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Push Hong Kong banks to wash their hands of coal projects

November 19, 2021 GMT

Near the end of the COP26 climate conference, the US and China agreed to enhance climate action to keep global temperature increases between 1.5 and 2 degrees Celsius under the Paris Agreement framework. One important strategy for the global economy to transition to green energy is to increase the cost of capital for the coal and oil industries through fossil fuel divestment.

Yet, major banks such as Standard Chartered and Bank of China are still providing enormous amounts of capital and loans to international coal and oil projects. To incentivise fossil fuel divestment, the Securities and Futures Commission of Hong Kong should revise its disclosure policies for all publicly listed banks and investment funds on the climate-related risks of their investees and loan recipients.

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Recently, the SFC announced that from November 2022, licensed asset managers with at least HK$8 billion (US$1.03 billion) of clients’ assets in Hong Kong would be required to disclose greenhouse gas emissions data of their investees. While this move can help investors manage climate-related risks in a global economy transitioning to green energy, the requirement does not apply to banks.

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To better protect investors’ interests, the commission should expect all publicly listed banks in Hong Kong to assess and disclose the climate-related risks of projects receiving their investment and loans. Such a requirement would pressure the banks to make more environmentally responsible investment and loan decisions.

The SFC also expects public companies in Hong Kong to follow the recommendations of the Task Force on Climate-related Financial Disclosures to disclose the greenhouse gas emissions from their own activities as well as indirect emissions from their consumption of electricity, heat or steam by 2025. Yet, the task force is primarily concerned with the carbon emissions resulting from the consumption of fossil fuels, without paying much attention to the climate risk from the suppliers of dirty energy.

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As the investors and creditors in coal and oil industries will face increasing climate-related risks including the repricing of fossil fuel reserves, climate lawsuits and reputation risks related to community perception, the SFC should issue clearer guidelines on how such financial institutions should disclose these risks and discourage them from financially supporting dirty energy industries.

In September, Harvard University announced its decision to end its endowment investments in fossil fuels. We hope a stronger disclosure policy on dirty energy investment and loans could prompt more banks and investors in Hong Kong to follow suit.

Yichun Wang and Zishan Feng, Kowloon Tong

To say that the outcome of the recent COP26 UN climate change conference held in Glasgow is disappointing would be a massive understatement. What was supposed to be a groundbreaking and ambitious Conference of the Parties ended with very lukewarm decisions during a time of great climate urgency.

The commitments agreed upon during COP26, especially regarding emission pledges, fall short of the 1.5 degrees Celsius goal of the Paris Agreement. With the current commitments, we are projected to go well above and beyond 1.5 and even 2 degrees.

It is quite devastating to see that the world leaders and powers cannot even band together to fight the most pressing issue humanity has had to face in its entire history. It is even more distressing to see that the nations which have barred ambitious outcomes from this COP are the same nations that have the highest greenhouse gas emissions.

Many vulnerable countries on the front line of climate change, mine included (the Philippines), do not have the luxury of time to argue over or negotiate bureaucratic matters. The climate crisis and slow deterioration of our natural world have already been our lived realities for quite a while now.

To see that countries which do not feel the brunt of the climate emergency in the same way we do, which emit 10 or 100 times more than we do, are watering down pledges related to fossil fuel phase-outs is aggravating to say the least. It is enraging that “phase-downs” are even within the realm of possibility when the truth is that the planet and everything on it cannot afford anything less than a phase-out of coal.

It is not even a question of whether we can do it. It has always been apparent that solutions to the climate crisis ” in terms of technology, policy and finance ” are available to us. The question then we must ask is: will we do it? COP26 just showed us that the answer to that question is no.

Olivia Anne Perez, Clear Water Bay

In 2018, the government launched a web-based Low Carbon Living Calculator enabling residents to assess our carbon footprint and promoting a low-carbon lifestyle. As this project is important for the city to achieve carbon neutrality by 2050, a long-term goal set by the chief executive, the government should more rigorously assess the efficacy of the calculator and explore how to attract and engage more users.

According to the Environmental Protection Department, from October 2019 to September 2021, the carbon calculator website only served about 43,000 visitors, a negligible number relative to the population of Hong Kong. Among these visitors, about 63 per cent actually completed an assessment of their carbon footprint. At the end of the assessment, the website offers some suggestions as to how the user can reduce carbon emissions associated with living, travel, food and clothing, but it is not clear how much impact the calculator has had on users’ behaviour.

In response to my inquiry about the costs of the project, the department says the carbon calculator is financed by the recurrent expenditure of the department and the Environment Bureau, with no breakdown by cost item available. I urge the government to conduct a thorough audit to assess the cost-effectiveness of the calculator and identify strategies for engaging more people in measuring and reducing their carbon emissions.

Ruisi Wang, Kowloon Tong

This article originally appeared on the South China Morning Post (SCMP), the leading news media reporting on China and Asia. For more SCMP stories, please download our mobile app, follow us on Twitter, and like us on Facebook.

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