Speech by Permanent Secretary for Financial Services and the Treasury (Financial Services) at Global Conference on Women in Governance (English only) (with photo)
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Carlye (Chief Executive Officer of the Hong Kong Institute of Directors (HKIoD), Dr Carlye Tsui), distinguished panellists and guests, ladies and gentlemen,
Warm greetings to all of you from different parts of the world attending the Global Conference on Women in Governance. It is my great pleasure to join this very important final session hosted by the Hong Kong Institute of Directors.
The topic today is Women's Role in Climate Change and the Impact of COVID-19, two seemingly unrelated aspects of the condition of human existence. I see a common thread here - they are both about changes and the test of our ability to overcome or manage changes. Climate change has been on the horizon for a long time and it is good to see that global efforts are coming together to manage it seriously in order to ensure a sustainable future for us and the generations to come. COVID-19 was a mega-scale health problem, a pandemic that caught everyone off guard and posed unexpected challenges for the global community and the financial world.
Role of women during the pandemic
Women have contributed tremendously to managing changes during the pandemic, bringing continuity and stability in times of chaos. We should pay tribute to the many health workers and practitioners who have fought the battle on the front line. According to a report published by the OECD (Organisation for Economic Co-operation and Development), women made up almost 70 per cent of the healthcare workforce worldwide in providing the health response to the pandemic on the ground. We should also recognise the contribution of many women professionals in the commercial and financial world in getting things done in a new way of delivering services by working from home and taking care of children at home all at the same time. Civil servants in Hong Kong, many female colleagues included, also participated actively in community work such as vaccination promotion and organisation, distribution of daily life supplies and arrangements for testing at the district level in addition to their usual duties.
Simply put, the pandemic was a huge test of the business continuity competence of public and private sector bodies, at both the governance and operational levels.
Resilience of Hong Kong's financial services industry
The Hong Kong Institute for Monetary and Financial Research published a report in June 2022 entitled "COVID-19 and the Operational Resilience of Hong Kong's Financial Services Industry" which made some pertinent observations. I would like to share with you some key takeaways as follows:
* First, business continuity planning can be an effective tool assisting financial institutions to achieve operational resilience during disruptive events.
* Second, financial institutions can proactively manage the risks associated with increasing usage of information and communication technology and implement strong governance to sustain and enhance operational resilience.
* Third, policy support, financial and data infrastructure and the accelerated adoption of innovations are important external enhancers of financial institutions' operational resilience.
In the Financial Services and the Treasury Bureau of the HKSAR (Hong Kong Special Administrative Region) Government and my role as the Permanent Secretary dealing with financial services policy work, it is our duty and top priority to see to the smooth operation of our capital markets and robustness of Hong Kong's function as an international financial centre. Our financial regulators have all along worked with their respective industries to ensure the effectiveness of financial institutes' business continuity plans, and took steps to allow remote or digital onboarding as appropriate, with cybersecurity risk management and operational resilience guidance. Other regulatory flexibilities were provided while keeping the overall integrity of the market. For example, for corporate financial reporting, issuers were permitted to continue trading after disclosing key financial figures instead of providing a full report agreed by their auditors. At the same time, we allowed hybrid forms of annual general meetings and eventually also took the chance to amend our Companies Ordinance to avail companies the flexibility to conduct fully virtual meetings.
We have also witnessed digital transformation in other areas. For example, in the fund transfer space, account openings for hand-held device or mobile phone app-enabled fund transfers, or what we call the Faster Payment System in Hong Kong, has increased threefold and daily funds transferred has increased fourfold since December 2019. The percentage of electronic incorporations of companies also increased from 39.6 per cent in December 2019 to 68.2 per cent in June 2023. And our Securities and Futures Commission has fully digitalised its licensing platform for firms and practitioners since April 2022.
As the recent IMF (International Monetary Fund) Article IV review concluding statement pointed out, economic activities in Hong Kong have been normalising with the full resumption of travel and commuting. Our strong fiscal policy support has helped the economy to navigate through multiple shocks over the last few years, while strong institutional frameworks and financial buffers have allowed the financial system to remain resilient and continue to operate smoothly. Our financial linkages with Mainland China continue to deepen, through the various Connect schemes under "one country, two systems".
With this proven resilience achieved during a highly disruptive period of time, it is opportune to look into the future. Instead of a crystal ball, it is perhaps wise to gaze into our future through the sustainability lens.
Hong Kong as a leading green and sustainable finance hub
Hong Kong stands ready to play a useful role in managing climate change. We have committed to cutting emissions by half before 2035 and achieving carbon neutrality before 2050. According to an estimate by the Asia Securities Industry & Financial Markets Association, Asia alone will require about US$66 trillion in climate investment in the next three decades to combat the effects of climate change. This massive amount underscores the immense need for green finance. With our well-developed capital markets, Hong Kong can play the role of a leading sustainable finance hub in transitioning to a sustainable future for all. Key parts of the ecosystem that are fast developing include:
* Since 2019, we have issued some US$22 billion worth of government green bonds, including two mega-scale triple-currency offerings denominated in RMB (Renminbi), Euro and US dollars in January and June this year, marking the largest ESG (environmental, social and governance) bond issuance in Asia.
* In fact, the volume of green and sustainable bonds arranged in Hong Kong by local, Mainland and overseas issuers accounted for one third of the Asian green and sustainable bond market.
* In the coming five years, the HKSAR Government will issue green and infrastructure bonds worth HK$65 billion annually.
* On disclosure by corporates of climate and sustainability-related information, we welcome the publication of sustainability disclosure standards IFRS S1 and IFRS S2 by the International Sustainability Standards Board (ISSB) last month. The Hong Kong Exchanges and Clearing Limited (HKEX), which operates our stock and futures markets, has recently conducted a market consultation on requiring all listed companies to make climate-related disclosures in their ESG reports. The HKEX is now preparing the consultation conclusions, taking into account the market feedback and the final standards published by the ISSB.
* On carbon trading, the HKEX has launched a new platform called HKD (Hong Kong dollar) settlements for the trading of international voluntary carbon credits. That will help foster the connection of capital and climate-related products and opportunities in Mainland China, Hong Kong and the rest of the world.
* On green tech and capacity building, we have set up a high-level committee chaired by the Financial Secretary to discuss how to promote faster and greater development of green technology. To improve accessibility to emission data and facilitate relevant analysis by the financial sector, we have launched a common data portal that centralises existing data sources and opened it up to the general public. We have also launched a three-year Pilot Green and Sustainable Finance Capacity Building Support Scheme to provide funding support to market practitioners, students and graduates in undertaking training and qualifications related to green and sustainable finance.
My team has been heavily involved in the above initiatives, including identifying green projects that would benefit from the sums raised from the green bond programme. I am also very happy to say that many capable women are in the driver's seat of realising the climate change vision. They are leading the core teams in our securities and futures markets operator, regulators, and professional bodies working on providing transparency and accountability regarding climate change risks and opportunities.
Gender diversity in boardrooms
On this note, it is encouraging to see positive results of efforts to promote gender diversity in our boardrooms. Since the introduction of the revised Corporate Governance Code and the Listing Rules by the HKEX in January 2022, there has been material increase in the percentage of women appointed to director positions in companies listed on the Hang Seng Index (Note 1). By contrast, the number of single gender board issuers has decreased from 31.5 per cent in 2020 to 23 per cent, according to a recent survey (Note 2).
Ladies and gentlemen, together we have sailed through storms, and the worst of the pandemic is behind us. As we reconnect globally, it is an opportune time for us to reflect on the priorities in creating a better future for all to thrive and make dreams come true. Multilateral efforts are of paramount importance in resolving issues, ironing out differences and charting practical way forward. Governance institutes and corporate boards have a very important role to play in value alignment and bring out the best value for shareholders, investors and society as a whole. I am extremely honoured to have the chance to share some of my views and the actions we are taking in Hong Kong in this respect. I look forward to having your feedback.
I am sure with perseverance, innovation and co-operation, together we are able to achieve a more inclusive and sustainable future for all inhabitants of our lovely planet. Thank you.
Notes:
1. According to a report published by Heidrick & Struggles.
2. According to a report published by the HKEX.
Ends/Friday, July 28, 2023
Issued at HKT 15:00
Issued at HKT 15:00
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