put it into perspective, USD 2.4 trillion is about 2.5% of the world GDP, and how to fill the investment gap is the million-dollar question for leaders around the world. In the energy sector, I anticipate there will be more interaction and collaboration between the public and the private sector in different forms to direct global capital to activities that are conducive to low-carbon transition.