Hong Kong Leads Asia Green Bond Sales Amid Infrastructure Boom

Hong Kong’s popular green bonds are becoming a key tool to cover infrastructure costs set to peak in the next several years.
The city has sold about $3.9 billion of green notes this year to fund projects including stadiums and hospitals. There are plans to offer a total of HK$120 billion in green and infrastructure bonds for the fiscal year ending March 2025. Nearly two thirds of green debt proceeds had been allocated to construction, according to Bloomberg calculations based on data in the government’s 2023 Green Bond Report.
Buildings are a key focus. They account for about 90% of the city’s total electricity consumption and more than 50% of its carbon emissions stem from generating electricity for them, according to a spokesman for the Financial Services and the Treasury Bureau. The government aims to reduce electricity consumption of commercial buildings by 30%-40% from the 2015 level by 2050, and that of residential buildings by 20%-30%, and to achieve half of those targets by 2035.
“The allocation of green bond proceeds to green buildings is in line with our policy objective,” the spokesman said, in an emailed reply to questions.
The boom, which supports Hong Kong’s goal of becoming a global center for sustainable finance, comes as the city embarks on multiple landmark projects. Infrastructure expenditure will reach an annual HK$90 billion in the next five years, according to the latest budget. “It is estimated that expenditure on capital works will start reaching its peak in the next three years,” the city said in the budget.
The government reported a budget deficit of HK$100 billion for the latest fiscal year, the fourth in five years, after a property downturn sent revenue from land sales to HK$19.6 billion, the lowest since the global financial crisis. 
“Given the fiscal condition, it’s impossible for the government to fund all these projects with only the reserves it has right now,” said Gary Ng, an economist at Natixis SA. “So you will need to find a way, either through green bonds, green loans, or any type of partnership with the private sector in the future.”
One of the most expensive new projects, the Kai Tak Sports Park, derived nearly 40% of its projected cost of HK$32 billion from green bonds as of July last year, the 2023 Green Bond Report shows.
Hong Kong has been well received in the sustainable finance market. The city’s green bond offering of about HK$25 billion in July received orders representing 4.8 times the issuance size from institutional investors, an indication of heavy demand.
“The Government’s issuances have also established important benchmarks for potential green bond issuers in the region and encouraged best practices in the market,” the spokesman for the Financial Services and the Treasury Bureau said.
The city was Asia’s top issuer of sovereign green debt in 2023, raising $14.4 billion that accounted for more than 60% of the region’s total, according to data compiled by Bloomberg Intelligence.
With assistance from Kiuyan Wong, Ishika Mookerjee, Sanjit Das and David Stringer.
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