Hong Kong think tank FSDC outlines measures to develop transition finance


Hong Kong’s Financial Services Development Council (FSDC), a government think tank, has released a report outlining recommendations on how to leverage the city’s financial muscle to develop transition finance in the fight against climate change.

Among other things, it says the government should develop a guiding principle to bridge diverse international benchmarks, including adopting a three-pillar approach to develop Hong Kong into a transition finance hub.

It also suggests scaling transition through blended finance and other financing mechanisms, as well as establishing structured public-private dialogues to accelerate sector transitions.

According to the FSDC, Hong Kong is “strategically positioned” to lead in financing sustainability transactions across Asia, with the region now accounting for around half the global greenhouse gas emissions.

“As the world grapples with urgent climate challenges, transition finance has gained momentum globally as a means to fund hard-to-abate sectors for their gradual decarbonisation journeys,” the think tank says in the report published on November 28.

The International Renewable Energy Agency estimates that around US$5 trillion is required annually for the world to reach net zero emission targets by 2050. It puts the global transition financing shortfall at about $4 trillion a year.

Laurence Li, chairman of the FSDC, says the think tank’s recommendations “aim to foster an enabling ecosystem where the public and private sectors can collaborate to drive impact through transition finance”.

“This signifies Hong Kong’s commitment to advancing sustainability despite shifting geopolitical landscapes,” he says in the report.