HKEX’s Laura Cha pledges tighter ESG disclosure, easier capital access for firms

The Hong Kong Exchanges and Clearing (HKEX) will keep raising its standards for climate-related information disclosure, while providing easier access to capital for quality green tech firms as part of efforts to reinforce China’s carbon neutrality goal, according to chairwoman Laura Cha Shih May-lung.

“Our goal is to enable [global] investors and the whole financial market to access complete [climate-related] information with ease,” Cha said on Saturday in her speech before the 2023 Bund Summit in Shanghai. “We will make sure that our [information disclosure] rules are in line with the highest international standards.”

She added that the exchange is also pushing for more innovative means to expand financing channels for green technology companies, without elaborating on this plan.

“Hong Kong and the HKEX are able to make our contributions to the country’s carbon neutrality push in financing green tech firms, connecting domestic [companies], overseas firms and funds to participate in low-carbon transition, as well as spurring green tech innovations and sustainable development,” she said.

The three-day Bund Summit, which concludes on Sunday, brings together senior policymakers, financial executives and academics around the world to shed light on the country’s economic status and prospects amid worries about US-China decoupling. The annual event is run by the China Finance 40 Forum, a non-governmental organisation.

Cha’s remarks underscore efforts proposed by Beijing to fully engage with Hong Kong, which plays a major role in offshore yuan trading, settlements and creating a risk management ecosystem, to allocate financial resources and help in the country’s economic growth.

The Hong Kong exchange is already home to a clutch of Chinese new-energy vehicle start-ups and automotive supply-chain powerhouses, including carmakers Nio, Li Auto and Xpeng as well as electric vehicle battery producer China Aviation Lithium Battery.

Cha, who served as vice-chairwoman of the China Securities Regulatory Commission between 2001 and 2004, said the HKEX has become the top initial public offering destination for the mainland’s green tech firms.

China’s green financing to soar next 30 years despite rising rates

China, the world’s second-largest economy, is estimated to need more than US$20 trillion in investments over the next 15 years to deliver on its sustainability goals, according to Cha.

Chinese President Xi Jinping in September 2020 pledged at the United Nations General Assembly that the country would reach peak carbon emissions by 2030 and carbon neutrality by 2060.

Financing demand for green projects in China, however, is expected to top 300 trillion yuan (US$41 trillion) from 2021 to 2050, as mainland authorities push ahead with those ambitious climate goals, according to a forecast by Beijing-based Institution of Finance and Sustainability in late 2022.

Hong Kong-listed firms not ready for new ESG disclosure rules: Grant Thornton

The HKEX has proposed to implement new reporting requirements from next year that are aligned with standards for a global baseline for disclosures set by the International Sustainability Standards Board.

Under the exchange’s new framework, -making environmental, social and corporate governance disclosures will be -mandatory, as opposed to the current “comply or explain” process.

Meanwhile, Chinese Academy of Social Sciences professor Zhang Xiaojing suggested at the Bund Summit on Saturday that senior Beijing authorities step aside from deliberations about technological innovations in various fields and allow market forces to support tech businesses.

“We must give market forces a full play in pricing financial risks and allocating financial resources,” Zhang said. “Government departments are supposed to relinquish their role in guaranteeing investment safety.”