Advancing Sustainable Finance in Asia

Photograph from HKGFA

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On November 4, 2025, a landmark workshop was hosted in Hong Kong to discover the expansion potential and challenges of the GSS+ bond market, particularly Dim Sum, Panda, and Free Commerce Zone (FTZ) bonds. The occasion, co-hosted by Hong Kong Inexperienced Finance Affiliation (HKGFA), China Worldwide Capital Company (CICC), CGS Worldwide Holdings Restricted (CGS Worldwide) and Lianhe Inexperienced Growth, and supported by Local weather Bonds Initiative and Inexperienced Growth Institute (GDI), introduced collectively policymakers, monetary establishments, improvement banks, and score businesses to debate strategic approaches to boosting Hong Kong’s position as a worldwide sustainable finance hub and enhancing cross-border financing for sustainable improvement initiatives, notably for International South nations.

The workshop’s main objectives have been to deal with key market bottlenecks, discover methods to enhance liquidity, and establish methods to scale financing for issuers in rising markets via modern de-risking and assure mechanisms. Right here’s an in depth abstract of the important thing discussions, insights, and outcomes shared by the outstanding audio system on the occasion.

Dr. Ma Jun (Chairman and President, HKGFA) – Opening Remarks: China’s Function in Local weather Finance Mobilisation

Dr. Ma Jun opened the workshop by highlighting the pressing want for China to play a extra outstanding position in addressing the worldwide local weather finance hole, particularly for growing nations. He identified that whereas OECD commitments to local weather finance have fallen brief, China has a singular alternative to steer world efforts to finance local weather motion, notably via RMB-denominated devices corresponding to Panda, Dim Sum, and FTZ bonds. These bonds provide price benefit in comparison with USD-denominated bonds, even after contemplating hedging prices, below the present world curiosity setting. Leveraging these RMB devices will help increasing financing channels for nations concerned within the Belt and Street Initiative (BRI) and different growing nations, enabling them to entry lower-cost capital, together with funding for inexperienced and sustainable initiatives.

Dr. Ma additionally recognized a number of challenges in selling these RMB financing choices: the attention hole amongst International South issuers concerning accessible RMB financing channels, liquidity constraints in Hong Kong’s offshore RMB market, and the shortage of threat mitigation instruments, corresponding to credit score ensures. He proposed mobilizing onshore RMB liquidity to enhance market circumstances and really useful that multilateral improvement banks (MDBs) like AIIB, ADB, and the World Financial institution step in to supply partial ensures to assist cut back dangers for rising market issuers. Capability constructing and joint advertising and marketing efforts have been additionally highlighted as important to elevating consciousness amongst issuers and growing participation within the GSS+ bond market.

Liang Dongqing (Member, Administration Committee, CICC) – Hong Kong’s Strategic Benefit in International Sustainable Finance Market

Liang Dongqing pointed to Hong Kong’s robust monetary infrastructure and seamless integration with mainland China’s capital markets, which permit it to behave as a key participant in inexperienced bond issuance and sustainable finance throughout Asia and globally. Liang highlighted Hong Kong’s Sustainable Finance Taxonomy and ESG disclosure requirements as necessary steps towards enhancing transparency and aligning with worldwide inexperienced finance practices.

Liang famous that coverage coordination between Hong Kong and mainland China is essential to unlocking the total potential of the inexperienced bond market. She pressured the necessity for steady market innovation and taxonomy alignment to drive broader market participation and guarantee sustained development in inexperienced finance initiatives.

Loran Chen (CGS Worldwide Holdings Restricted, CGSI) – White Paper Presentation: Enhancing Hong Kong’s GSS+ Bond Market

Loran Chen offered the White Paper co-authored by CGS Worldwide, CICC, Lianhe Inexperienced, and supported by HKGFA, providing a complete overview of Hong Kong’s GSS+ bond market. She famous that Hong Kong accounted for 45% of Asia’s inexperienced bond issuance in 2024, positioning it as a regional chief. Nevertheless, regardless of this management, the market faces important challenges corresponding to fragmented inexperienced requirements, restricted liquidity, and better bid-ask spreads than world markets.

To handle these challenges, the white paper really useful a number of short-term, medium-term, and long-term methods. Within the brief time period, the paper advocated for product innovation primarily based on standardised ESG scoring, the adoption of Widespread Floor Taxonomy (CGT), and coverage incentives corresponding to issuance payment subsidies. Within the medium time period, it emphasised the necessity to enhance disclosure requirements, improve cross-border connectivity via Bond Join, and create a GSS bond activity drive to have interaction potential issuers. Lengthy-term objectives included integrating fintech and carbon-linked pricing into inexperienced bond buildings to additional scale the market. The White Paper outlined actionable steps to make the GSS+ bond market extra environment friendly and clear, making certain that Hong Kong maintains its management in sustainable finance.

Dafei Huang (Government Director, CICC) – Improvements in Inexperienced Finance: Market Case Research

Dafei Huang shared a number of real-world case research that showcase the applying of innovation in China’s inexperienced bond markets, demonstrating how these improvements can drive development in each mainland China and Hong Kong. One instance was the CGT-ESG Bond Portfolio, a US$4 million portfolio co-structured by CICC and CGS Worldwide, which applies CGT and ESG metrics to inexperienced U.S. greenback bonds issued in Hong Kong. One other instance was the Sustainable Transition Bond Basket launched by CICC in China’s interbank market, with a basket dimension of ¥30 million, which focuses on carbon discount and achieves roughly 18,000 tons of oblique CO₂ discount yearly.

Huang famous that carbon reduction-focused bond portfolios are serving to improve the attractiveness and liquidity of inexperienced bonds, particularly in China’s interbank market. The comparatively decrease bid-ask spreads in mainland China, in comparison with Hong Kong’s market, characterize a chance for Hong Kong to study from China’s market and improve its personal liquidity. Huang emphasised that such modern finance merchandise play a crucial position in growing market participation and driving long-term development within the sustainable bond sector.

Mr. Xing Yong (Director, Shanghai Municipal Monetary Bureau) – FTZ Bond Market Replace

Mr. Xing Yong offered an replace on the Shanghai Free Commerce Zone (FTZ) bond market, which is present process important enlargement with the newly launched coverage framework for offshore RMB bond issuance. He emphasised that Shanghai’s FTZ is now extra open and versatile, providing new alternatives for inexperienced bond issuers. The precept that “each issuers and buyers must be primarily offshore”, together with in Hong Kong and different Belt and Street nations, goals to faucet into a bigger pool of abroad buyers. Xing additionally introduced that FTZ bonds shall be allowed to commerce on offshore platforms just like the HKEX, enhancing market liquidity and accessibility, embedding nice potential for twin listings and co-marketing between Shanghai and Hong Kong to develop the FTZ bond market and enhance market liquidity. In the meantime, Shanghai is exploring coverage incentives and subsidies for inexperienced FTZ bond issuance, which might additional incentivise market participation. These developments place Shanghai FTZ as a rising participant within the world sustainable bond market.

Wenhong Xie (Head of China Programme, Local weather Bonds) – Sustainable RMB Bond Market Overview

Wenhong Xie offered a complete overview of the Dim Sum, Panda, and FTZ sustainable bond markets, specializing in their development and potential for issuers in rising economies. He highlighted that Dim Sum bonds are the biggest and most energetic, with RMB 667 billion newly issued in 2025, whereas Panda bond issuance have reached RMB 119 billion.  Among the many GSS+ dim sum and panda bonds issued, round 70% of them have been aligned with CBI’s methodology. Wenhong additionally famous that the FTZ bond market continues to be in its early levels however has obtained robust regulatory assist.

He identified that RMB-denominated bonds provide a decrease price of capital in comparison with USD bonds, making them a beautiful possibility for issuers in growing nations. Nevertheless, low participation from the International South stays a problem, as a result of consciousness gaps and technical capability. Wenhong shared profitable case research corresponding to Egypt’s Sustainable Panda bond and Suzano’s RMB issuance, each of which demonstrated the numerous price financial savings and financing benefits of RMB issuance. He emphasised that capability constructing and the creation of de-risking mechanisms shall be essential to draw extra issuers from growing nations into the market.

 

Dialogue – Key Alternatives and Challenges to develop the GSS+ Panda, Dim Sum and FTZ Bond Markets

1. Structural Obstacles

The GSS+ bond market, notably Panda bonds, faces a number of structural challenges:

• International Change Volatility: International issuers of Panda bonds encounter sensible difficulties in changing RMB proceeds into laborious forex and remitting these funds offshore. This uncertainty can discourage world issuers from tapping into the market.
• Credit score Score Thresholds: Issuers are sometimes required to carry a AAA home score to take part within the Panda bond market. This minimal score requirement excludes lower-rated entities, notably from growing nations, making it tougher for them to entry the market.
• Stringent Disclosure Necessities: China’s inexperienced bond disclosure rules are thought of extra stringent than worldwide requirements, with obligatory post-issuance reporting and assurance obligations that add complexity for issuers.
• Market Liquidity and Depth: Each Dim Sum and FTZ bonds endure from restricted market depth and liquidity. Traders and issuers alike view these markets as comparatively small, making it tough to accommodate bigger issuances, and restricted liquidity could fall in need of the necessities of sure institutional buyers. This liquidity constraint limits the market’s capability to scale.
• Restricted Consciousness: Many world issuers and buyers, notably from growing nations, usually are not absolutely conscious of those sustainable financing alternatives. Furthermore, worldwide banks could lack the coaching and assets to successfully market these merchandise. Including to the data entry barrier is the inconsistent use of recognised inexperienced labels just like the Multi-jurisdiction Widespread Floor Taxonomy (MCGT). Beneath-communicating the advantages these labels provide might result in missed alternatives to additional cut back financing prices.
• Absence of Anchor Traders: Participation from long run capital as anchor buyers, corresponding to sovereign wealth funds, regional banks, or different institutional buyers, stays restricted, which impacts market  of confidence and liquidity. Anchor buyers play an important position in offering the required confidence to kick-start the market and maintain its development.

2. De-risking and Assure Mechanisms

One of the vital mentioned options to the challenges dealing with the GSS+ bond market is the supply and design of de-risking mechanisms:

• Partial Authorities and Philanthropic Ensures: It was famous that partial ensures from MDBs or philanthropic entities might nonetheless considerably cut back the upfront prices for issuers and de-risk investments, notably for issuers from the International South. Pilot packages in cities like Huzhou, the place the federal government partially subsidises inexperienced and transition finance devices, have been cited as profitable examples of this strategy.

3. Addressing the Want for Product Diversification

The market’s development is additional constrained by a necessity for diversified merchandise that may cater to numerous monetary wants and threat profiles. Whereas many diversification alternatives exist, improvement incorporating the next parts was mentioned:

• Linking Conventional Fastened-Earnings Constructions with Carbon Credit: The implementation of Articles 6.2 and 6.4 of the Paris Settlement might open up a brand new pathway to monetizing carbon credit for initiatives in growing nations. Whereas no precedent case but, this might additionally permit for structuring that hyperlinks carbon credit with GSS+ bonds to assist bond money flows or enhance credit score assessments.
• Tenor Limitation: At present, most Panda bonds are issued with brief maturities of round three years. Nevertheless, many sovereign and supranational issuers want long-term financing for infrastructure and improvement initiatives. This mismatch between the funding horizon and the challenge life limits the enchantment of those bonds for long-term financing wants.

4. Cross-Market Integration and Regulatory Harmonisation

A key matter of dialogue on the workshop was cross-market integration, specializing in the connection between the Shanghai FTZ offshore RMB bond market and Hong Kong’s offshore RMB (CNH) market. Each markets are important parts of China’s broader offshore RMB framework, which facilitates the comparatively free circulation of funds between these two areas. This interconnectedness presents a major alternative to boost market liquidity and broaden entry for issuers and buyers throughout jurisdictions.

To maximise the potential of those markets, regulatory alignment was proposed to keep away from duplication in key areas corresponding to accounting, disclosure, and GSS+ labelling. The FTZ framework is designed to permit issuers to observe a single set of requirements, which might align with Hong Kong’s inexperienced requirements whereas nonetheless assembly China’s home eligibility standards for bonds. This regulatory streamlining would assist cut back complexity, appeal to extra issuers, and enhance market effectivity, benefiting each native and worldwide contributors.

5. Ensures, Scores, and Issuer Incentives

The Panda bond market faces important challenges not by way of price, however fairly accessibility:

• Credit score Enhancement: Many issuers are required to carry a home AAA score, which restricts entry to the marketplace for lower-rated issuers. The complete or partial ensures for Panda bonds, corresponding to these offered by AIIB, are seen as a optimistic step, because it opens the door for issuers with decrease rankings to take part out there.
• Issuer Assist: For markets to develop, focused coaching and steering for issuers with restricted expertise, notably these from non-investment grade nations, is important. These capability constructing assist ought to embody however not restricted to pre-issuance preparation, steering on market practices, regulatory necessities, and the best way to construction GSS+ bonds in compliance with native and worldwide requirements. A collaborated effort from score businesses, underwriting businesses, and MDB as assure suppliers are inspired to develop market participation.

6. Liquidity Boosting Measures

Two complementary options have been mentioned to spice up market liquidity:

• Financial Authority Liquidity Services: The Hong Kong Financial Authority (HKMA) has launched an RMB Commerce Financing Liquidity Facility backed by the PBOC through currency-swap traces to offer liquidity throughout market downturns, making certain the soundness of rate of interest in offshore RMB markets.
• Triparty Repo Platforms: One other modern answer, offered by taking part firm, is the event of triparty repo platforms, which permit ESG- and climate-labelled bonds to be pledged as collateral, enabling bonds to keep up their sustainability traits whereas growing market liquidity.

7. Authorities Incentives and Coverage Suggestions

Coverage incentives are essential for exciting the expansion of the Panda and GSS+ bond markets:

• Hong Kong’s Inexperienced and Sustainable Finance Grant Scheme has been a key driver, because it supplies subsidies for exterior opinions and Second-Social gathering Opinions (SPOs), decreasing the price of issuance. Increasing related subsidy packages to the Panda bond market and FTZ market might additional speed up market development.
• Publish-Issuance Reporting: There’s a rising emphasis on measurable environmental outcomes. Governments can take into account introducing incentives which might be backed by assessments of every bond’s environmental impression, corresponding to emission reductions or biodiversity positive aspects.

8. Enabling GSS+ Issuance and Taxonomy Alignment

The alignment of inexperienced taxonomies performs a crucial position in enabling the expansion of the inexperienced bond market:

• Making use ofMulti-jurisdiction Widespread Floor Taxonomy (MCGT), collectively developed by China, the EU and Singapore, to label Panda, Dim Sum, and FTZ bond, allow issuers to align their devices with internationally recognised inexperienced and transition requirements, whereas concurrently assembly China’s home eligibility standards. Such an strategy can additional improve the worldwide acceptance of those devices.
• Capability Constructing: As many potential issuers lack the data and readability wanted to align with inexperienced or sustainable requirements and instrument-level requirement, providers corresponding to portfolio assessment might assist establish alternatives that meet MCGT thresholds, enabling issuers to align their initiatives with worldwide inexperienced requirements.

 

Dr. Ma Jun’s Closing Remarks: Elevating Consciousness and Increasing Ensures

In his closing remarks, Dr. Ma highlighted the necessity to elevate consciousness and develop assure amenities as low-cost, high-impact measures for advancing inexperienced finance. He advocated for leveraging private-sector actors—corresponding to issuers, underwriters, buyers, service suppliers, and second-party opinion corporations—to advertise related enterprise alternatives to potential issuers within the International South. Dr. Ma additionally emphasised the significance of diversifying assure amenities, encouraging better participation from a number of MDBs and philanthropic organisations to offer full or partial ensures that assist cut back financing boundaries for issuers in growing nations. Lastly, he underscored the importance of anchor buyers and steered selling and drawing classes from the profitable worldwide case research (e.g., Egypt, Brazil, Hungary) to enhance investor confidence and stimulate market development within the GSS+ bond market.

Conclusion: Path Ahead for Increasing GSS+ RMB-Denominated Markets

The workshop highlighted the immense potential for rising the GSS+ Panda, Dim Sum, and FTZ bond markets, emphasising the necessity to overcome current boundaries via strategic coverage coordination, product innovation, and enhanced assure mechanisms. By addressing these challenges, enhancing market liquidity, and increasing market schooling and consciousness, the RMB-denominated inexperienced bond market can play an important position in driving sustainable improvement and inexperienced transition throughout the International South.