HKMA Green Finance Subsidy

There are a few different types of support for businesses that are looking to become more sustainable. One of the most common ones is the HKMA Green Finance subsidy, which is available to eligible organizations that are looking to develop more environmentally friendly businesses.financesubsidy.com

Guideline

The Hong Kong Monetary Authority (HKMA) has developed green finance guidelines to promote the development of green and sustainable finance in Hong Kong. These guidelines are based on international standards and best practices. They also aim to address specific challenges in climate risk management.

HKMA is working closely with its local stakeholders and global partners. It is also one of the founding members of the Alliance for Climate Change Leadership, a collaboration of leading financial regulators and institutions from around the world. In order to implement the Alliance's goals, HKMA has established a cross-sector platform, the Centre for Green and Sustainable Finance. This aims to improve data availability and facilitate access to relevant information for the financial industry.

The HKMA's draft guidelines are a step towards integrating climate risk management into the overall supervisory framework. They offer comprehensive guidance for banks on how to identify and manage climate risks. Specifically, the guidelines will help AIs to develop climate-focused stress testing and scenario analyses. Ultimately, HKMA will expect AIs to report on their climate-related risks in their annual disclosures.

HKMA encourages AIs to set targets and integrate climate considerations into their remuneration systems and CSR initiatives. Moreover, HKMA also advises AIs to disclose the governance of climate-related risks. If an AI refuses to disclose, it must explain its reasons to the regulators.

HKMA is also actively participating in global forums to promote the development of green finance. It is a member of the Central Banks and Supervisors Network for Greening Financial Systems. Among the organizations involved are the Securities and Futures Commission (SFC), the Insurance Authority and the Mandatory Provident Fund Schemes Authority.

As part of its green finance strategy, HKMA also encourages AIs to incorporate climate-related risks in their pricing decisions. Furthermore, it asks them to incorporate climate-focused scenario analysis into their internal audits. Finally, it expects them to allocate their risks to different lines of defense. For instance, it is expected that AIs will systematically monitor the risk-management processes and risk-reward structures of their business units and assign responsibility for risk management.

HKMA's green finance guidelines are a major step towards promoting the development of green and sustainable finance in Hong Hong. Nonetheless, a critical challenge remains: how to effectively advise governments on climate-related risks.

Eligibility

If you are looking for a green finance subsidy, then you may want to check out the Hong Kong Monetary Authority (HKMA) Green and Sustainable Finance Grant Scheme. The Scheme is a three-year plan that is designed to encourage the transition to green finance practices. This scheme will help defray the costs involved in acquiring relevant qualifications and training. In addition, it provides subsidies to first-time sustainable bond issuers and loan borrowers. It is estimated that this will increase the size of the ESG-related financial talent pool in Hong Kong.

To qualify for the Scheme, an issuer/loan borrower must comply with the Scheme's eligibility criteria. This includes meeting the general issuance cost subsidy criteria, a minimum bond size of HK$200 million, and issuing the bond in Hong Kong.

In addition to the GSF Grant Scheme, the Hong Kong Government has also launched a pilot Green and Sustainable Finance Capacity Building Support Scheme. This scheme is targeted at local practitioners and students. These practitioners and students are required to undergo relevant training and examinations. They may apply for a subsidy of up to 80% of the relevant training and examination fees.

Apart from the aforementioned schemes, the Government has also released a Strategic Plan to support its efforts in building a vibrant, inclusive and environmentally-friendly financial ecosystem. The strategic plan outlines six key focus areas and five near-term action points.

As part of the plan, the HKMA launched the Banking Graduate Trainee Programme in collaboration with the banking industry this year. This programme aims to increase the supply of graduates in the banking sector, with a particular focus on green and sustainable finance.

Another scheme is the Pilot Scheme on Training Subsidy for Fintech Practitioners. This Scheme will provide around 1,500 places for training in the fintech field. It is the first fintech professional qualification to be recognised under the Qualifications Framework.

There is also a Green and Sustainable Finance Cross-Agency Steering Group. Co-chaired by the HKMA and the Securities and Futures Commission, the Steering Group supports the government's climate strategies and aims to coordinate the management of climate risks to the financial sector.

GSF Grant Scheme

The HKMA's Green Finance Grant Scheme provides subsidies to qualifying bond issuers. The scheme was introduced to stimulate green bond adoption in the Hong Kong market. It offers a subsidy to up to HK$2.5 million in the case of rated bonds and up to HK$1.5 million for unrated ones.

To make the most of the scheme, the HKMA has published a guideline. This includes a list of requirements for eligible transactions and external review services. Applicants may also submit a formal application to the HKMA within three months of the bond or loan issuance.

While the Green Finance Grant Scheme is still in its infancy, it has paved the way for a new breed of investors to enjoy the benefits of investing in safe government bonds. As the world becomes more environmentally aware, businesses are looking for funding to help them transition towards a low-carbon economy. Moreover, companies need technology innovation and personnel training to keep up.

In March 20222, the HKMA announced that more than 60 debt instruments had been approved. However, the HKMA did not reveal any details about the number of borrowers or the number of bond issuers. Nevertheless, it is expected that the number of green bonds issued will increase over the coming years. During the previous fiscal year, the green bond market grew by 69%.

According to a recent study, 64% of SMEs in the Hong Kong region do not have sufficient funds to do their part. The HKSAR government has rolled out the Climate Action Plan 2050, which aims to reduce Hong Kong's carbon emissions before 2035 by 50% from the 2005 levels.

The GSF Grant Scheme is just one part of a series of government initiatives to stimulate the green bond market. Some of the other notable schemes include the Green Bond Advisory Board and the Green and Sustainable Finance Grant Scheme. All of these are designed to increase the appetite for green bonds in the Hong Kong market. For instance, the HKMA's Green and Sustainable Finance Grant Scheme subsidizes up to half the cost of transaction-related external review services.

Pilot Green and Sustainable Finance Capacity Building Support Scheme

The Pilot Green and Sustainable Finance Capacity Building Support Scheme, launched in the 2022-23 Budget speech by the Financial Secretary, is aimed at supporting talent development in Green and Sustainable Finance. It will provide subsidies to local practitioners as well as relevant training and external review services. This scheme will run for three years and is open to market practitioners and prospective practitioners.

The Pilot Scheme is part of a collaborative effort between industry and government to build capacity in the industry and strengthen the financial ecosystem in Hong Kong. It will help address one of the world's most critical challenges: reducing climate-related risks.

The Pilot Scheme is administered by the Secretariat of the Centre for Green and Sustainable Finance (CGF). The Centre is an industry-led, cross-sector platform that co-ordinates efforts by key industry players, including regulators, financial institutions and academia.

One of the key focus areas is promoting the issue of green bonds. Through this scheme, investors can purchase safe government bonds while ensuring that the issuers are delivering a green impact. These bonds cover multiple tenors and affirm investors' confidence in Hong Kong's credit strengths and economic fundamentals.

Green and Sustainable Finance is a rapidly growing area of financial activities, and Hong Kong is committed to fostering its growth. In addition to expanding the scope of the Government Green Bond Programme, Hong Kong will support green finance through a range of measures, from professional services to the development of a market infrastructure. A number of projects have been initiated to improve the sustainability reporting of companies and the availability of data in the financial industry.

Another key initiative is the establishment of the Green and Sustainable Finance Cross-Agency Steering Group. It is composed of representatives from the Monetary Authority, Hong Kong Exchanges and Clearing, the Securities and Futures Commission and the Insurance Authority. They will work together to accelerate the growth of green finance in Hong Kong and to align the financial system with the 2015 Paris Climate Agreement.

Additionally, the Steering Group will also collaborate with CDP, a non-profit organisation that runs a global environmental disclosure platform for companies. Collaboration with CDP will enhance the availability of climate data in Hong Kong.