WrittenbyESGdevelopmentandprospectsofkeyindustriesintheGuangdong-HongKong-MacauGreaterBayArea1.ESGdrivingforceanddevelopmentintheGreaterBayArea42.DevelopmentofkeyindustriesundertheESGtrend8CasestudySmartenergydemonstrationcommunityinNanhaiCasestudyFoshanGaomingHydrogen-PoweredTramDemonstrationLine3.TheroleofGreenandSustainableFinanceinpromotingESGandsupportingkeyindustries22Summary25ContentsESGdevelopmentandprospectsofkeyindustriesintheGuangdong-HongKong-MacauGreaterBayArea4ESGdrivingforceanddevelopmentintheGreaterBayAreaESGdevelopmentandprospectsofkeyindustriesintheGuangdong-HongKong-MacauGreaterBayArea5GovernmentpoliciespromoteESGdevelopmentEnvironmental,socialandgovernance(ESG)andclimatechangearegainingglobalattention,andtheChinesemainlandandGreaterBayArea(GBA)arenoexception.Inits14thFive-YearPlanandLong-RangeObjectivesThroughtheYear2035,theCentralGovernmenthasmadeitclearthatitsupportsthedevelopmentofgreenfinanceinthecountry1.Specifically,attheconferenceonthe14thFive-YearPlan,theCentralGovernmentemphasizeditscommitmenttomakingHongKongagreenfinancecenterintheGBA.TheHongKongSpecialAdministrativeRegion(HKSAR)GovernmentisalsoeagertopromoteHongKongasapremierfinancingplatformforgovernmentsandgreenenterprisesinthemainlandandaroundtheglobe.ItsplantoachievethisobjectivewasstatedinitsPolicyAddress2022,whereitwasannouncedthattheCouncilforSustainableDevelopmentwillbereorganizedintothenewCouncilforCarbonNeutralityandSustainableDevelopment.ThenewCouncilwilladviseondecarbonizationstrategiesandsupportsustainabledevelopmentanddecarbonizationefforts.WithsustainabledevelopmentbeingastrategicpriorityfortheGBA,significantresourceswillbedirectedtowardstheregion'ssustainabledevelopment,therebycreatinggrowthandopportunitiesinESGandgreenandsustainablefinance.InvestorsdemandESGenhancementsandcomprehensivedisclosureCallingforgreatertransparencyanddataaccountabilityfrombusinesses,investorsandthecapitalmarketarepushingforimprovedESGdatadisclosureandconsistency.AsurveyconductedbyEYin2021foundthat74%ofinvestorssaidtheCovid-19pandemicmadethemmorelikelytodivestbasedonpoorESGperformance2.TheEYGlobalCorporateReportingandInstitutionalInvestorSurveyin2022showedthat99%ofinvestorssurveyedusecompanies‘ESGdisclosuresaspartoftheirinvestmentdecision-makingprocess,with74%usingarigorousandstructuredapproach.Bycomparison,thesamesurveyin2018foundthatonly32%ofinvestorssurveyedwereusingarigorousapproach.Theseresultsshowasignificantshiftininvestorattitudes.Sustainabilitydisclosuresarenowconsideredanimportantinsightforinvestorslookingtounderstandtheimpactofanissueonbusinessperformance,riskandlong-termgrowthprospects3.CompaniesintheGBAarealsoreceivingmoreESG-relatedinquiriesfrominvestors.AccordingtoaninvestorrelationsurveybytheSZSE4,halfofthesurveyedcompaniessaidtheyhadansweredESG-relatedquestionsanddisclosedESG-relatedinformationin2020.ListedcompaniesundertheSZSEarebeginningtodevelopESGawarenessandarewillingtoexchangeESGinformationwithinvestors.Withgrowingexpectationsanddemandsfrominvestors,companieswillultimatelyneedtoplacegreateremphasisonESGmanagementanddisclosure.1.Outlineofthe14thFive-YearPlan(2021-2025)forEconomicandSocialDevelopmentandLong-rangeObjectivesthroughtheYear2035ofthePeople'sRepublicofChinap.96,https://www.ndrc.gov.cn/xxgk/zcfb/ghwb/202103/P020210323538797779059.pdf2.EY,https://assets.ey.com/content/dam/ey-sites/ey-com/en_gl/topics/assurance/assurance-pdfs/ey-institutional-investor-survey.pdf3.EY,https://www.ey.com/en_gl/assurance/how-can-corporate-reporting-bridge-the-esg-trust-gap4.ShenzhenStockExchange,https://www.szse.cn/aboutus/trends/news/t20210409_585489.htmlESGdevelopmentandprospectsofkeyindustriesintheGuangdong-HongKong-MacauGreaterBayArea6RegulatorybodiestightenESGdisclosurerequirementsRegulatorybodiesintheGBAaresteppingupontheirESGdisclosurerequirements,callingformoretransparencyandcomparability,bymandatingmorecomprehensiveESGandclimatechangereporting.PublishedbytheHongKongStockExchange(HKEX),theupdatedESGReportingGuideforlistedcompaniescameintoeffecton1July2020,requiringlistedcompaniestopublishaboardstatementonESGandtoprovideenhanceddisclosureofenvironmentaltargets,climate-relatedissuesandsocialkeyperformanceindicators(KPIs).InDecember2021,theHKEXwentfurtherandreviseditsCorporateGovernance(CG)CodetorequireESGreportstobepublishedalongsideannualreports,startinginfiscalyear20225.TheHKEXalsoissuedaGuidanceonClimateDisclosuresin2021tohelpissuersalignwiththeTaskForceonClimate-relatedFinancialDisclosures(TCFD)recommendations.Thismandatorydisclosurewillberolledoutacrossrelevantsectorsby2025.TheCross-AgencySteeringGroup,co-chairedbytheHongKongMonetaryAuthority(HKMA)andSecuritiesandFuturesCommission(SFC),hasalsoannouncedsimilarplansfor2025acrossrelevantsectors6.FundmanagersarealsosubjecttohigherESGdisclosurestandards.In2021,theSFCreleasedanewcircularthatprovidedfurtherguidanceonenhanceddisclosureforESGfundsandadditionalguidanceforfundswithaclimate-relatedfocus.TheSFCalsointroducednewrequirementsforclimateriskmanagementforallfundmanagers7.InAugust2022,theSFCpublisheditsAgendaforGreenandSustainableFinance8,whichoutlinedfurtherstepstosupportHongKong'spositionasaregionalgreenfinancecenter.TheAgendafocusesoncorporatedisclosures,assetmanagementandESGfundsandcarbonmarkets.KeypointsincludethepossibilityofadoptingtheInternationalSustainabilityStandardsBoard(ISSB)climatestandardsaspartofthereportingframework,andaligningHongKong'sdisclosurewiththeTCFDwithit.Atthe2022UnitedNationsClimateChangeConference,orCOP27,theISSBmadekeyannouncementsabouttheimplementationofclimate-relateddisclosurestandardsin20239.Tostaycompliantwithregulatoryrequirements,companiesintheGBAmustkeepabreastofregulatorydevelopmentsandaimforamorecomprehensiveESGdisclosure.AlthoughtheShenzhenStockExchange(SZSE)currentlyhasnomandatoryESGdisclosurerequirementsforlistedcompanies,itreleasedanESGRatingsMethodologyandESGIndices10inJuly2022tomeetthegrowingdemandforESGinvestmentsandtoadvancethedevelopmentofagreenandlow-carboneconomyinsupportofChina'scarbonpeakandcarbonneutralitygoals.5.HKEX,https://www.hkex.com.hk/News/Regulatory-Announcements/2021/211210news?sc_lang=en6.HKMA,https://www.hkma.gov.hk/eng/news-and-media/press-releases/2021/07/20210715-4/7.SFC,https://apps.sfc.hk/edistributionWeb/gateway/EN/circular/products/product-authorization/doc?refNo=21EC278.SFC,https://www.sfc.hk/en/Sustainable-finance9.InternationalFinancialReportingStandardsFoundation,https://www.ifrs.org/news-and-events/news/2022/11/issb-cop27-progress-implementation-climate-related-disclosure-standards-in-2023/10.ShenzhenStockExchange,http://www.szse.cn/English/about/news/szse/t20220727_595057.htmlESGdevelopmentandprospectsofkeyindustriesintheGuangdong-HongKong-MacauGreaterBayArea7CarbonmarkettakesoffintheGBAThedevelopmentofacarbonmarkethasbeenakeyfocusforregulatorybodiesintheGBAandtheHKSARGovernment.TheSFCiscommittedtosupportingHongKongasaregionalgreenfinancecenter,withaparticularfocusonthecarbonmarket.Tothatend,theSFCisworkingwiththeCross-AgencySteeringGroup'sCarbonMarketWorkStreamtoestablisharegulatoryframeworkforthecarbonmarket.In2022,theSteeringGrouppublishedaCarbonMarketOpportunitiesforHongKongPreliminaryFeasibilityAssessment11,whichoutlinesaplanforHongKongtobecomeaglobal,high-qualityvoluntarycarbonmarketwhilefosteringcooperationwithintheGBAandwiththemainland.ThefeasibilitystudyidentifiedfourkeydirectionsfortheCarbonMarketWorkStream:►DevelopHongKongintoaglobal,high-qualityvoluntarycarbonmarket►CollaboratewithrelevantauthoritiesandstakeholderstoworktowardsestablishingtheGBAUnifiedCarbonMarketinlinewithmainlandpolicies►ExploreopportunitiestolinkinternationalinvestorswiththeGBAUnifiedCarbonMarketandpotentiallythenationalemissionstradingsystem(ETS)►StrengthencooperationwiththeGuangzhouFuturesExchangeoncarbonmarketdevelopmenttoenableHongKongtoactasthemainland'soffshoreriskmanagementcenterOnOctober2022,theHKEXlaunchedCoreClimate,anewinternationalcarbonmarketplacethatwillprovidetransparentandeffectivetradingofvoluntarycarboncreditsandinstrumentsacrossAsiaandbeyond.ThismarksamajormilestoneforcarbonmarketdevelopmentinHongKong.Theplatformconnectscorporatesandinvestorswiththetoolsandresourcestheyneedtodecarbonizetheiroperations.Withitsone-stopsolution,sourcing,trading,settlementandretirementofalltypesofwell-governedandinternationallycertifiedcarboncreditsprojectscanbefacilitatedontheplatform,connectingtheEastandtheWestinthequestforlow-carbonsolutions.Marketparticipants,particularlycorporatesintheGBA,canpurchasecarboncreditsfrominternationallycertifiedcarbonprojectsfromaroundtheworld,includingcarbonavoidance,reductionandremovalprojectstohelpthemtransitiontoalow-carbonfuture12.Thankstoitsleadingpositionasaninternationalfinancialcenterandclosetiestothemainland,thecarbonmarketinHongKonghasthepotentialtoserveasafacilitatorandconnectthemainlandwiththerestoftheworldbydirectingmoreglobalcapitaltothemainlandandtheGBAthroughcarboncreditprojects.Thiscreatesnumerousopportunitiesinthefightagainstclimatechange.11.GreenandSustainableFinanceCross-AgencySteeringGroupCarbonMarketWorkstream,https://www.sfc.hk/-/media/EN/files/CEOO/CASGWS3PreliminaryCarbonFeasibilityAssessmentEnglish3032022.pdf12.HKEX,https://www.hkex.com.hk/Join-Our-Market/Sustainable-Finance/Core-Climate?sc_lang=enESGdevelopmentandprospectsofkeyindustriesintheGuangdong-HongKong-MacauGreaterBayArea8SupportingsocialentrepreneurshipandimpactinvestingWhilethefocusonenvironmentalissueshasgainedwidespreadsupportinvarioussectors,thesocialcomponentofESGisstillinitsinfancy.AsESGbecomesincreasinglyimportant,socialentrepreneurshipincubationandimpactinvestinghavebecomekeyareasoffocusintheGBA.Socialentrepreneurshipaimstoincorporatesocialissuesintobusinessmodelstosolvesocialproblems,ratherthanjustprovidingcharityandfunding.Impactinvestingisaninvestmentstrategythataimstogeneratefinancialreturnswhilealsoaddressingsocialandenvironmentalissues.InHongKong,weareseeinganincreasingnumberofsocialenterprisesandimpactenterprisesthatalignedtheirbusinesswithsustainabledevelopmentgoalsandimpactinvestingisbecomingawayforthesecompaniestosecurefundingfortheirbusinessdevelopment.Giventhesetrends,companiesintheGBAareencouragedtoseizeopportunitiesandminimizerelevantESGorclimaterisksbyprioritizingenhancementoftheirESGandclimatechangemanagement.Inparticular,companiesintheGBAshouldfocusontheindustriesmentionedbelow.ESGdevelopmentandprospectsofkeyindustriesintheGuangdong-HongKong-MacauGreaterBayArea9DevelopmentofkeyindustriesundertheESGtrendESGdevelopmentandprospectsofkeyindustriesintheGuangdong-HongKong-MacauGreaterBayArea10Newenergy►OverviewofnewenergydevelopmentintheGBATransformingtheenergysectoriscriticaltodecarbonizationefforts.Inrecentyears,expertshaveexploredavarietyofrenewableenergysourcesinordertoreducerelianceonfossilfuels.Solarandwindpowerhavereceivedthemajorityofinvestmentinrenewableenergy,resultinginwell-developedandmatureindustrychainsglobally.Astheworld'sfactory,Chinahasalargemarketshareinthemanufacturingofsolarandwindenergydevices,includingphotovoltaicpanelsandwindturbines.AccordingtotheInternationalEnergyAgency(IEA),Chinaispredictedtosupplynearlyallofthekeybuildingblocksforsolarpanelproductionworldwidethrough2025.China'sshareofglobalpolysilicon,ingotandwaferproductionisexpectedtoreachalmost95%in202513.DatafromtheGlobalWindEnergyCouncil'sMarketIntelligenceshowsthatChinaholdsa58%marketshareofglobalwindturbinemanufacturingcapacity14.AccordingtoBloombergNEF15,sixofthetop10globalwindturbinemakersin2020wereChinesecompanies.AlthoughtheGBAisnotamajormanufacturingareafortheseproducts,theregion‘shighenergydemandandlowenergyself-sufficiencyrate16remaintobekeychallengesonitsdecarbonizationjourney.Inlinewithnationaldecarbonizationpolicies,theEnergyBureauofGuangdongProvincereleasedthe14thFive-YearPlanforEnergyDevelopmentinearly2022,whichaimstovigorouslydevelopadvancedoffshorewindandsolarpowerandacceleratethecultivationofemergingindustriessuchashydrogenenergy,energystorageandsmartenergy.Amongthese,hydrogenenergyisconsideredoneofthemainalternativestofossilfuelsduetoitswideavailability.AtleastfivecitiesintheGBAhaveannouncedplansforthedevelopmentofhydrogenenergyandhavebegunconductingfeasibilitystudiesandexperimentsonhydrogen,particularlyhydrogenfuelcells.AccordingtodocumentsfromtheGuangdongProvincialDevelopmentandReformCommission,theGBAaimstobecomeahubforthedevelopmentofthehydrogenenergyindustryandtoexpandthehydrogenenergyapplicationmarketthroughmultiplechannels.GuangzhouandShenzhenaimtobecomeresearchanddevelopmentandmanufacturingbasesforhigh-temperaturefuelcellsandsystems.Guangzhou,FoshanandDongguanaretargetingthedevelopmentofhigh-endhydrogenenergyequipmentindustries.CitiessuchasHuizhouandDongguanarefocusingonthedevelopmentofhydrogenenergystorageandtransportationindustries.13.IEA,https://www.iea.org/reports/solar-pv-global-supply-chains/executive-summary14.GlobalWindEnergyCouncil,https://gwec.net/wp-content/uploads/2022/04/Annual-Wind-Report-2022_screen_final_April.pdf15.Bloomberg,https://www.bloomberg.com/news/articles/2021-03-10/ge-topples-vestas-as-world-s-biggest-wind-turbine-maker16.People’sGovernmentofGuangdongProvince,https://www.gd.gov.cn/zwgk/zcjd/bmjd/content/post_3909391.htmlESGdevelopmentandprospectsofkeyindustriesintheGuangdong-HongKong-MacauGreaterBayArea1117.DepartmentofHousingandUrban-RuralDevelopmentofGuangdongProvince,http://zfcxjst.gd.gov.cn/zwzt/2022jnxcy/xmjs/03/18.NanfangDaily,https://news.southcn.com/node_54a44f01a2/aa6c7fafe9.shtmlCasestudySmartenergydemonstrationcommunityinNanhaiNanhaiDistrictinFoshanishometoChina'sfirstintelligentenergydemonstrationcommunity17,locatedinthetownofDanzao.Thecommunityaimstoindustrializefuelcelldistributedfacilitiesthatprovidebothheatandelectricityandwillbethefirstcarbon-neutralneighborhoodinmainlandChina.ItisalsoakeypartoftheFoshanNanhaiHydrogenEnergyCenter,whichisbeingdevelopedwiththesupportoftheNanhaigovernmenttobecomealeadinghydrogenenergycenterintheregion,attractingresearchanddevelopment,humancapitalandotherresources.ThecenterwillincludeaHydrogenEnergyMuseum,ahostel,andwillbelocatedneartheNanhaiDanzaoJapaneseSMEIndustrialPark.Theultimategoalofthecommunityprojectistocreateacomplementarysmartenergysystemusingwind,light,electricityandgas.Thecoreofthesystemisamulti-energycomplementarymicrogridthatispoweredbyfuelcelldistributedcogenerationequipment.Throughthissystem,thedemonstrationcommunitywillbeabletopromotetheinterconnectionofrenewableenergyandthetrialimplementationofnationalstandardsandnormsforhydrogenenergyinhousingandbuildings.Theprojectisdividedintotwophases.Duringthefirstphase,thecommunityreliesontheexistingurbangassupplynetworktoprovideenergytomostofthecommunitythroughfuelcells.Asmartenergymanagementcontrolsystemisalsointroducedtoincreaseenergyefficiency.Uponcompletionofthefirstphase,thesecondphasewillintroducephotovoltaicdevicestogenerateelectricity,whichwillbeusedtoproducehydrogenthroughtheelectrolysisofwater18.Thiswillallowthecommunitytocompletelyseveritsrelianceontheelectricitygridandgaspipeline,becomingatrulycarbon-neutralcommunity.Incomparisonwithcurrentpractices,thedemonstrationcommunityisexpectedtoreducecarbonemissionsandcostsbyabout50%and45%respectively.Thiswillacceleratethelow-carbondevelopmentofcitiesinChinaandthedevelopmentofhydrogencommunities.Bybuildingthecountry'sfirstsmartenergycommunitydemonstrationproject,theGBAhastheopportunitytotakealeadingroleinthedevelopmentofthesmartenergyindustry,quicklyformingasmartenergyindustrializationbaseandgatheringindustrialclustersforthedevelopmentoffutureurbanindustries.ItwillalsocreateanewopportunityforChina'sfuelcelldistributedenergyandsmartenergyindustryandhelpachieve“carbonpeakingandcarbonneutrality”assoonaspossible.ESGdevelopmentandprospectsofkeyindustriesintheGuangdong-HongKong-MacauGreaterBayArea12►OpportunityandchallengesofnewenergyintheGBATheGBApresentsseveralopportunitiesforgreenandlow-carbondevelopment,particularlyintheareasofpowersupplyandgridintegration.Hydrogenenergyisseenasakeydirectionfornewenergydevelopment,andtheregioniswell-positionedtotakeadvantageofemergingapplicationsinthisfield.However,therearealsochallengestobeaddressed.Forexample,thepotentialofterminalapplicationscenarioshasnotyetbeenfullyexplored.Whilethetransportationsectoriscurrentlyakeyfocusforthedownstreamapplicationmarketofthehydrogenenergyindustry,otherpotentialfieldssuchasenergystorage,petrochemical,steelandconstructionhavenotyetbeenfullytappedduetolimitedsuppliesandhighfuelcosts.Tofullyrealizethepotentialofhydrogenasasustainableenergysource,globaleffortsinthedevelopmentofgreenhydrogenwillbenecessary.GreentransportationTransportationisasignificantcontributortogreenhousegas(GHG)emissions,accountingforapproximatelyonequarterofglobalGHGemissionsin201919.Tomeetcarbonneutralitytargets,itiscrucialtodecarbonizethetransportationsector.TheChinesemainlandandHongKonghaveimplementedarangeofpoliciesandmeasurestopromotegreentransportationanddecarbonization.Keydevelopmentsinthisareaincludeelectricvehicles(EVs)andsupportinginfrastructure,hydrogenasanalternativefuelandintercityrailwaynetworks.►PromotingtheuseofElectricVehicles(EVs)topursuezerovehicularemissionsThroughaseriesofpoliciesincludinggovernmentstrategies,regulationsandincentives,ChinahasseensignificantgrowthinitsEVmarket.AccordingtotheChinaAssociationofAutomobileManufacturers,thepenetrationrateofnewenergyvehiclesinChinareached33.8%inNovember2022,upfrom5.4%in202020.19.IntergovernmentalPanelonClimateChange,https://report.ipcc.ch/ar6/wg3/IPCC_AR6_WGIII_Full_Report.pdf20.ChinaAssociationofAutomobileManufacturers,http://www.caam.org.cn/ESGdevelopmentandprospectsofkeyindustriesintheGuangdong-HongKong-MacauGreaterBayArea13AccordingtotheChinaElectricVehicleChargingInfrastructurePromotionAlliance21,GuangdonghasthelargestEVchargingnetworkinChina,with345,126publicchargesand19,116chargingstationsasofSeptember2022.GuangdongPowerGridCorporationplanstoinvestRMB532million(approx.US$74million)duringthe14thFive-YearPlanperiod(2021-2025)tofurtheracceleratetheconstructionofchargingfacilities22.InHongKong,thereareatotalof39,114EVsand5,283publicEVchargesasofSeptember202223.TheHKSARGovernmenthasalsoreleasedtheHongKongRoadmaponthePopularizationofElectricVehicles,whichoutlinedlong-termpolicyobjectivesandplanstopromotetheadoptionofEVsandsupportinginfrastructure.Keymeasuresoutlinedintheroadmapincludethecessationofnewregistrationsforfuel-propelledandhybridprivatecarsin2035orearlier,trialsforelectricpublictransportandcommercialvehicles,andtheexpansionoftheEVchargingnetworkacrossHongKong24.Aspartoftheseefforts,theHKSARGovernmentwillprovideanadditional7,000parkingspaceswithEVchargersingovernmentpremisesby2025,asoutlinedintherecentlyannouncedPolicyAddress202225.ThegovernmenthasalsoestablishedaHK$3.5billion(approx.US$450million)HomeSubsidySchemetosubsidizetheinstallationofEVchargersforexistingprivateresidentialbuildings26.ThewidespreadadoptionofEVswillhelpimproveroadsideairqualityandreduceGHGemissions,ultimatelyhelpingHongKongachievezerovehicularemissionsbefore2050andcontributingtotheregion'scarbonneutralitytargets.21.https://mp.weixin.qq.com/s/zpKVewcPy0qF5OS05suB7Q22.ChinaEconomicNet,http://en.ce.cn/main/latest/202210/31/t20221031_38201259.shtml23.EnvironmentalProtectionDepartment,https://www.epd.gov.hk/epd/english/environmentinhk/air/promotion_ev/promotion_ev.html24.EnvironmentalProtectionDepartment,https://www.epd.gov.hk/epd/english/resources_pub/policy_documents/index.html25.PolicyAddress2022,TheChiefExecutive’s2022PolicyAddress26.EnvironmentalProtectionDepartment,https://www.evhomecharging.gov.hk/enESGdevelopmentandprospectsofkeyindustriesintheGuangdong-HongKong-MacauGreaterBayArea14►HydrogenasanalternativefuelHydrogenfuelcellsgenerateelectricitywithminimalpollutionbyconvertinghydrogenandoxygenintoelectricity.Whilestillinitsearlystages,hydrogencanpotentiallyplayasignificantroleindecarbonizingenergy-intensiveindustries,particularlyintransportation.TheGuangdongProvincialDevelopmentandReformCommissionreleasedathree-year(2022-2025)actionplaninAugust2022withthegoalofpositioningGuangdongasagloballeaderinthehydrogenvehicleindustry.Accordingtotheplan,Guangdongaimstohavemorethan10,000fuel-cellelectricvehicles(FCEVs)ontheroad,buildmorethan200hydrogenrefuellingstations,andincreaseannualhydrogensupplycapacitytomorethan100,000metrictonsby2025.TheprovincewillalsoprovidesubsidiesofuptoRMB2.5million(approx.US$350,000)tohydrogenrefuellingstationsthatbeginoperationsbetween2021and2025andhaveadailyrefuellingcapacityofmorethan500kg27.Atpresent,HongKonghasyettosetitsownhydrogen-specifictargetsandstrategies.TopromotethelocaladoptionofFCEVs,theHKSARGovernmentestablishedaninter-departmentalworkinggroupin2021.TheworkinggroupistaskedwithassessingtheimplementationissuesforFCEVs,includingthesupplyofhydrogenenergy,supportinginfrastructure,safetyconsiderations,andregulationandlegislation28.InAugust2022,aleadingbuscompanyinHongKongintroducedHongKong'sfirsthydrogen-powereddouble-deckerbus,whichwasspeciallydesignedandbuiltfortheregion'suniquetopography.Thebusisequippedwitha450kWhbatteryandhasanestimatedrangeofover200km29.However,thehydrogen-poweredbushasnotyetbeenputintooperationduetothelackofrelevantregulationsinHongKong.Thedeploymentofhydrogeninthetransportationsectorrequiresacomprehensivepolicyandregulatoryframework.Severaljurisdictions,includingSouthKorea,havepassedhydrogen-specificlegislationgoverningtheproduction,storage,transportation,distributionanduseofhydrogen.SouthKorea'sHydrogenEconomyPromotionandHydrogenSafetyManagementLaw,whichcameintoeffectin2021,focusesonthreekeyareas:hydrogenvehicles,refuellingstationsandfuelcells30.TheimplementationofthelawisexpectedtoaccelerateSouthKorea'sgoalofincreasingFCEVproductionto6.2millionandraisingthenumberofhydrogenrefuellingstationsto1,200by204031.TheGBAcouldconsiderasimilarapproachinestablishingacomprehensiveregulatoryframeworkfortheuseofhydrogeninthetransportationsector.ThecompetitivenessofFCEVslargelydependsonthecostsofhydrogen.Currently,greenhydrogencostsaroundRMB40(approx.US$5.5)perkilograminGuangdong32.By2025,theretailpriceofhydrogenforFCEVsinGuangdongisprojectedtofalltolessthanRMB30(approx.US$4.4)perkilogram33,makingitamoreaffordableandattractiveoption.Inthefuture,theGBAcanleverageitsadvantageofhavingafullyintegratedhydrogensupplychainandbeingthelargestFCEVindustryclusterinChinatoproducelarge-scalehydrogen.Astechnologyimprovesandproductionscales,thecostsofhydrogenwillbecomemoreeconomicallyviable.27.GuangdongProvincialDevelopmentandReformCommission,http://drc.gd.gov.cn/ywtz/content/post_3993253.html28.HKSARGovernmentpressreleases,https://www.info.gov.hk/gia/general/202202/16/P2022021600224.htm29.Yahoonews,https://finance.yahoo.com/news/hong-kongs-first-ever-double-044100406.html?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuYmluZy5jb20v&guce_referrer_sig=AQAAAAj7-BKeiMxChxwhb8CC3tKStIi11oBSITJBeexiApbsmsaeUm3PQuQyTg62SoR3gDO9916XsOliZGc9pu9edGYaUGfjiY9I3rMOVsT5TyOq2hNATLFgjpb2WVSoIHBdQdzqV0TNyV4h_vQa7OsnOQ3gi4bOv48lJgYVRI9F3x2E30.TheKoreaHerald,http://www.koreaherald.com/view.php?ud=2021020800092631.InternationalEnergyAgency,https://www.iea.org/policies/6566-korea-hydrogen-economy-roadmap-204032.SouthChinaMorningPost,https://www.scmp.com/business/article/3194930/hong-kongs-towngas-says-hydrogen-production-tests-successful-ready-fuel33.GuangdongProvincialDevelopmentandReformCommission,http://drc.gd.gov.cn/ywtz/content/post_3993253.htmlESGdevelopmentandprospectsofkeyindustriesintheGuangdong-HongKong-MacauGreaterBayArea15►Promotinglow-carbonlifestylewithIntercityrailwaynetworkImprovingtransportationnetworksnotonlyprovidesgreaterconvenienceforthemovementofgoods,servicesandtalent,butalsocreatesnewinvestmentopportunitieswithinandbeyondtheGBA.In2020,theNationalDevelopmentandReformCommissionapprovedtheRMB474.1billion(approx.US$66billion)Guangdong-HongKong-MacaoGreaterBayAreaIntercityRailway36.Theintercityrailwayplanwillhelptoachievea“one-hourlivingcircle”byintegratinghigh-speedrailways,intercityrailwaysandlocalmetrolines.Undertheplan,therailnetworkintheGBAisexpectedtoreach4,700kmby2025and5,700kmcoveringcitiesabovethecountylevelinGuangdongprovinceby2035.Astheintercityrailwayplangainsmomentum,itwillbringnewinvestmentopportunitiessuchasthetransit-orienteddevelopment(TOD).Well-designedTODpromoteslow-carbonlifestylesandhasthepotentialtoreducecarbonemissions.TODnotonlyencouragesashiftfromprivatevehiclestopublictransit,butalsocreatesconnectedandcompacturbanspacesthatfacilitatewalkingandcycling.AnotableexampleofTODinvestmentistheWestKowloonStationinHongKong.TheWestKowloonStationprovidesseamlessconnectionsbetweenHongKongandmajorcitiesintheChinesemainlandviatheGuangzhou-Shenzhen-HongKongExpressRailLink,aswellastherestoftheworldthroughtheAirportExpressandtheHongKongInternationalAirport.Italsoservesasanintegratedhubforpeopletolive,workandplaywithwell-connectedwalkwaysandlandscapedpedestrianpaths.34.People’sGovernmentofGuangdongProvince,https://www.gd.gov.cn/gdywdt/dsdt/content/post_2708629.html35.Sohunews,https://www.sohu.com/a/357357999_47947036.NationalDevelopmentReformCommission,https://www.ndrc.gov.cn/xwdt/tzgg/202008/t20200804_1235524.html?code=&state=123CasestudyFoshanGaomingHydrogen-PoweredTramDemonstrationLineTheFoshanGaomingTramDemonstrationLineistheworld'sfirstcommerciallyoperatedhydrogen-poweredtram.ThedemonstrationlinehastwophaseswithatotalprojectinvestmentofRMB1.07billion(approx.US$149million)34.PhaseoneofthedemonstrationlinebeganoperationinDecember2019andisapproximately6.6kmlongwith10stations.Eachtramhasamaximumcapacityof360passengersandcanreachspeedsofupto70kmperhour35.Thedemonstrationlineisasignificantachievementasitprovidesvaluabledataforfuturelarge-scaleproductionandapplicationofhydrogentrams,andhaspositivedemonstrationeffectforthedevelopmentofthenationalhydrogenenergyindustry.ESGdevelopmentandprospectsofkeyindustriesintheGuangdong-HongKong-MacauGreaterBayArea1637.HKGFA,https://www.hkgreenfinance.org/wp-content/uploads/2022/10/GBA-Green-Buildings-Executive-Summary.pdf38.HKGFA,https://www.hkgreenfinance.org/wp-content/uploads/2022/10/GBA-Green-Buildings-Executive-Summary.pdf39.ShenzhenGreenBuildingAssociation,http://www.cngbol.net/index.php?ac=article&at=read&did=331640.HKSARGovernment,https://www.info.gov.hk/gia/general/202110/08/P2021100800588.htm?fontSize=1Realestate►DecarbonizingrealestateintheGBAChina'sgoalofachievingcarbonpeakby2030andcarbonneutralityby2060hasmadethebuildingsectorakeyareainneedofdecarbonization.Additionally,carbonemissionsfrombuildingoperationsinGBAcitiessuchasGuangzhou,Shenzhen,FoshanandZhuhaiarealsorising,posinganevengreaterchallengefortherealestatesectorinitsdecarbonizationjourney.Inparticular,thecarbonemissionsofGuangdongProvinceaccountedfor5.2%ofnationalemissions,highlightingtheimportanceofgreenbuildingdevelopmentwithintheGBA37.Greenbuildinginitiativesarenowanofficialnationalagenda.The14thFive-YearPlaninGuangdongProvinceemphasizestheimportanceoftheGBAregionleadingthewaytowardscarbonneutrality.Accordingtothelatestadoptionofthe14thFive-YearPlanDevelopmentPlanforEnergySavingandGreenBuildings,allnewurbanbuildingsmustcomplywithcertaingreenbuildingstandardsby202538.Inaddition,aworkinggrouponCarbonFootprintCertificationwithintheGBAwasestablished39.HongKongwillworkcloselywithcommitteememberstopromoteagreenandlow-carboneconomyacrosstheregion.AsforHongKong,theHKSARGovernmenthasoutlinedmajordecarbonizationstrategiesinitsHongKongClimateActionPlan205040.Thefourmajordecarbonizationstrategies,includingenergysavingandgreenbuilding,areemphasizedasawaytoreducetheelectricityconsumptionofcommercialandresidentialbuildingsby30-40%by2025.Bothnationalandregionalpoliciesarestrongdriversforthegrowthofgreenbuildingdevelopment.Tomeettheambitioustargetsforbothcarbonemissionreductionandenergyconsumption,regulatorybodiesareincreasinglyprioritizinggreenbuildingdevelopmentinpolicyagendas,supplementedbytighteningregulationsandprogressiveurbanplanning.Source：Workingpapercalculationfrom"DecarbonisingBuildingsintheGreaterBayArea:PolicyRecommendationsandtheRoleofSustainableFinance"FigureES-1.2015-2020Buildingoperationstagecarbonemissionsfourstudycities10,000tonnesofCO2GuangzhouShenzhenFoshanZhuhaiESGdevelopmentandprospectsofkeyindustriesintheGuangdong-HongKong-MacauGreaterBayArea17►GreenbuildingdevelopmentacrosstheGBAOverthepastdecade,policiesongreenbuildingintheGBAhaveundergonerevisionsandupdates.InChina,greenbuildingdevelopmentissupportedbytheChinaAssociationofBuildingEnergyEfficiency.Thegreenbuildingcertificationsystem41hasbeeninplacesince2006,withanewversionofthegreenbuildingevaluationstandardGB/T50378implementedin2019.Fourlevelsofgreenbuildingclassificationareavailable,namelybasic,one-star,two-starandthree-star,witharequirementthatatleast45%ofnewgreenbuildingsinnineGBAcities42becertifiedwithatleastone-starundertheChinaGreenBuildingLabels.InMacau,theGreenBuildingEvaluationStandard,managedbytheChinaGreenBuildingandEnergySavingAssociation(Macau),withsimilargreenbuildingstandardsrangingfromone-startothree-star,isadopted.InHongKong,similargreenbuildingcommitments43canalsobefound,requiringnewgovernmentbuildingswithaconstructionfloorareagreaterthan5,000m2withcentralairconditioningorgreaterthan10,000m2toachieveatleastBEAMPlusGold,andnewpublichousingtoachieveatleastBEAMPlusGold.ThemaindifferencebetweenHongKong,MacauandGBAcitiesintermsofgreenbuildingregulationisthedifferentstandardsadopted.InHongKong,internationalgreenbuildingstandardssuchasBEAMandLeadershipinEnergyandEnvironmentalDesign(LEED)certificationsareadopted,whileinGBAcitiesandMacau,thenationwidegreenbuildingcertificationsystemisadoptedinstead.Thiscreatespotentialchallengesforinvestorswhenevaluatingthesustainabilityperformanceofrealestatebusinesses,asGBAcitiesdonothaveaconsistentgreenbuildingstandardtofollow.Toaddressthis,policymakersshouldsupportpropertydevelopersinapplyingforinternationalgreenbuildingcertificationssuchasLEEDandBEAMPlus,andintegratelocalandinternationalgreenbuildingstandards.Toencouragetheadoptionoftheseinternationalstandards,governmentscouldalsoofferfinancialincentivessuchassubsidiesforgreenbuildingcertificationapplications.Greenbuildingdevelopmentplaysacrucialroleindecarbonizingtherealestatesector,butitalonemaynotbeenoughtohelpChinaandHongKongachievecarbonneutrality.Thedevelopmentofzero-carbonbuildings,whicharedesignedandequippedwitheco-friendlytechnologiestoachievenet-zerocarbonemissions,couldbeagamechangerinacceleratingGBA’slow-carbontransitionandachievingself-sufficiencyintheenergyconsumptionofbuildings.OneexampleofagreenbuildingprojectinHongKongistheZeroCarbonBuildinginKowloonBay44.Theparkgenerateson-siterenewableenergywithphotovoltaicpanelsandisequippedwithatri-generationsystemusingbiofuelmadefromwastecookingoiltoachievenet-zerocarbonemissions.Greenbuildingstrategieswereincorporatedandimplementedfromdesigntoconstructiontoreducecarbonemissions,makingitaleadingpracticeinHongKong.Movingforward,localgovernmentscouldplayamoreactiveroleinleadinggreenbuildingtowardsdecarbonization.Japanhasstrengtheneditsgreenbuildingdevelopmentbyproposingthemandatoryinstallationofsolarpanelsinallnewlyconstructedbuildings(zero-energybuildingsorZEBs)andhouses(zero-energyhouseorZEHs)by2030,andinallbuildingsandhousesby2050(MLIT,2022)45.BytakingcuesfromJapan,localgovernmentscouldtightenregulatorycontrolsandrevisetargetsettingstoincorporatemoregreenbuildingfeaturesinallnewbuildings.41.HSBC,https://www.sustainablefinance.hsbc.com/sustainable-infrastructure/greater-bay-area-green-infrastructure42.HKGFA,https://www.hkgreenfinance.org/wp-content/uploads/2022/10/GBA-Green-Buildings-Executive-Summary.pdf43.HKSARGovernment,https://www.info.gov.hk/gia/general/201505/14/P201505140408.htm44.ZCP,https://zcp.cic.hk/eng/story-of-zcb45.Climateactiontracker,https://climateactiontracker.org/countries/japan/policies-action/ESGdevelopmentandprospectsofkeyindustriesintheGuangdong-HongKong-MacauGreaterBayArea18►AcceleratingpropertydevelopmentandconstructiontechnologyOverthepastdecade,proptechhasbecomeapopulartoolfortransformingtherealestatesector.AsurveyconductedbytheUrbanLandInstituteandtheEYGreaterChinaRegionfoundthat44%ofsurveyedcompanieshadadoptedatleastoneproptechsolution.TheGBAmarketforproptechisexpandingrapidlyduetoitsabilitytodrivedigitaltransformationintheconstructionindustry,reducecostsandcontributetodecarbonization.Shenzhen,GuangzhouandHongKongareparticularlystronginproptechinvestment,accountingfor13.9%ofallproptechinvestmentinChina46.Tosupporttheindustryinadoptingproptech,theHongKongGreenBuildingCouncilhaspublishedabestpracticeguidebook47onsmartbuildingdesign.Thisguidebookoutlinedtheuseofsmartconstructiontechnologiesthroughouttheentireprojectlifecycle,fromplanninganddesigntoconstruction,operation,maintenanceanddemolition.RealestateenterprisesintheGBAarealsoactivelyparticipatingintheadoptionofsmartconstructionandgreenbuildingtechnologies.Forexample,theGBAhasadoptedtechnologiessuchasbuildinginformationmodeling(BIM)forconstructionmanagement,IoTinspectionandunmannedaerialvehicle(UAV)earthworksurvey.Onthegreenbuildingtechnologyside,theregionhasalsoembracedsmartopticalstorageandenvironmentallyfriendlyconstructionmaterialstooptimizeproptechusethroughoutthevaluechain.Theproductionofbuildingmaterialsaccountsfor28%ofemissions48throughouttheconstructionprocess,representingasignificantportionofscope3carbonemissionsfortherealestatesector.Embodiedcarbonremainsamajorchallengefordecarbonizingtheconstructionandrealestateindustries.InHongKong,theConstructionIndustryCouncilhasdevelopedacarbonassessmenttooltomeasuretheembodiedcarbonofconstructionmaterialsandhasestablishedcarbonemissionfactorsforover300materials.Withthistool,realestateandconstructionparticipantscanbetterestimatethecarbonemissionsfrombuildingconstructionsanddevelopamorecomprehensivecarboninventoryforfuturedecarbonizationefforts.LeadingdevelopersintheGBAarealsopromotingtheadvancementoftechnologyinprocuringgreenbuildingmaterialsthroughoutthesupplychain,usingcloudcomputingandbigdataanalyticstoenhancedigitalprecisioninsourcingchannels.Thesetechnologicalsolutionscanhelpaddressissueswithuncheckedqualitycontrolandlackoftransparency.►OpportunitiesandchallengesforrealestatedecarbonizationTherealestateindustrypresentsnumerousopportunitiesinthepursuitofalow-carboneconomy,asthetrendofgreenbuildingdevelopmentcontinuestogrowrapidlyintheGBAandnationaldecarbonizationtargetsbecomemoreambitious.Greenbuildingperformance,certificationsandenergyefficiency,aswellasembodiedcarbon,havebecomecrucialindicatorsforinvestorswhenmakinginvestmentdecisionsandassessingassetvalue.Itisalsobecomingmorecommonforgreenbuildingcertificationstobeusedasametricforsustainability-linkedfinancialproductsbybanksandrealestatecompanies.Tofullycapitalizeontheseinvestingopportunitiesandsecurefundingfromglobalinvestors,realestatecompaniesintheGBAshouldalignwithinternationalgreenbuildingpractices.Inordertomeetregulatoryrequirements,outperformcompetitorsandaccessfinancingopportunities,thesecompanieswillneedtomakeaconcertedefforttowardslow-carbontransitionandgreenbuildingdevelopment.46.EY,https://assets.ey.com/content/dam/ey-sites/ey-com/en_cn/news/2022/09/ey-uli-gba-prop-tech-white-paper-en.pdf47.HKGBC,https://www.hkgbc.org.hk/eng/resources/publications/Files/HKGBC_Smart-Green-Building-Design-Best-Practice-Guidebook.pdf48.EY,https://assets.ey.com/content/dam/ey-sites/ey-com/en_cn/news/2022/09/ey-uli-gba-prop-tech-white-paper-en.pdfESGdevelopmentandprospectsofkeyindustriesintheGuangdong-HongKong-MacauGreaterBayArea1949.SIEFund,https://www.sie.gov.hk/en/our-work/funded-ventures/index.page?category=b0450.SEBC,https://socialenterprise.org.hk/en/content/se-faq51.AVPN,https://avpn.asia/SocialinnovationandimpactinvestingtofosterESGdevelopment►LatesttrendsinsocialinnovationandimpactinvestingInrecentyears,theconceptofsocialinnovationhasgainedwidespreadattention,astheawarenessofsocialimpactandinnovationhasincreased.TherehasbeenasurgeinthenumberofsocialenterprisesandimpactventureswithstrongESGawarenessandpractices.Theseorganizationsaimtoempowercitizenstocreateimpactandconnectthebusinessworldwithcommunitymembers,includingdisadvantagedgroups,throughstakeholderengagementandimpactinvesting.Socialinnovationservesvarioussocialobjectivesandtargetdifferentgroupswithinthecommunity,ultimatelycontributingtothewell-beingofthecommunity.Tosupportsocialinnovation,theHKSARGovernmenthaspromotedthedevelopmentofsocialenterprisesthroughtheSocialInnovationandEntrepreneurshipDevelopmentFund49(SIEFund).TheSIEFundhasfunded373innovativeprojectsasof2022,successfullystimulatedthegrowthofsocialinnovationandentrepreneurshipinHongKong.AccordingtotheSocialEnterpriseDirectoryissuedbytheSocialEnterpriseBusinessCentre50,thereare711socialenterprisesinHongKongasof2022.Withgrowingnumbersofsocialenterprisesandextensivesupportfrombothgovernmentandcommunityorganizations,thesocialenterpriseecosysteminHongKongisgraduallymaturingandmovingtoanewstageofsocialimpactdevelopment.Inlightoftheincreasingawarenessofsocialimpactanddemandforimpactinvesting,variousorganizationsandnetworkshavebeenestablishedtoconnectinvestorswithsocialinvestmentopportunities.OneexampleistheAsiaVenturePhilanthropyAssociation51(AVPN),thelargestimpactinvestingnetworkinAsia,whichwasfoundedin2011.TheAVPNservesasanecosystembuildertoincreasetheflowofcapitaltowardsimpactinAsiaandhassofarattractedmorethan600membersfrom33industriesacrosstheAsiaPacific,coveringthemarketinHongKongandtheChinesemainland.Withfinancialinstitutions,trustsandresearchgroupsjoiningthenetworkasfunders,theAVPNhashelpedtodevelopasteadyflowofcapitalforsocialinvesting.Givenitsexperienceandresources,aswellasitsmaturesocialinnovationlandscape,HongKonghasthepotentialtobealeaderinsocialinnovationacrosstheGBA,fosteringsocialentrepreneurshipandimpactinvestingplatformsforinvestorsinGreaterChina.ESGdevelopmentandprospectsofkeyindustriesintheGuangdong-HongKong-MacauGreaterBayArea20►IncubatingsocialentrepreneurshipandreimaginingbusinessmodeltopromotesustainabledevelopmentSocialentrepreneurshipisakeycomponentofsustainabledevelopment,andshouldbewidelyrecognizedinsociety.Unliketraditionalbusinesses,socialentrepreneurshipaimstoembedsocialissuesintothebusinessmodel,transformingphilanthropyintoaself-sustainingapproachtoaddressingsocialissues.TheCentreofCivilSocietyandGovernanceattheUniversityofHongKongisaresearchcenterthatworkstowardsasustainablesocietybydevelopingcommunity-based,innovativesolutionstoinformpolicydeliberationandcollectiveaction.Thecenterisinvolvedinavarietyofsustainabilityprojects,suchasruralsustainabilityandinclusiveemployment.OneoftheseprojectsistheRuralUrbanSustainabilityFellowshipProgram52,whichallowsparticipantstodevelopnature-basedsolutionstoaddressruralsustainabilityissuesandcompeteforaseedgrant.ThisincubationprogramisfundedbyleadingfinancialinstitutionsinHongKongandservesasachanneltofostercollaborationbetweencivilsociety,academiaandthebusinesssector.Civilsocietymembersandpotentialsocialentrepreneurscanproposeinnovativesolutions,whilecorporatescangaininsightsonsustainabilityissuesrelatedtocommunityengagementandhabitatconservation,creatingsynergytodrivesustainability.►ScalingupimpactcapitaltocreateinvestmentopportunitiesintheGBAUnlikephilanthropy,impactinvestingchallengesthetraditionalviewthatsocialandenvironmentalissuesshouldbeaddressedsolelybyphilanthropicdonationsandtheperceptionthatinvestmentsshouldonlyfocusonfinancialreturns.Impactinvestingisawaytoaddresssocialandenvironmentalissueswhilealsogeneratingfinancialreturns.InHongKong,moresocialenterprisesandimpactventuresarealigningtheirbusinesswithsustainabilitygoalsandimpactinvestinghasbecomeatoolforthesecompaniestosecurecapitalforbusinessdevelopment.TheAVPN,asmentionedearlier,connectsimpactinvestorswithsocialenterprisesandimpactprojects.Forexample,theAVPNconnectedanaward-winningsocialenterprisethataimstocreateasustainablefoodecosystemwithaprominentfoundationestablishedbyanAsia-centriccommercialbank.ThenetworkbringstogethersocialenterprisesforinvestorstoconsiderandchannelsfundingtoHongKongsocialenterprises,whichisessentialforthegrowthoflocalsocialenterprises.Resourcessharingisanotherimportantfactorinthesuccessofsocialenterprises.Inlightofthis,DreamImpact,HongKong'slargestnetworkofsocialenterprisesandimpactventures,offerssimilarservicesandconnectsinvestorswithsocialenterprisesthroughitsimpactcapitalservices.NetworksandplatformsliketheAVPNandDreamImpactwillbecrucialincubatorsforimpactprojects,whereinvestorscanengageinfundmatchingandsocialventurescanmakeintroductionstoinvestorsfortheirimpactfulprojects.Impactcapitalmatchingandsocialventurescanofferopportunitiestobridgeimpactfinancingandpartnerwithventures,buildingsocialcapitaloverthelongterm.ItisworthnotingthatimpactinvestinginmainlandChinaisstillinitsearlystagesbuthastremendouspotential,withagrowingnumberofsocialinvestmentalliancesintheGBA.Forinstance,theChinaAllianceofSocialValueInvestment(CASVI)isthefirstlicensedinternationalNPOspecializinginbuildingtheecosystemofsustainablefinanceinChina.Theorganizationhasformedpartnershipswithmorethan50socialentrepreneurfoundationstofosterindustryexchangeandacceleratesocialventures.52.CCSGHKU,https://ccsg.hku.hk/airi/ESGdevelopmentandprospectsofkeyindustriesintheGuangdong-HongKong-MacauGreaterBayArea21►GBA’sroleandprospectsWiththegrowingnumberofimpactinvestingnetworksintheGBAregion,investorshavetheopportunitytodogoodforthecommunitywhilealsogeneratingfinancialreturns.Bytransformingtheirassetandfundportfoliosintosustainableandimpactfulones,investorscanleveragetheirfootprintintheGBA53.AccordingtoasurveybytheFamilyOfficeAssociationHongKong(FOAHK),90%ofrespondentsagreedthatHongKongisthefamilyofficehubinAsia,and79%ofthoseinthefamilyofficeindustryhadallocatedassetstoESGorimpactinvestingin2021.TheWorldEconomicForumsuggeststhatmanymulti-generationalfamilyofficesarenowexploringimpactinvestingasawaytounitefamiliesaroundsharedvaluesandcreatepositivelegacies54.Giventhegrowinginterestanddemandforimpactinvestingfromfamilyoffices,HongKongcancontinuetostrengthenitsroleasaregionalfamilyofficehubwiththesupportoftheGBA.Atthesametime,withitsdevelopedsocialenterpriseecosystem,HongKongcanactasagatewayforimpactinvesting,connectingglobalinvestorswithGBAimpactprojects.ThisconnectionallowsglobalinvestorsandAsianphilanthropiststoplayamoreactiveroleintacklingsocietalproblemswithinnovativebusinesssolutions,benefitinglocalcommunitiesandstimulatingthegrowthofthelocaleconomy.TheGBAhasthepotentialtoallocateresourcestosustainableprojectsand,withHongKong'sguidance,candirectinternationalfundingtowardsqualitysustainableprojectsthatcontributetoChina'scarbongoals,andpositiontheGBAasadecarbonizationleaderinAsia.Byconnectingthethrivingandrobustdevelopmentofsocialinnovationandimpactinvesting,theGBAcanmakeasignificantimpactonsustainability,withthepublicsector,privatesectorandcivilsocietyworkingtogethertodrivesustainabilityeffortsintheirrespectivespheres.53.Hubbis,https://www.hubbis.com/news/foahk-survey-family-offices-to-ramp-up-esg-allocations-in-202254.WorldEconomicForum,https://www3.weforum.org/docs/WEFUSA_FamilyOfficePrimer_Report.pdfESGdevelopmentandprospectsofkeyindustriesintheGuangdong-HongKong-MacauGreaterBayArea22TheroleofGreenandSustainableFinanceinpromotingESGandsupportingkeyindustriesESGdevelopmentandprospectsofkeyindustriesintheGuangdong-HongKong-MacauGreaterBayArea23SupportoftheCenterforGreenandSustainableFinance(GSF)intheGBAAspartoftheoverallplanfortheGBA,HongKongwillleverageitsstatusasaninternationalfinancialcenterandincreaseinvestmentinbuildingagreenandsustainablefinancialcenter.Thegreenandsustainablefinancialcenterplaysacrucialroleinprovidingfinancialsupportforlow-carbontransitionandESGdevelopment.ThedemandforGSFproductsisontherise,withtheHongKongMonetaryAuthorityestimatingthattheamountofgreenandsustainabledebt(includingbondsandloans)issuedin2021exceededHK$50billion,fourtimestheamountissuedin202055.Asaninternationalfinancialcenter,HongKongisquicktoadapttomarketchangesinordertostaycompetitiveintheGSFfield.Tokeeppacewithsustainabledevelopment,HongKong,incollaborationwithothercitiesintheGBA,hascontinuedtostrengthenitsGSFregulatoryframeworkanddeploynecessaryresourcestopromotetheregionalGSFcenter.TocaptureopportunitiesinGSF,theHongKonggovernmenthasannounceditsintention56todevelopGSFandpromoteHongKongasapremierfinancingplatformforgovernmentsandgreenenterprisesaroundtheworld,particularlyinmainlandChina.Tosupportthisgoal,thegovernmentandregulatorshaveimplementedvariousinitiativestoupgradetheGSFecosystemandprovidenecessarysupportformarketparticipantspursuingGSF.Thesetop-downeffortswillhelpHongKongstayattheforefrontoftheGSFmarketandstrengthenitsroleasaregionalfinancialhubintheGBA.►IncentivesforthedevelopmentofgreenandsustainablemarketsToencouragethedevelopmentofagreenandsustainablefinancialcenterintheGBA,HongKonghasintroducedvariouspracticesandfundingtoenrichandimproveitsfinancialsystemwithafocusongreenandsustainablefactors.OneexampleistheHKMA’sGreenandSustainableFinanceGrantScheme(GSFGrantScheme),whichwasreleasedinMay2021.Astheglobalgreenbondmarkethasseenrapidgrowthinrecentyears,theGSFSchemeaimstosupportgreenandsustainablebondissuanceandlending,furtherenrichingHongKong'sgreenandsustainablefinanceecosystemandstrengtheningitspositionasaregionalhub57.Inaddition,theHKSARGovernmenthastakenaleadingrolebyproposingtoissueitsowngreenbondasawaytodemonstrateitscommitmenttosustainabledevelopmentandthefightagainstclimatechange,andtopromotethedevelopmentofgreenfinance.Thegovernment'sGreenBondProgrammehasaborrowingceilingofHK$200billion.TheseeffortswillhelpHongKongplayakeyroleindrivingthegrowthofgreenandsustainablemarketsintheGBA.55.HKSARGovernment,https://www.info.gov.hk/gia/general/202202/23/P2022022200567.htm56.PolicyAddress,https://www.policyaddress.gov.hk/2022/public/pdf/policy/policy-full_tc.pdf57.HKMA,https://www.hkma.gov.hk/eng/news-and-media/press-releases/2021/05/20210504-4/ESGdevelopmentandprospectsofkeyindustriesintheGuangdong-HongKong-MacauGreaterBayArea24►BuildingGSFcapacityandsharingknowledgeHongKongistakingstepstocultivatetalent,createdataplatformsandfacilitateinformationexchangeasitworkstobuildcapacityandlaythefoundationforthefinancingofgreenandsustainableindustriesintheGBA.OnesucheffortisthePilotGreenandSustainableFinanceCapacityBuildingSupportScheme58,whichprovidessubsidiesofaroundHK$200milliontomarketpractitionersandprospectivepractitionerstoundergorelevanttrainingandacquireprofessionalqualifications.Inaddition,universitiesinHongKonghavelaunchedcoursesrelatedtogreenandsustainablefinancetoprovidetheneededtalentforthesector'sdevelopment.TheHongKongStockExchangehasalsointroducedtheSustainable&GreenExchange(STAGE),anonlineportalthatprovidesinformation,accessandtransparencyonarangeofsustainable,greenandsocialinvestmentproducts.STAGEoffersinvestorsandassetmanagerseasyaccesstoinformationforinvestmentduediligence,selectionandmonitoringofsustainableandgreeninvestments.TofurthersupportthegrowthofgreenandsustainablefinanceinHongKong,theHKMAandtheSFChaveestablishedtheGreenandSustainableFinanceCross-AgencySteeringGroup.Thisgroupaimstocoordinatethemanagementofclimateandenvironmentalriskstothefinancialsector,acceleratethegrowthofgreenandsustainablefinanceinHongKong,andsupportthegovernment'sclimatestrategies.►GBAintegrationforGSFopportunitiesThecredibilityandtransparencyofESGinvestmentcanbeimprovedthroughtheuseoftaxonomy,whichisasystemforpreciselyidentifyingthe“green”and“sociallyresponsible”characteristicsofeconomicactivitiesandfinancialassets.Thetaxonomyusedindifferentregionsincludesdifferentqualitativecriteriaandquantitativeindicators,andtheCommonGroundTaxonomy(CGT)isanotableexamplethatidentifiescommonalitiesanddifferencesbetweentheEUandChina'sgreentaxonomies.CGTcurrentlyfocusesonsubstantialcontributioncriteriaforclimatechangemitigation,butdoesnotcoverotherenvironmentalobjectives.InternationalbanksintheMainlandarecurrentlyusingCGTwhenissuinggreenloans,andasmorecountriesandregionsadoptCGTasthebasisfortheirgreenclassificationframeworks,theapplicationofCGTwillbecomemorewidespread.IfcompaniesintheGBAissuegreenbondsthathaveappliedCGTandplacethemintheHongKongcapitalmarket,theycaneasilyexplaintheproductstointernationalinvestorsinHongKong.Toconnectcapitalwithclimate-relatedproductsandopportunitiesinHongKong,theChinesemainlandandbeyond,theHKEXhaslaunchedacarbonmarketplacecalledCoreClimate.Thisplatformprovidestrading,custodyandsettlementservicesforcorporates,investorsandprojectownersacrosstheclimatevaluechain,andhelpstomobilizeinvestmentinnewclimateprojects,technologiesandbusinessmodels.58.PivotGSFCapacityBuildingSupportScheme,https://www.greentalent.org.hk/SummaryAsESGandsustainabledevelopmentbecomeincreasinglyintegratedintodailylife,emergingindustriesintheGBAsuchasnewenergy,greentransportationandrealestatearesettobecomemajorplayers.HongKong,asaleadinginternationalfinancingplatformintheGBA,caneffectivelyhelptheseindustriesraisefundstoexpandtheirdevelopmentandintroducerelatedproductslikebondsandcarbonoptionstothemarket.EmergingcompaniescanalsoutilizetraditionalfinancingmethodsandnewchannelsthroughtheGSF.Intermsofthecarbonmarket,theChinaEmissionsExchange(CCEX)andtheHKEXareexploringopportunitiesforcooperation.CCEXisconsideringestablishingacarbonmarketintheGBA,whileHongKonghaslaunchedavoluntarycarbonmarket.Ifthesemarketscomplementeachotherinthefuture,itcouldfurtherstimulatecarbontradingintheGBA.EYBuildingabetterworkingworldEYexiststobuildabetterworkingworld,helpingtocreatelong-termvalueforclients,peopleandsocietyandbuildtrustinthecapitalmarkets.Enabledbydataandtechnology,diverseEYteamsinover150countriesprovidetrustthroughassuranceandhelpclientsgrow,transformandoperate.Workingacrossassurance,consulting,law,strategy,taxandtransactions,EYteamsaskbetterquestionstofindnewanswersforthecomplexissuesfacingourworldtoday.EYreferstotheglobalorganization,andmayrefertooneormore,ofthememberfirmsofErnst&YoungGlobalLimited,eachofwhichisaseparatelegalentity.Ernst&YoungGlobalLimited,aUKcompanylimitedbyguarantee,doesnotprovideservicestoclients,nordoesitownorcontrolanymemberfirmoractastheheadquartersofanymemberfirm.InformationabouthowEYcollectsandusespersonaldataandadescriptionoftherightsindividualshaveunderdataprotectionlegislationarea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