Yue: Structural transition vital for Asia-Pacific climate goals
Eddie Yue, Chief Executive of the Hong Kong Monetary Authority, emphasized the need for a structural transition to a low-carbon economy in the Asia-Pacific region. He highlighted policy priorities and the HKMA's action agenda at an international conference in Hong Kong.
Asia-Pacific's complex climate challenge
The global conversation around ESG and sustainable finance has grown more complex, yet the underlying reality of relentless climate change and the imperative for a low-carbon economy persists.
This transition is especially critical for Asia-Pacific, which accounts for over half of global carbon emissions while its economies rapidly expand.
Sustainable finance must support credible transition pathways in high-emitting sectors vital for growth.
China's 15th Five-Year Plan, targeting a 17% reduction in carbon intensity per unit of GDP by 2030, integrates decarbonisation into its economic blueprint.
Research by Nobel laureates Daron Acemoglu and Philippe Aghion suggests that reducing carbon emissions is compatible with, and can even drive, long-term economic growth.
Their work outlines three key policy lessons: addressing societal costs of fossil fuels while supporting cleaner technologies; implementing early and credible policy actions to foster competitive low-carbon alternatives; and leveraging progress in one economy to facilitate adoption in others.
HKMA's three-pillar action agenda
The HKMA's 2024 Sustainable Finance Action Agenda implements these policy lessons.
It reduces transition costs for adopters by leveraging FinTech for green bond tokenisation and supporting regional banks in building green capacities.
As an investor, the HKMA allocates capital to new sectors and promotes blended finance to bridge funding gaps.
The HKMA also acts early to prevent lock-in to high-emission infrastructure.
Its multi-year framework, climate risk stress testing, and integrated transition planning encourage banks to redirect capital from carbon-intensive activities proactively.
Hong Kong leverages its international financial centre status to drive cross-border progress, publishing the Hong Kong Taxonomy (Phase 1 and 2A) for compatibility and developing consistent regulatory requirements.
This ecosystem aims to lower transition costs and accelerate progress.
Collaboration is the only way forward
The conference highlights a critical need for unified understanding among policymakers, financial institutions, and researchers to achieve a transition of this scale.
The HKIMR's new report, noting growing momentum in transition finance, particularly in Asia, reinforces the importance of deep cross-border and cross-sector collaboration.
Ultimately, the success of the green transition hinges on agreeing upon sustainable economic frameworks that enhance quality and generate positive spillovers.