• The Hong Kong ESG Reporting Awards (HERA) 2021, the first non-profit ESG reporting awards in Hong Kong, came to a successful close. Speakers representing the government, regulator, ESG industry, institutional investors, senior practitioners and industry associations hosted a number of keynote speeches and panel discussions to shed light on the latest development for the ESG industry. The grand awards winners were congratulated on the NASDAQ MarketSite, in Times Square, New York, demarcating their long-standing support towards HERA as the pioneer of renowned ESG reporting accolades in Greater China. The winners of HERA 2021 can be found on Sponsored by InvestHK, HERA 2021 is co-organised by Alaya Consulting, supported by the Environment Bureau, Government of the Hong Kong Special Administrative Region. The Awards witnessed two keynote speeches by Joseph Chan, JP, Under Secretary for Financial Services and The Treasury, The Government of Hong Kong SAR and Stephen Philips, Director-General of Investment Promotion, InvestHK, who both informed all stakeholders the facts and figures of the fast-growing ESG sector in Hong Kong and the Greater Bay Area. Tony Wong, Director of Hong Kong ESG Reporting Awards Limited and Founder of Alaya Consulting, stated: “Coming to the fourth year of HERA, we have witnessed ESG has been getting the attention from investors, regulators, corporates, as well as the general public more than ever before. We are extremely excited to be a part of this irreversible trend, contributing to the best practices of ESG reporting. Looking forward, we are committed to collaborating with industry stakeholders to contribute to Hong Kong as a regional hub in green finance.” This year’s ceremony is a carbon neutral event. Emissions generated by the attendees’ transportation were offsetted using High Integrity CCERs (Chinese Certified Emissions Reductions) thanks to the guidance and support by Ben McQuhae & Co., an ESG-focused law firm and AEX Markets Ltd in Hong Kong. Ben McQuhae, founder of Ben McQuhae & Co, stated: “Having designed and recently executed the first ever offshore trade of high-integrity CCERs, it’s encouraging to see other Hong Kong businesses join us in taking the initiative. It is really important that we demand only high-quality carbon credits. We support HERA’s leadership in promoting ESG best practices in Hong Kong and enjoyed working with AEX and HERA to help HERA reach their climate ambition of hosting a carbon neutral 2021 event. Congratulations HERA, let’s hope your leadership will help generate real momentum in Hong Kong.” Jeff Huang, CEO of AEX Holdings,Ltd., commented ‘“We at AEX are glad to assist HERA in offsetting its carbon footprint with CCER credits that meet international standards. AEX continues to work with stakeholders towards building a liquid and regulated market for high integrity CCERs targeting corporate net-zero emissions buyers in Hong Kong and beyond. Our thanks to Ben McQuhae & Co for your guidance and continuing support on the development of a robust international carbon market in Hong Kong. Congratulations to HERA for a great and successful 2021 ESG awards ceremony.” Since its inaugural edition in 2018, HERA has been committed to recognising organisations at the forefront of exemplary ESG reporting, fostering a platform for stakeholders of the industry to exchange their views and strike collaborations. As an important ESG event in Hong Kong, HERA is highly regarded by the ESG industry and the business community. To revisit the event, please visit HERA’s website at About HERA Hong Kong ESG Reporting Awards is a not-for-profit initiative that recognises ESG reporting leaders, aiming to build trust among stakeholders. The Awards welcome applications from companies in Asia that strive for outstanding practices in sustainability reporting. Whether you are a small organisation or a large conglomerate, the HERA will be able to showcase your corporate sustainability initiatives.
  • Infrastructure and advancements in technology will play a key role in Asia’s recovery, as the region prepares for the gradual reopening of an economy that was devastated by the pandemic, according to analysts and officials who participated in a regional economic forum on Sept 30. Participants in the Asia Economic and Entrepreneurship Summit also encouraged Asian economies to ratify free trade agreements – like the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and the Regional Comprehensive Economic Partnership – as they will help sustain growth in the post-pandemic era. Analysts and officials have likewise encouraged a more inclusive and climate-friendly development path – aligned with the socio-economic targets set under the UN Sustainable Development Goals and the Paris Climate Treaty. The AEES is an annual regional economic forum organized by the Kuala Lumpur-based think tank KSI Strategic Institute for Asia Pacific, the Pacific Basin Economic Council and China Daily. In his welcome speech, KSI President Michael Yeoh said that Asia needs “innovation, investment and infrastructure” for economic rebound and sustained growth. At the same time, he said economic recovery “also requires inclusive and sustainable development, and a much stronger commitment” to UN SDGs. Asian governments also need to address some of the key challenges posed by environmental degradation, as well as climate change, added Yeoh. Jayant Menon, visiting senior fellow at ISEAS - Yusof Ishak Institute in Singapore, said that in planning for post-pandemic growth, governments in the region need to shift their focus from the short term to a more long-term agenda. He noted that the spike in unemployment, poverty and inequality “will not go away anytime”. He said resolving these issues should be prioritized and in order to do so, Asian economies “need to push back on the rise in the anti-globalization force”. “And one such pushback is to start thinking about how we can open borders safely. (Borders have) been closed for too long in Asia,” he said. “The lack of progress with the SDGs leading up to this pandemic has made its impact even worse. This is a vicious circle that we need to break somehow,” Menon said. Fadillah Yusof, Malaysia’s Senior Minister of Works, said in his opening keynote address that access to “reliable, quality, efficient and affordable infrastructure services” is critical in reducing poverty, promoting economic growth, supporting social development and building resilient communities. He said in Malaysia, infrastructure development is one of the main drivers of economic growth and the construction sector is set to move in tandem with UN SDGs. Guo Wanda, executive vice president of Shenzhen-based China Development Institute, said that digital economy has become very important for China's economic growth. He also cited the fast growth in high-tech manufacturing and the manufacturing of electric vehicles as well as China’s move towards a carbon-neutral economy.
  • The carbon accounting system should be improved to help more sectors join the emissions trading market and facilitate the country’s carbon peak and neutrality. Ma Jun, founding director of the Institute of Public and Environmental Affairs, made the remarks in an interview. “Although China’s national ETS (emissions trading system) has become the world’s largest market as it covers the largest amount of greenhouse gas emissions, our market for carbon trading is not vibrant enough, and the carbon price is also much lower than that in the European Union carbon market,” Ma said. Currently, only China’s power industry can participate in carbon trading, he added. Using those power companies that were initially involved in carbon trading as an example, Ma said there were two main considerations when choosing the power-generation sector as the breakout point in the national carbon market: The power-generation sector consumes coal directly and thus has by far the most carbon dioxide emissions; and the sector has a more-straightforward monitoring and accounting system, therefore a more-credible carbon inventory database. A more-developed carbon trading market could provide greater incentives for enterprises to reduce carbon emissions, Ma added. Since an important factor of an ETS is how many carbon allowances are assigned to companies, “if a company’s carbon intensity is exceedingly higher than the industry criteria, then it may have to either pay to cut back its emissions or purchase additional carbon allowances from others,” Ma said. Ma also said that the transparency of the market should be enhanced. “Accurate and effective access to carbon emissions data is a necessary prerequisite for the ETS to function properly, but most of companies joining the trade have yet to make their disclosure as required by the rules of the market,” he said. A mature emissions trading program will help tilt the economics in favor of renewables versus fossil fuel energy, promoting a virtuous cycle of carbon emissions reduction, he said. More participants like financial institutions and individual investors eventually will be involved in the trade. However, it should happen only after the infrastructure and governance of the system are enhanced, Ma said. “The regulators hope to see a smooth commencement of the national ETS, with the carbon price neither too high nor too low, without huge fluctuations. But over the long run, the price of carbon needs to reflect the cost to reduce emissions. Otherwise, it would not provide an incentive for many institutional investors,” Ma said.
  • Despite a global carbon trading market starting to take shape, the carbon price is still too low to incentivize enterprises to cut carbon emissions, panelists said at Tuesday’s roundtable themed “Renewables & Climate Change: An Overview of Carbon Market”, co-hosted by China Daily and AvantFaire Investment Management Ltd. The panelists added that governments and private companies need other tools such as financial incentives, governance structures, positive feedback and a global standard of evaluating carbon trading credits to build a vibrant, transparent and high integrity carbon trading market. Incentives needed While the world has embraced the carbon market and carbon exchanges, the progress made has been slow. It is estimated that the global carbon emissions from fossil fuels use will soar to over 60 billion metric tons by 2030, according to Erik Berglof, chief economist of the Asian Infrastructure Investment Bank. “The carbon prices have been way too low, as low as they have essentially been zero, or you can even argue that has been a negative carbon price,” he said. Incentives are needed to spur industries that are most responsible for carbon emissions to make a real change, and doing away with the fossil fuel subsidies is the first step, Berglof said. “If we do that, we can bring forward investments that reduce greenhouse gas emissions, carbon dioxide, and other greenhouse gases. Also, we need markets for offset. For example, to encourage fossil fuel companies to transition to carbon capture companies.” China and the European Union have established their respective emissions trading systems in a bid to slash carbon emissions. China’s ETS market, which made its debut on July 16, is believed to be the world’s largest carbon trading market. In China, the ETS program aims to slash carbon dioxide emissions by requiring covered entities to pay for emissions, and invest in technologies that will enhance fuel efficiency and reduce pollution. In the early stage, the national ETS regulated 2,225 power operators and related entities for the year 2019-20, targeting those power plants with annual emissions of more than 26,000 tons of carbon dioxide equivalent in any period between 2013 and 2019. These power generators account for 40 percent of the nation’s carbon dioxide emissions and 20 percent of the global carbon dioxide output. The ETS is expected to expand to cover seven other emission-intensive sectors: petrochemical, chemical, building materials, steel, nonferrous metal, paper and domestic aviation. Ma Jun, founding director at the Institute of Public and Environmental Affairs, said he expects China’s ETS market to have a smooth start. “So the carbon price should not be too high, not too low, and there should not be too much fluctuations. “For the pricing issue in China, what we know is that the current price is not enough to send the incentives for companies to cut their emissions seriously. So we know that it is too slow and needs to go up, and what should be the bottom line? We have to realize that our (the Chinese) carbon market is far from being mature, and the trading volume is very low.” This sentiment was echoed by Catherine Chen, founder and CEO of AvantFaire Investment Management Ltd. She said the focus should be not so much on how much the pricing is being increased, but how fast it is being raised. To motivate the enterprises, especially the private entities, to take a plunge from “a corporate governance or a corporate point of view”, they first need to understand why the carbon market is so important as well as their corporate responsibilities on emission-cutting objectives, Chen said. “We need to get across the message before exacting the price”, Chen added, saying the outcome she is looking for is that private enterprises and all other market participants have the intention to follow suit. “It also requires a lot of positive feedback from the local policies to the local participants, as well as from the practitioners to the policies,” Chen said. Stable price signal urged Pascal Saint-Amans, director of the Centre for Tax Policy and Administration at the Organisation for Economic Co-operation and Development, highlighted the importance of a stable price signal in carbon pricing. “What I think is important is the stability of the price signal. The involvement of business will depend on the stability of the price signal. If you have peaks at 100 euros ($118), then it goes down to 10 euros, and it is not stable, that will send the right signal to investors. The price signal is not yet there to push into the right direction of green investment and green recovery. So there is much more work to do,” Saint-Amans said. Panelists said that other tools such as a good governance structure and a global standard are needed to create a vibrant, transparent and high integrity voluntary carbon market. “The most important issue is for the government to try to build the right governance structure. If you do not have a proper governance structure, then you cannot have a functioning market to elicit greater and broader participation that leads to a major impact on emission trading,” Ma said. Grace Hui, managing director, head of the Green and Sustainable Finance, Markets Division at Hong Kong Exchanges and Clearing Ltd, noted: “The different standards in the existing voluntary carbon markets make the carbon credits not fungible. So, as recommended by the TSVCM, the important thing is for there to be a standard, a global framework to determine the core carbon principles of a carbon credit that ensures high quality and high integrity standards across removal and avoidance or reduction credits. And we hope to be able to use standardized core carbon reference contracts together with additional attributes such as social co-benefits.” Hui also highlighted the need for setting up a global governance body to strengthen the oversight of voluntary carbon markets.
  • With investment markets gradually emerging to provide capital to address the most pressing environmental challenges, one seasoned investor says that the social and environmental impact, and financial returns should not be mutually exclusive. “We weigh both social and environmental impact and financial returns as equally important. They are not and should not be mutually exclusive,” said Catherine Chen, founder and CEO of AvantFaire Investment Management Ltd, a Hong Kong-based company that provides securities advisory and asset management services with a focus on impact investments. Financial returns — the monetary outcome of impact investments — will help sustain capital in the market to fund more impact projects dedicated to solving problems in areas such as sustainable agriculture and renewable energy, Chen added. Impact investments are those made with the intention of generating a positive, measurable social and environmental impact alongside financial returns. The term “impact investment” was coined in 2007, and the current emerging market size is estimated at US$715 billion, according to a survey published in 2020 by the Global Impact Investing Network, a nonprofit organization dedicated to the development of impact investment. The financial returns range from below market to market-competitive and market-beating levels, depending on investors’ strategic goals and involving various asset classes, such as green bonds and fixed income products often with stable and lower returns, as well as private equity and venture capital with higher ones, Chen noted. Around 70 percent of investors surveyed by the GIIN pursue competitive, market-rate returns. “We are not only taking financial risk into account, but also climate and social risks,” Chen said, adding that impact investment would have an extra benefit of providing a more stable performance and a more long-term return, as the underlying assets tend to be less cyclical with the economy, and the outcome is adjusted by environmental, social and corporate governance risks. Amid the Hong Kong government’s commitment to achieve carbon neutrality by 2050, Chen underlined the sense of urgency and level of difficulties which require more synergy across public and private sectors. “This is not an easy task for Hong Kong as it requires a substantial change in the mix of the renewable energy in energy supply, in addition to other areas including waste management, green building, green transportation, cleaner production and green finance,” Chen said. “The urgency is ‘code red’ and we believe that the 1.5 degree estimate is conservative,” Chen warned, referring to warnings that global temperatures are expected to increase by 1.5 degrees C or more in the next two decades from pre-industrial levels, unless “immediate, rapid and large-scale” reductions in greenhouse gases are achieved, according to the latest Intergovernmental Panel on Climate Change report published in August. However, “it is never too late to take action,” Chen added, calling on the private sector to first understand and properly measure its carbon footprint to tackle climate change. She suggested transportation and logistics companies optimize transportation arrangements, and energy companies use better insulation materials and indoor temperature controls to reduce unnecessary energy losses.
  • A webinar titled “Renewables & Climate Change: An Overview of Carbon Market”, co-organized by China Daily and AvantFaire, was held on August 31. 240 business leaders, investment project owners, private equity firms and investors from 20 countries and regions joined the event online. According to the World Bank’s annual report “State and Trends of Carbon Pricing”, released in May, there are 64 carbon pricing instruments in operation across the world, covering over 21 percent of global greenhouse gas emissions and generating $53 billion in revenue, up from 15.1 percent in 2020. In its national emissions trading program, launched in January, China has pledged to reach its CO2 emissions peak by 2030 and achieve carbon neutrality by 2060, making it the world’s largest carbon emissions market in terms of coverage. By March, markets have covered more than 20 industries and 440 million metric tons of carbon discharged by nearly 3,000 major companies. With the carbon emission markets gradually maturing and moving in line with projected targets, how can carbon trading benefit the global economy? What should investors factor in while investing in the low-carbon transition? Moderated by China Daily Asia Pacific Multimedia Director Dr. DJ Clark, Asian Infrastructure Investment Bank Chief Economist Dr. Erik Berglof delivered the keynote address. He also participated in the panel discussion with fellow speakers including Ms. Catherine Chen, founder and CEO, AvantFaire Investment Management Ltd; Ms. Grace Hui, managing director and head of Green and Sustainable Finance, Markets Division, Hong Kong Exchanges and Clearing Ltd; Mr. Ma Jun, founding director, Institute of Public and Environmental Affairs; and Mr. Pascal Saint-Amans, director, Centre for Tax Policy and Administration, Organisation for Economic Co-operation and Development. Panelists share their insights. Erik Berglof said that carbon markets are needed more than ever in Asia. “The carbon prices are still very low and the Asian carbon market is not that well developed. Asian and global experiences with the carbon market have taught us some lessons: to start from low prices, but commit to increase over time, and to start from low coverage but commit to broaden over time. This will encourage more participants tapping into the market. Carbon pricing is not everything. We also need other tools such as planning and financial governance. However, planning and financial governance need carbon prices,” he said. Catherine Chen said the development of the carbon market involves not only policymakers; all parties, including the private sector, should get involved and help. She suggested that companies should have a clear awareness of concepts such as green economy and carbon neutrality while a standardized framework of the carbon market is needed to ensure a fair and orderly competition. “In the green recovery, the faster and greener is the better. If it takes too long, we will not only reel from the economic loss, but also put more pressure on the environment due to the plastic waste caused by the disposable masks and the biodiversity loss related to the pandemic,” she said. Grace Hui said Hong Kong Exchanges and Clearing is well positioned to support the development of the carbon market with the huge market potential in the mainland. It could also support Hong Kong’s unique role as an international financial center and further a carbon financial center in Asia. The live webinar Ma Jun said, “We have seen the picking up again of China’s coal consumption and carbon emissions, which is an especially very strong surge in the first quarter of this year. Although it's very important, we have to realize that our carbon market is far from being mature and the treating volume is very low. And the carbon price is too low to provide much incentive at all.” Pascal Saint-Amans said countries are combining e-carbon pricing and other mitigation policies, which means increasing the implicit price of carbon but not the explicit price of carbon. “So we need to offer a place where we benchmark the different policies, and where we try to establish both the implicit price and the explicit price of carbon being the price resulting from the emission trading system and carbon taxes, and excise duties or other similar taxes,” he added. About China Daily Founded in 1981, China Daily covers over 350 million readers and users worldwide through diversified platforms, including newspapers, websites, and mobiles and social media. The number of China Daily’s followers has now reached more than 59 million on Weibo, 11 million on the WeChat microblog platform, 100 million on Facebook, and another 4.35 million on Twitter. About the China Daily Asia Leadership Roundtable The China Daily Asia Leadership Roundtable is a by-invitation network of movers and shakers in Asia, providing platforms for focused dialogue, issue investigation and possible collective action on strategic issues relating to Asia’s economic, business and social development. Our aim is to enhance communication and increase mutual understanding between China, Asian and Western countries. Roundtable events are held in major cities across Asia.
Sponsors & Partners