Keynote speech - Hong Kong Green Finance Association (HKGFA)-GBA Green Finance Alliance Annual Forum (GFA) Annual Forum

Good afternoon. It is my great pleasure to address you at this year's GBA Green Finance Alliance Annual Forum. I extend my congratulations to Hong Kong Green Finance Association on taking on the role of Chairmanship for the GBA Alliance. Moreover, I commend our hosts for launching the Green Accelerator programme this morning. Hong Kong remains committed to supporting these collaborative efforts and providing a platform to amplify GBA's voice on both regional and global stages.

While we celebrate our accomplishments today, we must remain vigilant in the face of present challenges. Geopolitical tensions, market fluctuations, and technological disruptions present real obstacles to global climate action. However, for Asia, which accounts for more than 60% of global GHG emissions and remains among the most vulnerable to climate hazards, climate transition and resilience are not merely environmental goals.

They serve as our safeguard against energy crises, supply chain disruptions, and represent a strategic approach to long-term stability and competitiveness.

China's transition story is an inspiring example. From solar to electric vehicles, clean energy sectors contributed more than one-third of economic growth in China's mainland last year, and helped stabilize the economy during periods of heightened geopolitical tensions. Throughout Asia, a strong commitment to drive transition and build resilience exists, but the necessary capital has been slow to follow.

The barrier is not a lack of liquidity or an ignorance of urgency; rather, it lies in the high cost of uncertainty. Capital hesitates when rules are inconsistent, standards are fragmented, and transition pathways are unclear.

It is in removing this barrier that the Hong Kong Monetary Authority (HKMA) focuses its efforts. By establishing clear definitions, setting transparent regulatory expectations, and deploying useful tools, we aim to provide global capital with the certainty needed to flow at scale towards Asia's transition and adaptation. The Phase 2B Taxonomy prototype published today marks our latest step towards delivering that certainty.

Despite the abundance of ambition for the transition ahead, and the presence of capital ready to finance it, the bridge between these two elements is confidence. Confidence that what is labeled as green is genuinely green, and that transitions are credible. Confidence must be ingrained into the system itself, rather than negotiated deal by deal. This is the role a taxonomy plays, for Hong Kong, for Asia, and beyond.

A robust, credible, and practical framework is essential, and the Hong Kong Taxonomy for Sustainable Finance provides just that. As an international financial hub, Hong Kong's advantage lies in its ability to connect capital across borders. Our common language, developed step by step through Phases 1 and 2A, will serve as a trusted reference point for financial markets worldwide.

We have built this common language by including new activities, such as battery manufacturing and recycling, and addressing hard-to-abate sectors like aviation and iron & steel, which require significant capital investment. A taxonomy that solely focuses on already green activities will not achieve net zero; it must also finance enablers and hard cases alike.

On resilience, we begin with our local concerns. Phase 2B expands adaptation measures for the climate risks most dire to Hong Kong, including shoreline protection and flood management, and introduces a process-based approach to help the market identify and finance adaptation efforts that build resilience to physical climate risks.

The value of a framework is proven only through its usage. I am encouraged that banks and corporations are integrating the Taxonomy into financing and investment decisions, as well as into their sustainable finance frameworks. We have also witnessed the emergence of Taxonomy-aligned bonds and loans. I eagerly anticipate more institutions adopting this approach and putting the Taxonomy to work.

Adoption is underway, and the next step is to scale. This requires building the necessary expertise and sharing practical experience, so that Taxonomy alignment becomes the norm rather than the exception. Moreover, the Taxonomy will continue to evolve as markets progress, policies advance, and technologies mature. We will maintain Hong Kong's participation in international efforts to enhance taxonomy interoperability and adoption, ensuring our common language remains trusted across markets and remains a tool that the market can grow with.