Green finance supports the capital flow for environmental and sustainability projects through financial instruments and capital markets, such as green credit, green bonds and ESG funds. Green finance facilitates the flow of capital into low-carbon, renewable energy, energy efficiency, and emission reduction projects, promoting the synchronous development of the economy and the environment. With growing environmental awareness and the advancement of sustainable development goals around the world, green finance will be a key investment theme moving forward. With its robust financial infrastructure and policies, Hong Kong offers a diverse range of green investment opportunities, allowing investors to be environmentally and socially responsible while pursuing financial returns.
Comparing different green finance products
Investing in green finance products not only helps address global climate change and reduce carbon emissions, but also facilitates technological innovation and industrial upgrading. Meanwhile, incorporating ESG factors into their strategies may help investors improve risk management, and the stability and diversity of their portfolios. With supportive policies and growing demand, green finance products now enjoy a broad market with common options like ESG funds, green bonds, and low-carbon index ETFs. These three types of products are introduced and compared below to give investors a better understanding.
| Product | ESG Fund | Green Bond | Low-carbon Index ETF |
| Investment Features | Focus on companies or projects with remarkable performance in environment, social responsibility, and corporate governance | Bonds issued to finance environmental and sustainability projects involving renewable energy, energy efficiency, emission reduction, and pollution control | ETFs that provide an easy and cost-effective access to low carbon indexes |
| Investment Objectives | Create a more sustainable and socially responsible portfolio while delivering financial returns | Fund projects with environmental benefits, offer a stable bond yield, and promote environmental protection | Track the performance of market-specific low carbon indexes |
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Product Examples |
SFC-authorised ESG funds focused on investment themes such as climate change, environmental protection, and sustainable development | Retail green bonds issued by the Hong Kong Government, such as HKD retail green bonds | SFC-authorised ETFs related to low carbon indexes |
| Suitable Investor Type | Investors who value sustainable development, prefer long-term investment, and want to improve risk management | Investors seeking stable returns while supporting environmental projects | Investors who can tolerate market volatility and are optimistic about the development of a low carbon economy |
Read Product Disclosure Documents Carefully Before Investing
Green finance offers various opportunities for investors in Hong Kong. By understanding the concept of green finance and selecting suitable products, they can contribute to environmental and social sustainability while realising their investment goals. However, before making any investment decisions, investors should read the product disclosure documents carefully to gain a clear understanding of a product’s features, objectives, and risks. They may refer to different ESG ratings and indicators and review the terms of such products to make an informed decision. These documents outline a company’s goals, strategy, actions, and how it balances different factors in terms of ESG, helping investors evaluate whether the product aligns with their investment goals and values or not. Finally, they should also be fully aware of the risks associated with these products for a more comprehensive risk tolerance assessment.
25 October 2024
