Since the Hong Kong Government has declared Green finance as a priority development area, Fanny Lung, Finance Director of Swire Properties, has contributed to the company’s sustainable development strategies, leveraging related Green finance opportunities in the sector. Sustainability is a huge driver of the company, and having an Environmental, Social and Governance (ESG) in place is crucial in mitigating potential business risks. Under Lung’s leadership, the company has received Sustainability and Social Responsibility Reporting Awards on the Large Market Capitalization Category for the second consecutive year in 2020 by The Hong Kong Institute of Certified Public Accountants (HKICPA).
What is the importance of Green Finance Framework according to you?
Green financing is one of key areas we are looking at under the Economic Performance pillar under the strategy, which also forms part of our ongoing commitment to advancing the development of Green financing in Hong Kong.
Sustainable development (SD) plays a key role in the company’s business philosophy and culture. At Swire Properties, we have renewed our SD vision in 2016, which is to be the leading SD performer in the real estate industry globally by 2030. We launched a comprehensive SD 2030 Strategy to integrate SD into every aspect of its business.
Since we launched our first Green bond in January 2018, we have made great progress in this area. Currently, around 30 per cent of our current bond and loan facilities came from Green financing.
By obtaining Green financing through Green bonds and sustainability-linked loans, not only we are supporting the transition to a low-carbon, more resource efficient and sustainable economy, we also reaffirm our commitment to SD and to designing and developing sustainable projects that improve the well-being of building occupants and local communities.
We also have been able to attract a broader range of individual and institutional investors to include those who focus on investing in Green financial products. It is also in line with the Hong Kong Government’s policy of promoting Hong Kong as an international Green finance hub
As part of the commitment to developing Green financing in Hong Kong, what aspects do you address in the Green Finance Framework? What are your strategies to support it?
Our Green Finance Framework, which was developed in accordance with the Green Bond Principles issued by the International Capital Market Association and the Green Loan Principles, is categorised into four key pillars and cover the use of proceeds, process for project evaluation and selection, management of proceeds, and reporting.
The Framework stipulates that the net proceeds from Green Finance Transactions must be allocated to eligible Green projects in the areas of renewable energy, energy efficiency, sustainable water and wastewater management, climate change adaptation, and Green buildings.
Green projects are subject to evaluation and selection prior to the actual use of any proceeds. We have a dedicated working group—comprising representatives from our Technical Services and Sustainable Development as well as Treasury Department—which selects and reviews eligible Green projects according to a series of set criteria.
Relevant information on the allocation of net proceeds from our Green Finance Transactions is available in the Green Finance Report, our corporate website and Sustainable Development Report.
Where possible, we also provide qualitative and quantitative environmental performance indicators from the Green projects. These include reductions in energy consumption, carbon emissions and water consumption, as well as renewable energy generated and certified Green buildings.
What are some challenges on implementing such a financing system?
We have been very fortunate and have not come across any major challenges in this regard so far. However, when we first launched our Green bonds in 2018, Hong Kong’s Green financing market was still in its initial development stage.
To help our stakeholders better understand Green financing, we hosted the ESG Investor Day in 2019 and an ESG briefing in 2020 for investors; during which we discussed ESG topics with investors including Green financing.