Green and inclusion, key to Hong Kong’s economic development
At the 2020 Hong Kong Green Finance Association (HKGFA) Annual Forum, participants discussed the collective actions needed to drive Hong Kong’s economic development, identifying green and inclusive recovery as key factors.
With over 700 participants - including policy makers, regulators, financial institutions, companies and civil society from Hong Kong and mainland China - top officials from Hong Kong’s S.A.R government spoke on this topic.
Opening the forum, Paul Chan Mo-Po, Financial Secretary, said: "Hong Kong believes in green finance. Despite last year's turbulence, the amount of green bonds arranged and issued in Hong Kong tripled between 2017 and 2019 – and that came with a wider diversity of issuers. We are eager to seize the unprecedented opportunities that green and sustainable finance can bring to the Greater Bay Area and its cluster of world-class cities and internationally competitive economies. We look forward to the post-pandemic world, to the rewarding role green and sustainable finance will surely play in accelerating social and economic growth and welcome, widespread recovery."
"In a Post-COVID world, green and sustainable finance will emerge as a new trend and transition into a key theme for investment and financing, empowering global inclusive recovery,” commented Christopher Hui Ching-yu, Secretary for Financial Services and the Treasury.
The discussion focused on four core topics, including: green recovery, Greater Bay Area collaboration, developments in sustainable finance markets and climate transition finance.
In addition to the four core topics, the association revamped its working groups in light of the rapidly evolving landscape in the region, taking the number from seven to eight topics:
- Green and sustainable banking
- Green and sustainable products
- ESG disclosure and integration
- Policy research and dissemination
- Green and sustainable insurance
- External collaboration
- Green and sustainable real estate
- Green and sustainable private equity
"China's commitment to carbon neutrality and deeper economic integration of the Greater Bay Area will give a significant boost to both demand for and supply of green finance in Hong Kong. In addition to its on-going work in areas such as green banking, green bonds and ESG, the HKGFA will set up new working groups to promote green real estate and green private equity, and will explore options to develop an integrated carbon market for the Greater Bay Area," added Dr. Ma Jun, Chairman and President of HKGFA noted during his keynote address.
Asia-Pacific seeing surge in cleantech-focused VC funds
Cleantech became one of the hottest investment sectors among VCs a decade ago with cleantech VC deal volumes doubling between 2005-2007, according to Brookings Cleantech Venture Capital report. And while the global recession in 2007-2008 halted many investments in cleantech, the sector has gained traction over the last few years.
Asia Cleantech Capital is an early-stage investment firm focused on clean tech projects and companies in the APAC region; DreamLabs Innovation is a US$50m fund established to invest in disruptive, scalable, people-focused companies in areas including cleantech and energy; and ENGIE New Ventures runs a US$61.2m fund dedicated to making minority investment in tech startups in sustainable energy including across Asia.
More recently, in 2021, in light of the pandemic and increasing focus on sustainability, there’s been a surge of cleantech-focused VC funds being set up both globally and across Asia-Pacific with the aim of supporting startups that are developing advanced technologies to tackle global problems, whether renewable energy or food waste.
Climate Solutions Partnership unveiled
Just last week, HSBC, World Resources Institute (WRI) and WWF unveiled their Climate Solutions Partnership (CSP), which aims to unlock barriers to finance for innovators developing climate solutions with a focus on startups in Asia developing carbon-cutting technologies, projects that protect and restore biodiversity, and initiatives to help the transition to renewable energy.
Backed by US$100m of philanthropic funding over five years from HSBC, and part of the banking giant’s climate strategy, this partnership will help identify future business opportunities for sustainable innovations, and mobilise finance, including helping startups and next-generation new sustainable approaches.
Spotlight on Japan and China
Set to launch this month is a new cleantech-focused fund targeting investments in Japan, Europe and the US. Sony Group, Suzuki Motor, Mizuho Bank and 15 other Japanese companies have joined forces on a startup investment fund focused on companies that are developing technologies related to digital transformation and decarbonisation.
The fund, set up by California-based VC firm World Innovation Lab (WiL) with a maximum fund size of US$911m and a lifespan of 10 years, will invest in 50-60 startups in the first 3-5 years. Focused on the environmental sector, the fund is set to invest heavily in companies with digital technology, such as software and data analysis tools that can help streamline the operations of large companies, and those developing advanced technologies to tackle global problems, from water shortages to development of plastics-free products.
And the recently launched TDK Ventures, the corporate venture capital arm of Japanese multinational TDK Corporation, is scouting for more industrial tech investments in Asia and especially China, following the recent close of its US$150m TDK Ventures Fund II. This fund is targeting early-stage, global investments in ‘hard tech’ spanning the advanced materials, industrial, robotics, energy, autonomous vehicles, electric vehicles, clean-tech and health-tech verticals.
“This new fund renews our commitment to supporting hard-tech entrepreneurs creating innovations for the greater good,” says Nicolas Sauvage, managing director, TDK Ventures. The materials science field has always been part of the technology sector’s foundation, and as such, it can help the sector address some of the world’s biggest challenges, including sustainability.”
ADB Ventures brings a more sustainable future to Asia
Back in March, ADB Ventures, the Asian Development Bank’s venture capital arm, announced its first two investments since its founding in 2020. ADB Ventures, which aims to pursue environmental, social and governance (ESG) investments in verticals such as FoodTech, AgriTech, HealthTech, FinTech and CleanTech, revealed two green investments, funding Indian electric vehicle manufacturer Euler Motors and Indian CleanTech startup Smart Joules.
The firm is currently partnered with the Ministry for Foreign Affairs of Finland, the Climate Investment Fund, Nordic Development Fund, Korea Venture Investment Corp., and Korea’s Ministry of Economy and Finance to help bring a more sustainable future to Asia.
Nordic Development Fund managing director Karin Isaksson says: “ADB Ventures represents a timely complement to traditional development approaches through the involvement of the private sector in addressing critical climate change challenges. We are pleased to be working with the ADB on this important initiative that has particular relevance in the post-COVID recovery.”
And finally, while not exclusively tech-focused, last month Singapore-headquartered global gaming firm Razer announced the launch of its new (and first) sustainable US$50m fund. The Razer Green Fund aims to invest in environmental and sustainability startups with up to US$1m funding for startups in the seed and series A stages.