‘From experience’ green adds to long-term asset value, says HKMA
Green assets are drivers of long-term value, says HKMA chief
HONG KONG Monetary Authority (HKMA), investment manager to the city's over US$500 billion Exchange Fund, uses green assets as drivers of long-term value, says its top executive.
"Contrary to some perception that investing in green undermines return, our experience shows that many green investments that are good for the environment can also be good for investors over the long term," says Norman Chan, chief executive of one of the world's largest asset owners. The Exchange Fund oversees Hong Kong's foreign exchange reserves.
"We invest in green because we see it as a driver of long-term value, in addition to wanting to do the right thing," says Chan during the 2018 Green and Social Bond Principles annual conference, co-organised by the HKMA and the International Capital Market Association and the Hong Kong Financial Services Development Council.
The HKMA is supportive of responsible investment, and has incorporated environmental, social and governance, or ESG, principles into its investment processes. Assets from green bonds to renewable energy projects such as wind farms feature in the Exchange Fund's portfolio.
"I see the application of green and ESG in investment as just another balancing act that investors have to perform," says Chan as he urges asset owners to get involved in green finance.
"Exactly where and how to draw the line depends on the specific circumstances at hand. While some green bonds may produce slightly lower yield or returns as compared with the conventional bonds, I truly believe that time has come for asset owners to take a more progressive and proactive stance in supporting green finance," says Chan.
"I don't think there is much disagreement amongst the stakeholders on whether green finance can make a difference in promoting long-term environmental sustainability. The big question is whether the stakeholders, especially the asset owners, be they pension funds or sovereign wealth funds, want to make a difference by taking concrete steps to invest in green finance," he adds.