On the evening of May 3, 2024, the Hong Kong Monetary Authority officially announced the extension details of the Green and Sustainable Finance Funding Scheme. The green and sustainable finance subsidy policy that has attracted much attention from the market has finally been officially released and confirmed. The new green and sustainable finance funding scheme will be implemented on May 10, 2024 for a period of three years. In addition to continuing to support the relevant green and sustainable debt financing instruments of the previous period, the new funding scheme will cover financial instruments such as transition bonds and transition loans to promote enterprises to use Hong Kong's financing platform to accelerate low-carbon development. CCXGF International believes that the extension and expansion of the funding scheme will continue to promote the development of Hong Kong's green and sustainable financial market and continue to enhance Hong Kong's competitiveness in building an international financial center.
Since the current funding scheme was officially launched in May 2021, the Hong Kong SAR Government has funded more than 390 green and sustainable debt financing instruments in three years, with a financing scale of more than US$110 billion. The subsidy scheme has also become an important support for the development of green and sustainable development finance in Hong Kong in the past three years, allowing Hong Kong to remain Asia's largest green and sustainable bond arrangement and issuance center. (For details, please click "Read the original text")
Compared with the original funding plan, the new funding plan has three major characteristics:
- Covering transition financial instruments and requiring disclosure of transition plans or programs
The new funding program guidelines clearly propose to include transition bonds and transition loans in the funding scope. At the same time, sustainable development-linked bonds and loans and social responsibility bonds and loans are also clearly written into the funding guidelines. At the same time, the benchmarking and analysis of transition financial products should refer to internationally accepted standards or classification catalogues. It is expected that the above-mentioned financial instruments will become an effective means to continue to support Hong Kong in developing a green and sustainable financial market.
Different from the current application for green and sustainable financial instrument subsidies, when applying for funding for transformation financial instruments, issuers or borrowers should submit and disclose their own corporate-level transformation plans and transformation paths. CCXGF International believes that this move will encourage more high-carbon enterprises that intend to raise funds in Hong Kong to accelerate their own transformation process.
- Benchmarking against Hong Kong Sustainable Finance Classification Catalogue
The new funding scheme specifically mentioned the application of internationally accepted principles, standards and guidelines in the external review of pre-issuance external reviews when defining external review services, and specifically mentioned that the Hong Kong Sustainable Finance Classification Catalogue launched by the Hong Kong Monetary Authority on the same day could be used for external reviews. This move will also help enrich Hong Kong's experience in green finance standard building.
- Set a cap on pre- and post-issuance evaluation costs
The upper limit of external review fees for a single eligible debt financing instrument remains at HK$800,000, but the new funding plan specifies that the upper limit of external review fees before issuance is HK$250,000, and the upper limit of external review fees after issuance is HK$200,000 per year. Clear fee guidelines will promote the healthy development of the green finance external review market.
As the most important green finance market in Asia, the new round of green and sustainable finance funding program will continue to promote the development of Hong Kong's green finance market, provide more financing facilities for the majority of market participants, and attract more issuers, borrowers and financial service institutions to participate in the construction of the green and sustainable finance market.
CCXGF International is the first Chinese rating agency to obtain the external review qualification for Hong Kong's green and sustainable finance funding program. Through China Chengxin's huge customer network and good market reputation, it provides high-quality green and sustainable finance external review services to issuers and borrowers. As China's leading green and sustainable financial service provider, CCXGF has a deep understanding of the dynamics of China's green finance market, and has accumulated rich project experience in the fields of green, sustainable, socially responsible and transformation bonds and loans, which has been highly recognized by customers and the industry.
