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A Guide to Issuing and Listing Green Bonds on The Stock Exchange of Hong Kong Limited

  1. Introduction

    Environmental protection and sustainable development have continuously been put under the international spotlight and become one of the most important topics for many countries in recent years.  Increasingly, businesses around the globe are responding to a worldwide imperative demand to go green. Green finance has gained momentum since the 2015 Paris Agreement on climate change. There is a huge financing demand for facilitating the global commitment of developing green economies. In this regard, green bonds are one of the major tools serving the needs of green borrowers and investors for reasonable funding costs and enhanced environmental disclosure. Green bond issuances in Asia-Pacific hit record levels in 2019, raising US$18.89 billion, with Mainland China’s green bond market alone accounting for US$8.13 billion.[1] Hong Kong is well-placed to contribute to the creation of global green finance with its proactive development of the green bond market. By the end of 2019, the cumulative amount of green bonds arranged and issued in Hong Kong reached US$26 billion.[2]

  2. Overview of green bond issuance in Hong Kong

    1. What are green bonds?

      In general, green bonds are fixed-income securities under the scope of green finance. In other words, green bonds are conventional bonds with a clearly disclosed “green” use of proceeds. “Green finance” is a broad term that refers to capital raising and financial investments in projects, products and companies that support the development of a more sustainable economy.

      According to Hong Kong Green Finance Association (“HKGFA”), a non-profit organization (“NGO”)  established on 21 September 2018 to promote the development of green finance in Hong Kong, green bonds are any type of bond instrument where the proceeds will be exclusively applied to finance or re-finance, in part or in full, new and/or existing eligible green projects and which are aligned with the four core components of the Green Bond Principles (“GBPs”) set out by International Capital Market Association (“ICMA”):

      1. Use of proceeds

        All designated green projects should provide clear environmental benefits, which will be assessed and, where feasible, quantified by the issuer. The GBPs explicitly acknowledge certain broad categories of eligibility for green projects which contribute to environmental objectives, such as climate change mitigation, climate change adaptation, natural resource conservation, biodiversity conservation, and pollution prevention and control.

      2. Process for project evaluation and selection

        A green bond issuer should clearly communicate to investors:

        • the environmental sustainability objectives;

        • the process by which the issuer determines how the projects fit within the eligible green projects categories; and

        • the relevant eligibility criteria, including (if applicable) exclusion criteria or any other process applied to identify and manage potentially material environmental and social risks associated with the projects.

        Issuers are encouraged to position this information within the context of the issuer’s objectives, strategy, policy and/or processes in relation to environmental sustainability. Issuers are also encouraged to disclose any green standards or certifications referenced in project selection.

      3. Management of proceeds

        The net proceeds of the green bond should be credited to a subaccount, moved to a sub-portfolio or otherwise tracked by the issuer properly, and attested to by the issuer in a formal internal process linked to the issuer’s lending and investment operations for green projects. As long as the green bond is outstanding, the balance of the tracked net proceeds should be periodically adjusted to match allocations to eligible green projects made during that period. The issuer should make known to investors the intended types of temporary placement for the balance of unallocated net proceeds.

      4. Reporting

        Issuers should make, and keep, readily available up to date information on the use of proceeds to be renewed annually until full allocation, and on a timely basis in case of material developments. The annual report should include a list of the projects to which green bond proceeds have been allocated, as well as a brief description of the projects and the amounts allocated, and their expected impact. Transparency is of particular value in communicating the expected impact of projects. The GBPs recommend the use of qualitative performance indicators and, where feasible, quantitative performance measures, and disclosure of the key underlying methodology and/or assumptions used in the quantitative determination. Issuers with the ability to monitor achieved impacts are encouraged to include those in their regular reporting.

    2. Certification

      There is no universal international standard on the “green” element in a green bond. Green elements are usually verified through external reviews by a wide variety of reviewers. Therefore, to enhance credibility of and stakeholders’ confidence in green financial instruments, independent certification of the green elements is indispensable for the issuance of green bonds.

      To cater for the needs of green bond issuers and investors on certification schemes, the Hong Kong government has been providing support to Hong Kong Quality and Assurance Agency’s (“HKQAA”) development of an internationally recognised green finance certification scheme. HKQAA has developed the Green Finance Certification Scheme (“GFCS“) to provide third-party certification for issuers, as highlighted in the Hong Kong government’s Policy Address 2017/18. This will provide more clarity on green labelling and increase alliance with international standards. The HKQAA certification can be issued at stages of pre-issuance and post-issuance, and the certified green bonds are displayed at the HKQAA’s website on green finance. The pre-issuance certification validates the adequacy of the environmental method statement as of the date of certification, while the post-issuance certification verifies the continuous implementation and effectiveness of the environmental method statement.

  3. Incentives by the Hong Kong government

    The green bond issuance in Hong Kong has developed rapidly in recent years. The Hong Kong government plays a pivotal role to facilitate green projects in Hong Kong and expand the investor base. In order to help issuers reduce their high funding costs, the Hong Kong government has implemented two supportive schemes, the Green Bond Grant Scheme (“GBGS”) and the Pilot Bond Grant Scheme (“PBGS”). It has also launched one of the largest government green bond issuance programmes in the world.

    1. GBGS

      The government launched the GBGS in June 2018 to subsidize eligible first-time and repeated issuers in obtaining certification under the GFCS for the issuance of green bonds. Set out below is a summary of the eligibility criteria for application to the GBGS:


      Grant eligibility criteria

      External review

      Certification obtained from the HKQAA under its GFCS

      Issuance arrangement

      Issued in Hong Kong:

      • majority of bond arranging activities takes place in Hong Kong [3]; and

      • being, at issuance, issued in Hong Kong to:

        1. 10 or more persons; or

        2. fewer than 10 persons none of whom is an associate of the issuer

      Listed in Hong Kong:

      • listed on The Stock Exchange of Hong Kong Limited (“HKEx”); and/or

      • lodged with and cleared by the Central Moneymarkets Unit (“CMU”) operated by the Hong Kong Monetary Authority (“HKMA”) in its entirety


      Issuance size

      Minimum HK$500 million (or the equivalent in foreign currency)

      Grant amount

      Full cost of the external review incurred during the valid period of the GBGS, up to HK$800,000 per bond issuance

      Validity of the GBGS

      3 years

    2. PBGS

      The PBGS came into force in May 2018 to facilitate the development of green bond issuance in Hong Kong. A green bond issuer who applied GBGS can also apply for subsidies under the PBGS to cover other eligible expenses specified in the scheme. Set out below is a summary of the eligibility criteria and grant details in relation to the PBGS:


      Eligibility and grant details

      First time issuers

      Eligible issuers must be first time issuers, which are issuers that have not issued bonds in Hong Kong in the five-year period between 10 May 2013 and 9 May 2018, both days inclusive.

      Eligible issues

      Eligible issues must satisfy the following criteria:

      • being issued in Hong Kong;

      • having an issuance size of at least HK$1.5 billion (or the equivalent in foreign currency);

      • being lodged with and cleared by the CMU operated by the HKMA in its entirety, or being listed on the HKEx; and

      • being, at issuance, issued in Hong Kong to

        1. 10 or more persons; or

        2. fewer than 10 persons none of whom is an associate of the issuer.


      Grant amount

      The grant amount for each bond issue is equivalent to half of the eligible issuance expenses, up to the following limits:

      • HK$2.5 million where the bond, its issuer or its guarantor(s) possesses a credit rating by a rating agency recognised by the HKMA, such as Fitch Ratings, Moody’s Investors Service, Rating and Investment Information, Inc, and S&P Global Ratings ; or

      • HK$1.25 million where none of the bond, its issuer or its guarantor(s) possesses a credit rating by a rating agency recognised by the HKMA.


      Each issuer can apply for a grant for two bond issuances at most.

      Eligible expenses

      Eligible expenses include the following:

      • Fees to Hong Kong-based arrangers;

      • Fees to Hong Kong-based legal advisors;

      • Fees to Hong Kong-based auditors and accountants;

      • Fees to Hong Kong-based rating agencies;

      • In the case of green bonds,fees to Hong Kong-based external green reviewers;

      • HKEx listing fees; and

      • CMU lodging and clearing fees


      Validity of the PBGS

      3 years

    3. Government Green Bond Programme (“GGB Programme”)

      According to the Budget 2018/19 prepared by the Financial Secretary of the Hong Kong government, the GGB Programme would set the maximum at HK$100 billion for green bonds issued by the government. The government published the Green Bond Framework (“GB Framework”) setting out how the issuance of green bonds will improve Hong Kong’s environment and facilitate the transition into a low carbon economy. The green bonds issued under the GB Framework will be aligned with the GBPs 2018 of the ICMA or as they may be subsequently revised.

      The first batch of inaugural green bonds under the GGB Programme was issued in May 2019. The green bond offering amounted to approximately HK$7.8 billion, and attracted strong demand from a diverse group of conventional and green investors. In accordance with the GB Framework, the net proceeds are expected to be credited to the Capital Works Reserve Fund to finance or refinance public work projects that provide environmental benefits and promote the sustainable development of Hong Kong. These projects are related to water and waste water management, waste management and resource recovery, green buildings, and energy efficiency and conservation.

  4. Regulatory support

    Hong Kong’s securities regulator, the Securities and Futures Commission (“SFC”) is also supportive of the green finance development. The SFC published the strategic framework for green finance in September 2018 (the “Strategic Framework”). Building on Hong Kong’s green bond initiatives, the SFC is keen to develop green finance opportunities arising from Mainland China’s transitioning to a green economy and to position Hong Kong as a connector of green finance flows between the Mainland and the rest of the world.

    The Strategic Framework identifies international regulatory developments geared towards supporting green finance. These include the recommendations of the Task Force on Climate-related Financial Disclosures (“TCFD”) set up by the Financial Stability Board and Mainland China’s targeted introduction of a mandatory requirement for listed companies to disclose environmental information by 2020 (“Mandatory Requirement”). The Mandatory Requirement will extend to A/H share issuers listed on the HKEx.

    The SFC’s five-pronged action agenda on Hong Kong green finance development proposes:

    • improving HKEx-listed companies’ disclosure of environmental and climate-related information, by aligning disclosure requirements with the TCFD recommendations;

    • engaging with the asset management industry in formulating appropriate guidance and possibly obligations for asset managers on disclosure of how and to what extent environmental factors are taken into account by their investment processes and risk assessments;

    • facilitating the development of a broader range of green investment products, including listed, unlisted, exchange-traded and OTC green products. This would involve providing guidance on disclosure, and developing and promoting the listing and trading of green financial products, such as bonds, indices and derivatives, on HKEx;

    • supporting investor awareness of and capacity building in green finance; and

    • promoting Hong Kong as an international green finance centre through participation in international initiatives.

    In May 2020, the SFC and HKMA initiated the establishment of the Green and Sustainable Finance Cross-Agency Steering Group (“Steering Group”). Other members of the Steering Group include the Environment Bureau, the Financial Services and the Treasury Bureau, Hong Kong Exchanges and Clearing Limited, the Insurance Authority and the Mandatory Provident Fund Schemes Authority.

    The Steering Group aims to coordinate the management of climate and environmental risks to the financial sector, accelerate the growth of green and sustainable finance in Hong Kong and support the government’s climate strategies through:

    • examining policy and regulatory issues in green and sustainable finance;

    • facilitating policy direction and coordination to ensure Hong Kong has a cohesive and comprehensive green and sustainable finance strategy;

    • addressing technical cross-sectoral issues by, for example, forming technical working groups and consulting with different experts and stakeholders;

    • tracking international and regional trends, issues and developments in green and sustainable finance, and considering how Hong Kong should better position itself and provide leadership in the region and globally; and

    • identifying areas where Hong Kong can promote its strengths and thought leadership on green and sustainable finance regionally and globally.

    In June 2020, the HKEx announced its plan to launch the HKEX Sustainable and Green Exchange, “STAGE”. As Asia’s first-of-its kind sustainable finance platform, STAGE will act as a central hub for data and information on sustainable and green finance investments in the region.

    Through STAGE, investors will have access to a comprehensive database of sustainable and green investment options that are available on Hong Kong’s securities markets.  STAGE will also act as an education and advocacy platform that facilitates knowledge sharing and stakeholder engagement in sustainable finance.

    In the initial stage, STAGE will be home to a repository of information on sustainability, green and social bonds and ESG-related exchange traded products listed on the HKEx.  Issuers with products that meet international standards or principles and provide post-issuance reports annually are invited to join STAGE for free to display their products on the platform.  The online repository will be launched by 2020.

    The HKEx proposes to further develop the platform and consider expanding its coverage to introduce more asset classes and product types, including derivative products linked to relevant sustainability or environmental, social, and governance indices, as well as other sustainable and green financial products.

  5. Green bonds issued in Hong Kong

    Hong Kong’s first green bond was the offshore issuance by Xinjiang Goldwind Science & Technology Co., Ltd. (“Goldwind”) in July 2015. Goldwind is a Beijing-based renewable energy firm listed on the HKEx (stock code: 02208), raising US$300 million through the issuance by its Hong Kong-based subsidiary, Goldwind New Energy (HK) Investment Limited. Goldwind’s issued green bonds are also listed on the HKEx. Thanks to the concerted efforts of the Hong Kong government, regulators and NGOs such as HKGFA and HKQAA, green bond issuance in Hong Kong picked up in 2018 after its gradual development during 2015-2017.

    1. 2019 Market overview

      In 2019, six Hong Kong issuers raised funds in the green bond market. The total issuance by Hong Kong-based entities dropped slightly to US$2.6 billion, representing a decrease of 5% or US$140 million in 2018, yet there was increasing diversification of issuer types and project categories funded by proceeds from green bonds.

      Source: Hong Kong Green Bond Market Briefing, May 2020 by Climate Bonds Initiative.

      The issuance from real estate developers remained one of the key drivers for Hong Kong’s green bond market. Hysan MTN Limited issued four green bonds (US$197 million) in 2019. A growing number of real estate developers capitalized on green loans to finance projects in 2019, including The Wharf Holdings, Hang Lung Properties and Capital Court Limited (a subsidiary of Lai Sun Development).

      Source: Hong Kong Green Bond Market Briefing, May 2020 by Climate Bonds Initiative.

      In 2019, Hong Kong issuers intended to allocate proceeds into eight project categories. The share of Buildings grew to almost two thirds (61%). The three largest allocations by volume came from the Buildings category, Link REIT (HK$4 billion), Capital Court Limited (HK$3.6 billion) and The Wharf Holdings (HK$2 billion), respectively. The next largest category was Waste (8%), followed by Industry, Transport, Water, Land Use, all at 6%, and Energy at 5%.

    2. Hong Kong’s green bond listing in 2019

      Hong Kong’s green bond market is expected to benefit from the growing number of listed corporate issuers from Mainland China and Hong Kong. Excluding the issuance by supranationals, most of the green bonds in Hong Kong were issued by Mainland and Hong Kong companies listed on the HKEx or by their subsidiaries.  In 2019, HKEx remained the most popular exchange for China’s offshore green bond listing. Apart from Hong Kong’s domestic issuance, there are US$7.3 billion worth of green bonds from ten Mainland China domiciled issuers listed on HKEx. These Chinese issuers include Jiangxi Provincial Water, Wuhan Metro, ICBC Financial Leasing, and the GBA-themed deals from Agricultural Development Bank of China and Zhuhai Da Hen Qin Investment.

  6. Hong Kong listing requirements for green bonds

    In Hong Kong, the listing requirements and listing process are currently the same for green bonds and conventional bonds. As of September 2019, all the HKEx-listed green bonds are offered to professional investors.[4] These are bonds issued under Chapter 37 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (“Listing Rules” or “LR”).

    The following provides a summary of the key requirements for listing green bonds in Hong Kong under Chapter 37 of the Listing Rules.

    1. Eligibility requirements of green bond listing

      1. Eligible issuers

        An issuer can be:

        1. a body corporate;

        2. a State (which includes any government, agency, authority, central bank, department, ministry or public or statutory person of, or of the government of, a state or any regional or local authority thereof);

        3. a Supranational (i.e. any institution or organization at a world or regional level specified as such by the HKEx); or

        4. a trust.

      2. Eligibility requirements for corporate issuers

        A corporate issuer will be qualified for listing if it has:

        1. (i) net assets of HKD$100 million. This is not required for companies whose shares are listed either on the HKEx or another stock exchange, or for issuers which are Supranationals, State Corporations, or special purpose vehicles (“SPVs”) formed for listing asset-backed securities);[5] and

        2. audited accounts for the 2 years before the listing application. This is not required for issuers whose shares are listed on the HKEx, or which are Supranationals, State Corporations, or SPVs formed for listing asset-backed securities.[6]

        If a company does not meet these eligibility criteria, it can issue guaranteed green bonds if:

        1. it is wholly owned by a State, a Supranational or a company that meets the eligibility criteria under paragraph (b) above;

        2. its owner guarantees its obligations; and

        3. it and its owner agree to comply with the Listing Rules.

      3. Green bonds eligible for listing

        The green bonds must be freely transferable and have a minimum denomination of at least HK$500,000 or an equivalent amount in foreign currency. This condition is aimed at limiting retail investors’ access to the professional bond market.

      4. Convertible green bonds

        Convertible green bonds must be convertible into:

        1. shares that are, or will be, listed on the HKEx or another stock exchange;

        2. depositary receipts that are, or will be, listed on the HKEx or another stock exchange; or

        3. other assets that the HKEx has agreed in writing are acceptable.

        If the green bonds are convertible into shares that have not yet been issued, the issue and listing of the shares must have been validly authorised.

        Green bonds which are convertible into shares or depositary receipts must have a term providing for appropriate adjustments to the conversion terms on a change in the capital of the issuer of the shares into which the green bonds are convertible or of the shares underlying the depositary receipts into which the green bonds convert.

        The HKEx treats green bonds with non-detachable warrants to subscribe for equity securities or other assets as convertible green bonds.

      5. Authorised representative

        Two authorised representatives must be appointed by the issuer to communicate with the HKEx, but they do not have to be resident in Hong Kong (LR 37.54). The authorised representatives should generally be either two directors or a director and a company secretary of the issuer.

        The issuer must notify any change of representative or to their contact details to the HKEx in a timely manner by completing the authorised representative form and sending it to debt@hkex.com.hk.

    2. Application procedure

      1. Listing document

        In the case of green bond issuance programmes, the Listing Rules’ requirements for listing documents apply to both the base listing document and the supplementary listing document for each issue under the programme.


        The offering circular or other listing document must contain the information which the investors which the green bonds will be offered to (i.e. professional investors) would expect it to contain (LR 37.29). It must also contain:

        1. a disclaimer statement;

        2. a responsibility statement; and

        3. a statement limiting its distribution to professional investors.


        The listing document must be in either English or Chinese.

      2. Application documents

        On application, a listing applicant must submit:

        1. a completed application form in the form of LR Appendix 5, part C. Where the issue is guaranteed, the guarantor must also complete the application form;

        2. the one-off listing fee;

        3. the draft listing document and draft formal notice of listing;

        4. if the applicant is not listed on the HKEx, a copy of:

          • its memorandum and articles of association, certificate of incorporation or equivalent to show that it is validly incorporated or established;

          • its last published financial statements (unless the issue is guaranteed);

        5. if the issue is guaranteed by a company that is not listed on the HKEx, a copy of the guarantor’s:

          • memorandum and articles of association, certificate of incorporation or equivalent to show that it is validly incorporated or established;

          • last published financial statements;

        6. a copy of the shareholders’ resolution authorising the issue of the securities (if any) and a copy of the board resolutions (or resolutions of its governing body) authorising the issue and allotment of the green bonds, the application for listing and the issue of the listing document;

        7. if the issue is guaranteed, a copy of the resolutions of the guarantor’s governing body authorising the listing application and the issue of the listing document;

        8. if the issue is convertible into shares, a copy of the approvals authorising the issue and listing of those shares.

        An issuer can submit drafts of the application form in (i) and the authorisations in (vi) and (vii) to allow the HKEx to consider whether the issuer and its green bonds are eligible for listing. The final resolutions and authorisations can then be submitted after the listing application but before listing.

      3. Processing time

        According to the Listing Rules, the HKEx will advise an issuer whether it and its green bonds are eligible for listing within five business days after receipt of the listing application (LR 37.36). The letter is valid for three months from the date of issue.

        In practice, for applications that do not involve novel or unusual features, the HKEx will normally issue the listing approval or eligibility letter within one business day for a Hong Kong listed company or within two business days for other issuers. Issuers have the choice of obtaining confirmation of eligibility to list before applying for formal listing approval.[7]

      4. Listing fees

        The listing fees for professional green bond issues are amongst the lowest in the Asia Pacific region being capped at a range of HK$$7,000 to HK$$90,000 depending on issue size and tenor. The listing fee is a one-off payment: there are no annual fees.

    3. Green bond programmes

      The HKEx may approve the listing of green bonds under a programme. The programme will be valid for one year from its publication date. The issuer must submit the pricing supplement for each issue under the programme before 2.00 pm on the business day before the listing is required to become effective. The pricing supplement cannot be issued until the HKEx has confirmed that it may be issued.

      The HKEx will approve the listing of green bonds issued under an approved programme on the issuer:

      1. notifying it of the final terms of each issue;

      2. confirming the issue of the green bonds; and

      3. paying the required listing fee.

The above is a summary only of the principal requirements for the listing of green bonds on the HKEx. This guide derives relevant information from public sources including but not limited to HKGFA’s Our Guide to Green Bonds and HKEx’s Research Report on the Green Bond Trend, and is provided for information purposes only. It does not constitute legal advice. Specific advice should be sought in relation to any particular situation. This guide has been prepared based on the laws and regulations in force at the date of this guide which may be subsequently amended, modified, re-enacted, restated or replaced.

[1] Source: Hong Kong: Asia’s Green Finance Hub by Hong Kong Information Services Department.
[2] Source: Hong Kong Green Bond Market Briefing, May 2020 by Climate Bonds Initiative.
[3] Bond arranging activities comprise originating and structuring, legal and transaction documentation preparation, and sale and distribution. When assessing whether a majority of the bond arranging activities takes place in Hong Kong, one of the factors considered is to what extent the involved lead arranger(s) has substantial Hong Kong debt capital market (“DCM”) operations, determined based on the size of an arranger’s DCM operations, its use of Hong Kong service providers, its plan for developing its DCM operations in Hong Kong, among other relevant factors.
[4] Professional investors are defined under LR37.58 as, for a person in Hong Kong, a professional investor as defined in Part 1 of Schedule 1 to the Securities and Futures Ordinance (Chapter 571 of Laws of Hong Kong) (excluding those prescribed under the Securities and Futures (Professional Investor) Rules such as high net worth individuals and companies); or for a person outside Hong Kong, a person to whom securities may be sold in accordance with a relevant exemption from public offer regulations in that jurisdiction.
[5] LR 37.05.
[6] LR 37.06.
[7] LR 37.05.

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