HSBC GBA ESG

Index Report
July 2023

Prepared by:
 Table of
Contents
Executive Summary 4

GBA ESG Regional Index 8

GBA ESG Industry Sub-indices 16

Case Study: Real Estate 19

Appendices 28
Glossary 28
References 29
Table of Indicators 31
Disclaimer 32
Copyright Statement 32
About HSBC 33
About CECEPEC 33

2 3
Executive
Summary

4 5
 3 The volume of GSSS bonds issued by the GBAv has continuously increased and reached a record high in
Q2 2023. Moreover, the total assets under management (AUM) of the new ESG mutual funds launched in

Executive
Q2 2023 amounted to close to four times the AUM of new ESG mutual funds launched in Q1 2023.

Hong Kong, Guangzhou and Shenzhen continued to lead the GBA GSSS bond market. According to our data, the volume
of GSSS bonds issued by the three cities collectively accounted for 97% of GBA’s total volume in Q2 2023. The Hong Kong

Summary
government has been the major contributor to the large GSSS bond issuance in recent quarters. Our study also found that
there was a resurgence in ESG mutual fund launches in the GBA in Q2 2023, the majority of which were launched by asset
managers based in Shenzhen.

This report is the quarterly update on the HSBC GBA ESG Index (the Index), which analyses the ESG and sustainable development
performance of the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) in Q2 2023.

1 The GBA ESG Regional

Index reached
4 The average value of the GBA
ESG Industry Sub-indices
reached a record high of

Our study found that, in Q2 2023, the GBA improved in three areas, i.e.,
122.15
Our study shows that almost all sectors had an improved ESG
performance in Q2 2023. Industrials maintained its leading position in
ESG in Q2 2023. Over the same period, it also had the largest issuance
167.55
economic and social development, corporate governance, and green and volume of GSSS bonds of the eight key sectors. The communication in Q2 2023
sustainable finance. Over the same period, the GBA remained stable in services sector was ranked second in ESG performance in Q2 2023, with representing a year-on-year
in Q2 2023
the areas of policy and environment. The GBA’s performance in the area a rate of improvement vi of 118%. Our study also found that, of all sectors, increase of
representing a year-on-year

22%
of economic and social development in Q2 2023 was the best for any Q2, communication services contained the largest number of new companies
compared to Q2 of the previous years studied. The GBA’s performance in increase of setting carbon emission reduction targets or making commitments via the

3%
areas of corporate governance and green and sustainable finance improved Science Based Targets initiative (SBTi)vii in Q2 2023.
significantly in Q2 2023, driven by the increased rate of ESG disclosure and
improvements in the GSSSi bond market and ESG mutual funds.

2 5
According to the latest data collected in Q2 2023, the ESG disclosure rate of GBA listed companiesii
increased from 71% in financial year (FY) 2021 to 73% in FY2022. Furthermore, GBA companies achieved
a notable improvement in CDPiii climate change scores in recognition of their climate transparency
and action.
Our data shows that Hong Kong and Macao led in the ESG disclosure rate in FY2022, with around 94% and 92% of
companies based in Hong Kong and Macao respectively making ESG disclosure. Of all the cities in the GBA, Zhaoqing
experienced the most significant improvement, with the percentage of companies making an ESG disclosure increasing from
10% in FY2021 to 50% in FY2022. Moreover, there was a notable increase in 2022 in both the number and proportion of GBA
companies that achieved scores of B- or higheriv in the CDP’s climate change questionnaire.
This report focuses on the ESG performance of the real estate sector, which is under increasing pressure
to reduce carbon emissions within the context of the national dual carbon goals and increasing demand
for green buildings.
This report highlights some of the leading practices adopted by the GBA to reduce the carbon footprint at the key stages
of the building lifecycle, such as tracking embodied carbon emissions of construction materials, leveraging technologies
to assess the operational efficiency of buildings, and so on. Green and sustainable finance can play a significant role
in channelling capital towards the sector’s sustainable development. The report shows some common approaches to
sustainable finance, including green bonds and sustainability-linked loans (SLLs).

i GSSS bonds include green bonds, social bonds, sustainability bonds and sustainability-linked bonds.
ii “GBA listed companies” refer to listed companies registered or primarily operating in the GBA, which are listed in Hong Kong, Shenzhen, or overseas
stockexchanges.
iii The CDP is an international non-profit organisation that helps companies and cities disclose their environmental impact. The CDP has a separate set of
questionnaires for climate change, forests, and water security.
iv B- or above scores include B-, B, A- and A. To earn a score of A or A- (i.e., “Leadership level”), organisations must show environmental leadership and demonstrate
best practices in strategy and action as recognized by frameworks such as the TCFD, Accountability Framework and others. A score of B or B- (i.e., “Management v GSSS bonds issued by issuers in the GBA or any specific GBA city in this report refer to both onshore and onshore GSSS bonds issued by entities registered or
level”) indicates environmental management. Companies that receive a score of B have addressed the environmental impacts of their business and ensured good primarily operating in the GBA or any specific GBA city.
environmental management. A score of B- indicates that a company is showing some evidence of managing its environmental impact but is not undertaking actions vi Evaluation of rate of improvement for a specific period by comparing the performance in that period with that of the base period.
that mark it out as a leader in its field (Source). vii The SBTi is a partnership between CDP, the United Nations Global Compact, World Resources Institute (WRI), and the World Wide Fund for Nature (WWF).

6 7
GBA ESG
Regional Index

8 9
 Figure 2. Breakdown of the GBA’s performance
in the five areas
Policy

490

GBA ESG
390
290
190

Regional Index 90

Q4 2019

Q1 2020

Q2 2020

Q3 2020

Q4 2020

Q1 2021

Q2 2021

Q3 2021

Q4 2021

Q1 2022

Q2 2022

Q3 2022

Q4 2022

Q1 2023

Q2 2023
Environment
The GBA ESG Regional Figure 1. The GBA ESG Regional Index 130
Index reached 120
110

122.15

122.15
100

120.27
125
90

118.06
116.42
80
in Q2 2023 120

114.28

Q4 2019

Q1 2020

Q2 2020

Q3 2020

Q4 2020

Q1 2021

Q2 2021

Q3 2021

Q4 2021

Q1 2022

Q2 2022

Q3 2022

Q4 2022

Q1 2023

Q2 2023
recording a year-on-year
increase of

3%
115

117.26
108.12
107.73

114.68
114.82
110
Economic and social development
120

112.47
110
100.00

105
108.28

100
104.86

100 90
101.41

80
95

Q4 2019

Q1 2020

Q2 2020

Q3 2020

Q4 2020

Q1 2021

Q2 2021

Q3 2021

Q4 2021

Q1 2022

Q2 2022

Q3 2022

Q4 2022

Q1 2023

Q2 2023
90
Q4 2019

Q1 2020

Q2 2020

Q3 2020

Q4 2020

Q1 2021

Q2 2021

Q3 2021

Q4 2021

Q1 2022

Q2 2022

Q3 2022

Q4 2022

Q1 2023

Q2 2023
Corporate governance
110
108
Source: China’s official statistical database, public disclosure of listed companies, public information from
relevant third-party databases, other public sources, CECEPEC 106
104
102
100
98

Q4 2019

Q1 2020

Q2 2020

Q3 2020

Q4 2020

Q1 2021

Q2 2021

Q3 2021

Q4 2021

Q1 2022

Q2 2022

Q3 2022

Q4 2022

Q1 2023

Q2 2023
Green and sustainable finance
180
160
140
120
100
80
Q4 2019

Q1 2020

Q2 2020

Q3 2020

Q4 2020

Q1 2021

Q2 2021

Q3 2021

Q4 2021

Q1 2022

Q2 2022

Q3 2022

Q4 2022

Q1 2023

Q2 2023
Note: The values are normalised. The base values were 100.00 for Q4 2019 (base period).
Source: China’s official statistical database, public disclosures of listed companies, other public sources,
CECEPEC

10 11
Our study found that the GBA’s performance remained stable in Q2 2023 in the areas of policy and environment. At the same The proportion of installed clean energy power in the
time, the GBA improved in the other three areas, i.e., economic and social development, corporate governance, and green and GBA reach ed 65% as of 2022, significantly higher
sustainable finance. Specifically, the performance in the area of economic and social development in Q2 2023 was the best for than the equivalent figure for mainland China which
any Q2, compared to Q2 of the previous years studied. The GBA’s performance in areas of corporate governance and green and was 48%, according to the data from the National
sustainable finance both reached record highs in Q2 2023, driven by the increased rate of ESG disclosure and improvements in the Energy Administration.6, 7 The latest data shows that
clean energy generation in the GBA steadily increased,
GSSS bond market and ESG mutual funds.
accounting for 59% of total electricity generation as
of 2022, compared to 33% for mainland China.6, 7 The
purchase of renewable energy is also gaining popularity
among many GBA-based companies. For instance,
more than 200 GBA entities actively took part in green
power tradingix in 2022, purchasing 3.83 billion kWh
annually, which is equivalent to a reduction of 2.93
million tonnes in GHG emissions.8
GBA companies have also shown a heightened
awareness of sustainability and progress in climate-
related disclosures. Our findings showed a notable
improvement in the overall CDP climate change
scores among GBA companies. In 2022, 2.1% of
GBA companies received the top CDP scores of A and
A- and demonstrated environmental leadership for their
climate change disclosures, compared to 0.8% in 2021.
The proportion of GBA companies scoring B and B- and
displaying management of environmental impact also
increased from 8.7% in 2021 to 12.4% in 2022. We also
observed that the proportion of companies failing to
disclose through CDP dropped from 80.1% in 2021 to
71.4% in 2022. Our findings indicate that GBA-based
companies are beginning to recognise climate impact
and are advancing on their climate-related disclosure
journeys.
Hong Kong, as the most open and international city
in the GBA, has demonstrated the highest rate of
improvement, with the number of companies scoring
between A and B- rising by 153%, according to our
data. Around 70% of the companies scoring B- and
above are listed companies in Hong Kong, clearly
indicating that Hong Kong’s climate-related disclosure
rules have encouraged companies to accelerate their
environmental reporting and decarbonisation efforts.

Figure 3. Year-on-year increase in CDP’s climate change scores of GBA

companies from 2021 to 2022

Policy Scores Proportion in 2021 Proportion in 2022

In Q2 2023, Guangdong Province published a set
of policies to guide the province’s high-quality
development. The overall aim was to coordinate
initiatives in the economy, society, and ecology to
achieve high-quality and sustainable development.
In October 2022, the Chinese central government
announced that high-quality development is a top
priority for the country. As the largest provincial-level
economy in the country, Guangdong Province is taking
steps to ensure that this happens at the provincial level
and in May 2023 released a plan to guide the province’s
high-quality development. According to the plan, the
government views the GBA as the engine to promote
Guangdong’s high-quality development. Initiatives in
sustainability-related areas, such as green ecology,
low-carbon transformation of key sectors, technology
and innovation, will be strengthened to support the
region’s development.1 Furthermore, Guangdong
Province has unveiled detailed policies to guide the
Environment
The GBA, a leading region in China in clean and
renewable energy, has expanded its installed
non-fossil fuels electricity capacity and steadily
increased its reliance on clean energy generation.
Our study also found that the GBA has improved
its climate-related performance, with a notable
improvement in the CDP climate change scores
achieved by GBA companies.
In May 2023, Guangdong Province released the
Implementation Plan for Boosting the High-quality
Development of Energy Sector in Guangdong Province
high-quality development of key sectors, including
manufacturing and energy.
As noted in our report dated April 2023, governments
at national and regional levels have attached great
importance to new energy vehicles (NEVs), for their
role in the low-carbon transformation of the automotive
industry. The Chinese central government studied
the policies to facilitate the high-quality development
of NEVs in the State Council executive meeting of
June 2023.2 At the provincial level, the government
of Guangdong Province has set a goal for the NEV
industry cluster to pass the RMB1 trillion mark viii, as
mentioned in its plan to guide the province’s high-
quality development.1 The NEV industry in the GBA
continued its rapid development in the first few months
of 2023. For example, from January to April 2023, the
added value of NEVs and charging stations increased
by 140% and 51% year-on-year, respectively.3
(2023 - 2025).4 One of the major goals highlighted in
the document is the low-carbon transformation of
energy by increasing the percentage of non-fossil
energy consumption and the installed capacity of
renewable energy. To promote energy saving and
carbon reduction, in May 2023, Guangdong Province
also issued the Notice of Work Circulars on Energy
Conservation and Carbon Reduction for Public
Institutions. The aim of the notice was to enhance
the environmental performance of government
departments by reducing carbon emissions.5
Year-on-year increase
(Number of companies)
A and A- 0.8% 2.1% 4
B and B- 8.7% 12.4% 15
C and C- x
7.1% 8.9% 9
D and D- xi
3.3% 5.2% 7
Fxii 80.1% 71.4% 15
F to A 100% 100% 50
Source: CDP, CECEPEC
Economic and Social Development
Innovation and technological advancement is the or planned approaches aligned with this policy.
source of sustainable and high-quality economic For example, Shenzhen has actively encouraged
growth. It is the focus of Goal 9 of the United Nations its financial institutions to support sci-tech
Sustainable Development Goals (UNSDG)xiii, and, corporations, and the outstanding loans to sci-tech
therefore, has been selected as one of the indicators of corporates recorded a year-on-year increase of 30%,
the economic and social development area in the Index. approximately 20% higher than the growth rate of all
loans as the end of March 2023.9 Another noteworthy
In June 2023, the Guangdong Province released example is that The Stock Exchange of Hong Kong
guidelines on the high-quality development of
manufacturing and proposed building a whole-
Limited (SEHK) launched a new listing regime for
Specialist Technology Companies, effective 31 March
process innovation ecology to support the sector’s 2023, to facilitate the financing of these companies
transformation. Cities within the GBA have adopted and further unleash the GBA’s innovation potential.10
viii In 2022, the broader automotive industry of Guangdong Province first recorded an operating income of over RMB1 trillion, becoming the 8th industry cluster of the
province to pass the RMB1 trillion mark.
ix Green power trading pilot was launched on 7 September 2021 by the National Development and Reform Commission, the countrys top economic regulator. Power
from renewable sources is regarded as a distinct tradable commodity from traditional power and can be separately priced and purchased.
x A score of C or C-/C score indicates fall under the “Awareness- level” engagement. Awareness also has C and C- scores, the difference being the level of awareness
a company has shown in their response. The awareness score measures the comprehensiveness of a companys evaluation of how environmental issues intersect
with its business, and how its operations affect people and ecosystems (Source).
xi A D-/D score is disclosure level. Every question in the questionnaires is scored for disclosure. At disclosure level, Companies are awarded roughly one point per
data point provided in the questionnaire. A score of D or D- fall under the “Disclosure level”. This level features both D and D- score. To receive a score of a D over a
instead of D-, organisations need to have disclosed a more extensive set of information (Source).
xii An F score is given when a requested company fails to disclose through CDP (Source).
xiii The SDGs are a collection of 17 interlinked global goals designed to be a “shared blueprint for peace and prosperity for people and the planet, now and into the
future”. They were set out in 2015 by the United Nations General Assembly (UN-GA) and are intended to be achieved by 2030.

12 13
 Moreover, Hong Kong and Shenzhen jointly developed
the Hetao Shenzhen-Hong Kong Innovation and
Technology Co-operation Zone (Co-operation Zone)xiv,
a leading area for GBA innovation and cooperation. The
governments on both sides have launched the Joint
Policy Package for the Co-operation Zone to provide
Corporate Governance
In line with international trends, the GBA
is tightening ESG disclosure requirements,
especially with regard to climate-related issues.
The International Sustainability Standards Board
(ISSB) finalised the IFRS S1 General Requirements
for Disclosure of Sustainability-related Financial
Information and IFRS S2 Climate-related Disclosures at
the end of Q2 2023, effective 1 January 2024.12 These
two standards will serve as a comprehensive global
baseline of sustainability disclosures for the capital
market. In support of the ISSB’s new standards, SEHK
published a consultation paper on the enhancement
of climate disclosure under its ESG framework in April
2023.13 SEHK proposed requiring all issuers to report
climate-related topics in accordance with IFRS S2
starting from 1 January 2024. The consultation paper
provides no room for exclusion with regard to climate-
related disclosure, revealing the increasing attention of
regulatory bodies on climate-related issues and putting
pressure on issuers to consider low-carbon transition in
their business strategies. Additionally, the State-owned
Assets Supervision and Administration Commission
of the State Council (SASAC) is due to issue the ESG
disclosure guideline for listed companies majority-
owned by central state-owned enterprises (SOEs),
with a target ESG disclosure rate of 100% in 2023.14
Green and Sustainable Finance
Our study observed that there is continued strength
in the GBA’s sustainable debt market. Based on
the data, the issuance volume of GSSS bonds in
the GBA during Q2 2023 reached a record high
of RMB66.76 billion, against a previous high of
RMB56.76 billion in Q1 2023. The Hong Kong
government had a major contribution to the large
GSSS bond issuance volumes in both quarters.
In June 2023, the Hong Kong government issued
approximately RMB42.45 billion (close to US$6 billion)
worth of green bonds under the Government Green
Bond Programme.16 This surpassed the government’s
record-setting issuance of approximately RMB39.27
billion (close to US$5.75 billion) worth of government
green bonds in January 2023, which was at the time
the largest ESG bond issuance in Asia.17
According to government statistics, total green and
xiv The Co-operation Zone comprises the Hong Kong-Shenzhen Innovation and Technology Park (HSITP) located at the Lok Ma Chau Loop and the Shenzhen Innovation
and Technology Zone.
xv “Listed companies in the GBA” refer to listed companies registered or primarily operating in the GBA, which are listed in Hong Kong, Shenzhen, or xix Including the Financial Services and the Treasury Bureau (FSTB), Securities and Futures Commission (SFC) and the Hong Kong Monetary Authority (HKMA).
overseas stock exchanges.
xvi These include sustainability reports and corporate social responsibility (CSR) reports, which all contain non-financial information.
14
measures to facilitate the flow of talent and scientific
research resources, and promote cross-boundary
investment and financing channels.11
Currently, the ESG disclosure rate of listed companies
majority-owned by central SOEs is 60%.15 The above
ESG disclosure guidelines indicate that transparency of
ESG information is gaining in importance and is likely to
place increased demands on GBA companies.
In Q2 2023, we conducted a study on more than 2,000
listed companies in the GBA xv to assess whether
ESG and other related non-financial reportsxvi were
published for FY2022. According to the latest data
collected in Q2 2023, the ESG disclosure rate of
GBA companies increased from 71% in 2021 to
73% in FY2022. Hong Kong and Macao led in the
ESG disclosure rate in FY2022, with around 94%
and 92% of companies based in Hong Kong and
Macao respectively making ESG disclosure. The most
significant improvement was seen in the case of
companies from Zhaoqing. In FY2021 only 10%
made ESG disclosures, whereas the corresponding
figure for FY2022 was 50%. Macao was second in
terms of improvement in ESG disclosure rate, with the
proportion of companies making ESG disclosures rising
from 67% in FY2021 to 92% in FY2022. Our study
also reveals that most other GBA cities experienced
improvement in ESG disclosure.
sustainable bond and loan issuance in Hong Kong
recorded an increase of 40% from 2021, reaching
US$80.5 billion as of 2022. In particular, Hong Kong
made up 35% of the Asian green and sustainable bond
market.14 Our study shows that Hong Kong, along
with Guangzhou and Shenzhen, continues to lead
the GBA GSSS bond market, as can be seen in
Figure 4.
Our study found a notable increase in the number
of launches of new ESG mutual funds in the GBA
in Q2 2023, compared to Q1 2023. According to the
data accessed on Wind, a third-party database, as of
30 June 2023, the AUM of the new ESG mutual funds
launched in the GBA in Q2 2023 amounted to close to
four times the AUM of new ESG funds launched in Q1
2023. The majority of the new ESG funds launched
in the GBA in Q2 2023 were launched by asset
Figure 4. Combined volume of GSSS bonds issued by Hong Kong, Guangzhou and
Shenzhen issuers
Combined volume of GSSS bonds
issued by Hong Kong, Guangzhou and
Shenzhen issuers (RMB billions)
Quarter
Q2 2023 64.97
Q1 2023 56.76
Year
2022 146.62
2021 112.83
2020 132.02
2019 74.17
Note: GSSS bonds issued by issuers in Hong Kong, Guangzhou and Shenzhen refer to both onshore and offshore GSSS bonds issued by entities
registered or primarily operating in these cities.
Source: Wind, CECEPEC
managers based in Shenzhen. We observe that ESG funds
differ in investment strategies, ranging from thematic investing
to ESG factor integration, to passive investing based on ESG
indices, and so on. Also, our study found there to be same
number of new UN Principles for Responsible Investment (PRI)
xvii
signatories in the GBA during 2Q 2023.
Policymakers across the GBA have continued to
show mutual commitment to bolstering the region’s
collaboration on green and sustainable finance, in support
of the country’s climate and sustainable development
ambitions. In April 2023, senior officials from the People’s
Bank of China (PBOC) and the financial regulators in
Guangdong Province, Guangzhou, Shenzhen and Macaoxviii
gathered in a meeting co-organised by the Hong Kong Green
Finance Association (HKGFA) and the Greater Bay Area Green
Finance Alliance (GBA-GFA) to meet with Hong Kong’s local
authoritiesxix to discuss plans to enhance the integration of
the green and sustainable finance markets across the GBA,
and to leverage Hong Kong’s strength as an international
sustainable finance hub.18 The policymakers further discussed
potential joint initiatives to enhance the sustainable finance
ecosystem, such as globally aligned corporate sustainability
disclosure requirements, exchange of emissions and other ESG
data, development of carbon markets and capacity building.19
Furthermore, in June 2023, Guangdong-Macao In-Depth
Cooperation Zone in Hengqin set out a policy to encourage
xvii PRI is an international organisation that works to promote the incorporation of environmental, social, and corporate governance factors into investment decision-
making.
xviii Including Guangdong Financial Supervisory Authority, Guangzhou Municipal Local Financial Supervision and Administration Bureau, Shenzhen Municipal Financial
Regulatory Bureau and Monetary Authority of Macao.
xx A green finance taxonomy is a classification system for regulators, financial institutions and borrowers to facilitate the identification and classification of
environmentally sustainable projects.
Percentage of volume of
GSSS bonds issued by all Year-on-year growth rate
GBA issuers
97% 49%
100% 138%
91% 30%
87% -15%
99% 78%
96% /
corporates within the cooperation zone to issue bonds in
Macao. This policy envisaged providing subsidies for green
and sustainable bond issuers to cover their expenses on bond
issuance and external review.20
The Hong Kong government has worked at developing a
local green classification framework, i.e., taxonomy xx, which
can help underpin Hong Kong’s instrumental role in bridging
green financial flows between Mainland China and the rest of
the world. In May 2023, the Hong Kong Monetary Authority
(HKMA) published the long-awaited prototype of the taxonomy
and sought feedback on its ongoing development and
application until the end of Q2 2023. The taxonomy focuses on
specific activities in the energy, transport, buildings, waste and
water sectors, which were selected by virtue of Hong Kong’s
local circumstances and industry standards.21
Pilot decarbonisation projects with a special focus on the
real estate, transport and manufacturing sectors have
been set up by policymakers in the GBA. The aim is to
nurture and enhance the regional green and sustainable
finance ecosystem.22 These pilot projects are designed to
align with international transition finance frameworks, as well
as disclosure and verification standards, so as to tap into global
capital markets.
15
GBA ESG
Industry
Sub-indices

16 17
 Our study shows that, in Q2 2023, the average value of the GBA ESG Industry Sub-indices reached a record high of 167.55,
representing a year-on-year increase of 22% and up 8% from Q1 2023. As per Figure 5, all sectors, except financials, improved in
Q2 2023. Industrials continued to lead the way in ESG and had the largest issuance volume of GSSS bonds of eight key sectors in

GBA ESG
Q2 2023. The communication services sector was ranked second in ESG in Q2 2023, with a rate of improvement of 118% (Figure
6). Our study found that, of all sectors, communication services contained the largest number of new companies setting carbon
emission reduction targets or making commitments via SBTi in Q2 2023. The financials sector showed a decline over the past two

Industry
quarters, mainly due to decreased GSSS bond issuance.

Case Study: Real Estate

Sub-indices
“
Real estate, which has a substantial environmental and social impact,
plays a significant role in GBA’s sustainable development.
Figure 5. Relative ESG performance evolution of the eight sectors In 2022, the real estate sector accounted for 8% of Guangdong the context of the national dual carbon goals and increasing
300 Province’s GDP xxi, which is above the national level of 6%.23 market demand for green buildings. Green and sustainable
In 2021, real estate constituted 4%24 and 13%25 of the GDP of finance can play a significant role in channeling capital towards
250 Hong Kong and Macao, respectively. Real estate development the sustainable development of the sector.
comprises multiple phases, including land acquisition,
200 construction, operation, renovation of buildings, etc. This Figure 8 shows that the ESG performance of the real estate
long process involves many ESG issues including energy and sector has been on an upward trend, which is in line with the
150 water efficiency, occupational health and safety, and product average performance of the eight key sectors. Since Q4 2019,
quality and safety; community wellbeing, anti-corruption, and real estate has performed better than the average of the eight
100 key sectors. Furthermore, the gap between real estate and the
others. Two pillars of GBA ESG Industry Sub-indices, namely
green and sustainable financexxii and climate actionxxiii, are average performance has reduced over the past three quarters.
50 The most significant improvement within the real estate sector
increasingly recognised as key issues in the current move
towards sustainable development. was between Q1 and Q4 2020, primarily due to the key pillars
0
of policy xxiv and industry development xxv. According to our
Q4 2019

Q1 2020

Q2 2020

Q3 2020

Q4 2020

Q1 2021

Q2 2021

Q3 2021

Q4 2021

Q1 2022

Q2 2022

Q3 2022

Q4 2022

Q1 2023

Q2 2023
The significant carbon emissions produced by real estate data, real estate has performed better than most other sectors
come primarily from the building lifecycle, especially from in the pillar of green and sustainable finance, and experienced
the manufacture of building materials and from energy a notable improvement in the climate action pillar over recent
consumption during the operational stage. The sector is under quarters.
Average Communication services Consumer discretionary increasing pressure to reduce overall carbon emissions within
Consumer staples Energy Financials
Healthcare Industrials Real estate
Figure 8. GBA ESG Sub-index – Real Estate
Note: The average value of the GBA ESG Industry Sub-indices was set at 100.00 for Q4 2019 (base period), as a benchmark with which to compare each key sector’s
individual ESG performances as well as their average performance.

187.12
175.78

174.85
173.46
Source: China’s official statistical database, public sources, CECEPEC

170.23
169.63
167.68

163.66
200

162.33
156.70

151.77
150.28
180
Figure 6. Rates of improvement in ESG Figure 7. Rate of improvement in ESG

139.26
137.62
performance levels of the key sectors performance level of healthcare (%) 160

120.70

167.55
(excluding healthcare) (%) 140

155.05
152.07
145.80
120 2,500 120

137.30
135.40
133.36

131.42
128.15
118.67

118.03
100

115.92

114.35
2,000

102.47
100.00
70
80
1,500 60

40
1,000

Q4 2019

Q1 2020

Q2 2020

Q3 2020

Q4 2020

Q1 2021

Q2 2021

Q3 2021

Q4 2021

Q1 2022

Q2 2022

Q3 2022

Q4 2022

Q1 2023

Q2 2023
20

500

(30) 0 Average Real estate

Q4 2019

Q1 2020

Q2 2020

Q3 2020

Q4 2020

Q1 2021

Q2 2021

Q3 2021

Q4 2021

Q1 2022

Q2 2022

Q3 2022

Q4 2022

Q1 2023

Q2 2023

Q4 2019

Q1 2020

Q2 2020

Q3 2020

Q4 2020

Q1 2021

Q2 2021

Q3 2021

Q4 2021

Q1 2022

Q2 2022

Q3 2022

Q4 2022

Q1 2023

Q2 2023

Note: The line chart shows the ESG performance evolution of the real estate sector. The average value of the GBA ESG Industry Sub-indices was set at 100.00
for Q4 2019 (base period).
Source: China’s official statistical database, Wind, public sources, public disclosures of listed companies, CECEPEC

Communication services Consumer discretionary Healthcare xxi Data retrieved from Guangdong Statistics Bureau (Source).
Consumer staples Energy
xxii Evaluation of utilisation of green and sustainable finance instruments to support sustainable development of the sector.
Financials Industrials xxiii Evaluation of corporate performance as regards climate-related disclosure and commitment to a low-carbon economy.
Real estate xxiv Evaluation of the strength of policy support for the sector by looking at the number of industrial policies set out at each level of government including central,
provincial, municipal and district levels. Here we assume that the policies set out by central government carry the greatest weight and have the greatest impact on
Note: Q4 2019 is the base period. Rate of improvement = (Value for a specific period – Value for base period)/Value for base period. the sector.
Source: China’s official statistical database, public sources, CECEPEC xxv Evaluate the industrial activity of the eight key sectors using indicators such as industry value added and electricity consumption by sector.

18 19
Green and Sustainable Finance in the Real Estate Sector The real estate sector is also involved in projects with sustainability profiles. SLLs often contain margin adjustments
social benefits, such as providing affordable housing to (which increase or reduce the interest rate), depending on
Figure 9. Real estate’s performance with regard to green and sustainable finance disadvantaged groups and communities that are relocated whether the pre-determined SPTs have been achieved. As
for development projects, enhancing physical access and such, borrowers have a financial incentive to achieve the
10 accessibility, and establishing public spaces for the pre-determined SPTs so as to enhance their sustainability
9 community.xxviii performance. Leading GBA real estate companies have
leveraged SLLs, setting SPTs such as a reduction in electricity
8 In addition to green and social use-of-proceeds financing,
consumption, an increase in the proportion of green buildings,
7 sustainability-linked loans (SLLs) continue to be popular in
and so on.
6 the real estate sector, especially among leading companies
5 that have established clear sustainability strategies External review is key to ensuring the integrity and
4 and goals. Borrowers of SLLs are required to set relevant, transparency of green and sustainable financing. In Hong
3 material and quantifiable Key Performance Indicators (KPIs) Kong, the Construction Industry Council (CIC)xxix developed the
2 and ambitious Sustainability Performance Targets (SPTs). To Sustainable Finance Certification Scheme (SFCS)xxx in 2021 to
1 avoid green and sustainability washing, borrowers should set introduce an assessment system tailored to the construction
0 sufficiently ambitious and meaningful SPTs. Borrowers should industry value chain to facilitate their access to green and
continue to monitor, measure and disclose their performance sustainability-linked financing.26
Q4 2019

Q1 2020

Q2 2020

Q3 2020

Q4 2020

Q1 2021

Q2 2021

Q3 2021

Q4 2021

Q1 2022

Q2 2022

Q3 2022

Q4 2022

Q1 2023

Q2 2023
against the SPTs, with an aim to further improving their

Figure 11. Examples of green and sustainable finance for the real estate sector
Note: The values are normalised. The closer the value of the Y-axis to 10, the better the performance of the pillars.
Source: China’s official statistical database, Wind, public sources, public disclosures of listed companies, CECEPEC within the GBA
Target group Homebuyers Developers Main Contractors
The robust development of green and sustainable finance sector nearly tripled from RMB6.69 billion in 2020 to RMB18.29 Subcontractors
Suppliers
within the GBA has accelerated the transformation and billion in 2022. The issuance volume of real estate was ranked
sustainable development of the entire real estate sector, third in 2022 just behind the industrials and financials sectors, Examples of green and Green mortgage Green Bonds Green Loans
generating environmental and social benefits for both the and was slightly above the average level of the eight sectors in sustainable financing Sustainability Bonds SLLs
Green Loans Green guarantees
economy and the wider community. As shown in Figure both 2021 and 2022.
SLLs Sustainability-linked
10, the volume of GSSS bonds issued by the GBA’s real estate
guarantees
Possible financial benefits Cash incentives Lower interest rates Lower interest rates and fees

Figure 10. Issuance volume of GSSS bonds by the real estate and average issuance ESG benefits Promote consumer preference Support green projects Support green projects
volume of GSSS bonds by the eight sectors for residential properties that or efforts to improve or efforts to improve
have received designated levels sustainability profile in the sustainability profile in the
of green building certifications real estate sector real estate sector
Issuance volume of GSSS bonds by Average issuance volume of GSSS bonds
Year and ratings
the real estate sector (RMB billions) by the eight sectors (RMB billions)
Case study Green Mortgage Planxxxi Record breaking SLL of Green guarantee of HKD258
2023 (Q1 – Q2) 1.6 3.71
HK$20.7 billion in the loan million to support the
2022 18.29 18.01 syndicate to a leading Hong development of Hong Kong
Kong developerxxxii International Airport Terminal
2021 17.16 12.14 2 (“T2”) Expansion Works
2020 6.69 8.18 projectxxxiii
Source: Wind, CECEPEC Source: Public sources, CECEPEC

Green bonds, as well as green loans, are highly relevant
to the real estate sector. As an integral part of the sector’s
environmental sustainability strategy, real estate companies
are focussing their attention on green building projects. This
coincides with growing demand for green buildings among
investors, homebuyers and tenants. Green bonds and loans
are efficient tools commonly used by the real estate sector
to finance green building projectsxxvi. According to our data,
the proceeds of green bonds issued by real estate companies
in the GBA were primarily used to finance green buildings.
However, green financing in the real estate sector is not
restricted to green buildings. Companies can also use green
proceeds to support green and low-carbon related activities
when developing a property, such as purchasing low-carbon
construction materials, Modular Integrated Construction (MiC)
xxvii
, electric vehicle charging facilities, and solar photovoltaic
(PV) panels.

xxviii These projects are aligned with international standards such as Social Loan Principles (SLP). SLP are voluntary guidelines published by the LMA, APLMA and
LSTA that are widely adopted in international social loan markets.
xxvi Green building is a green project category recognised by international green financing standards including the Green Bond Principles (GBP) and Green Loan xxix The Construction Industry Council (CIC) acts as a communication channel between the construction industry of Hong Kong and the Hong Kong Government. It is
Principles (GLP). GBP are voluntary guidelines published by the International Capital Market Association (ICMA) that are widely adopted in international green bond empowered to formulate codes of conduct, facilitate the adoption of construction standards, administer registration and rating schemes, promote good practices
markets. GLP are voluntary guidelines published by the Loan Market Association (LMA), Asia Pacific Loan Market Association (APLMA) and Loan Syndications & and compile performance indicators.
Trading Association (LSTA) that are widely adopted in international green loan markets. xxx CECEPEC codeveloped the CIC SFCS, and has been appointed as the sole Scheme Operator of the CIC SFCS.
xxvii MiC is a construction technique in which modules are prefabricated in factories to reduce on-site pollution and construction time, before being transported to the xxxi (Source).
construction site for assembly and installation. xxxii (Source).
xxxiii (Source)

20 21
 Furthermore, the impact of climate change is felt by the real and 35% of such new buildings in the nine PRD municipalities
estate sector itself, as it is vulnerable to the physical and in the GBA, to achieve at least a one-star ratingxxxv by 2023.29
transitional risks of climate changexxxiv. The risks can lead to Furthermore, Guangdong Province released the 14th Five-Year
increased insurance premiums, higher capital expenditure and Plan for Building Energy Conservation and Green Building

Responding to Climate Change in operational costs. Thus, there is rising demand for green and
climate-resilient buildings and an increasing need for the real
Development, highlighting the priority tasks of each stage
of the building lifecycle to promote energy-saving and green

the Real Estate Sector estate sector to improve its resilience and climate adaptation. buildings.

In the face of increasing pressure from the public, investors and policymakers, the
real estate sector is ramping up efforts to mitigate and adapt to climate change.
Real estate is one of the primary sources of carbon emissions. According to the
China Association of Building Energy Efficiency, the carbon emissions of the building
Governments in the GBA have unveiled a series of policies
to promote the green and low-carbon development of the
real estate sector, with the aim of achieving significant
energy savings in the sector as well as substantial
reductions in emissions. In 2021, Guangdong Province
published the Implementation Plan for Green Building
Development in Guangdong (2021-2023), which specified the
target for 20% of new civil buildings in Guangdong Province,
Developing energy-saving and low-carbon buildings is one
of the major decarbonisation strategies of Hong Kong. Hong
Kong’s Climate Action Plan 2050 sets out the targets of
reducing the electricity consumption of commercial buildings
by 30% to 40%, and that of residential buildings by 20%
to 30% by 2050, and encourages the application of new
and environmental construction methods in the
construction stage.30

lifecycle account for approximately 50% of mainland China’s total carbon emissions,
Figure 12. Performance of the real estate sector with regard to climate action
while energy consumption accounts for approximately 46% of mainland China’s total
energy consumption.27 At the same time, the environmental footprint of the building 10
9
lifecycle accounts for more than 60% of carbon emissions and around 90% of total
8
electricity consumption in Hong Kong.28 Therefore, the decarbonisation of real estate 7
is crucial in the effort to reach national carbon neutrality. 6
5
4
3
2
1
0

Q4 2019

Q1 2020

Q2 2020

Q3 2020

Q4 2020

Q1 2021

Q2 2021

Q3 2021

Q4 2021

Q1 2022

Q2 2022

Q3 2022

Q4 2022

Q1 2023

Q2 2023
Note: The values are normalised. The closer the value of the Y-axis to 10, the better the performance of the pillars.
Source: China’s official statistical database, Wind, public sources, public disclosures of listed companies, CECEPEC

The real estate sector in the GBA attaches great
importance to the management of climate change risks
and opportunities, and actively engages in sustainability
initiatives to support the national and regional goals
of carbon neutrality. Our study shows a remarkable
improvement in the performance of the real estate’s
climate action pillar over the period, as shown in Figure 12.
Real estate companies have made significant progress in the
climate action pillar over the last few years. Specifically, our
study shows that the number of GBA real estate companiesxxxvi
ranked C or above in the CDP’s climate change questionnaire
increased by 133% in 2022, compared to 2020. Furthermore, in
2022 the first real estate company ever scored A in that same
questionnaire. An increasing number of real estate companies
in the GBA, which are primarily Hong Kong companies, have
set carbon emission reduction targets or made commitments
via SBTi to demonstrate their aim of reducing direct and
indirect carbon emissions, including the indirect emissions that
occur along the value chain. The number of GBA real estate
companies set carbon emission reduction targets or made
commitments via SBTi reached 15 as of Q2 2023, compared
with 0 in 2020.
According to our study, the proportion of GBA real estate
companies that were invited to fill in the CDP’s climate change
questionnaire increased from 63% in 2020 to 96% in 2022.
However, the disclosure rate of real estate remains relatively
low, under the average rate of eight key sectors, which
may imply that the sector is facing some challenges in the
management and disclosure of the climate change issue, such
as the calculation and management of indirect emissions of
scope 3.

xxxiv Acute physical risks include extreme weather events such as hurricanes and floods, while chronic physical risks include changing climate patterns, such as sea-
level rise and temperature and rainfall fluctuations. Transitional risks include additional operating costs incurred by changing policies, compliance requirements and
technologies.
xxxv The China green building system sets out three ratings: one-star, two-star, and three-star.
xxxvi “GBA real estate companies” refer to the real estate companies that are registered or primarily operating in the GBA.

22 23
Figure 13. Proportion of GBA companies invited to disclose via CDP and disclosure rate 1 Product Phase
for the real estate sector and the eight key sectors overall Embodied carbon emissions from construction materials who have environmental management systems in place,
represent a significant proportion of the carbon footprint such as ISO 14001. Many construction suppliers are actively
Proportion of GBA real Proportion of eight of a building. With this in mind, real estate companies promoting sustainable construction materials, including self-
estate companies that Disclosure rate of key sectors that were Disclosure rate of in the GBA are ramping up their efforts to reduce their healing materials, sensor-embedded composite materials,
Year were invited to disclose GBA real estate invited to disclose via eight key sectors
GHG emissions through the procurement of low-carbon smart bricks, and so on.
via CDP’s climate change companies CDP’s climate change overall
questionnaire questionnaire construction materials. Typically, cement, concrete, and steel;
aluminium, glass, and plastics are the construction materials Policies on green building material also drive decarbonisation
2022 96% 15% 85% 31% with the highest embodied carbon emissions. in the real estate sector within the GBA. The 14th Five-Year
Plan for Building Energy Conservation and Green Building
2021 81% 18% 71% 24% Unlike operational carbon emissions, carbon embedded in the Development promotes the use of green building materials in
walls, girders and surface of the building cannot be reduced by new construction projects, and encourages the development
2020 63% 15% 51% 22%
upgrading mechanical systems and other equipment. Reducing of innovative building materials. The policy also states that
Note: Proportion of GBA companies invited to disclose via CDP = no. of companies invited to disclose via CDP’s climate change questionnaire / no. of GBA embodied carbon in a building is achieved during the project government procurement should give priority to green
companies. Disclosure rate = no. of companies disclosed / no. of companies invited to disclose via CDP’s climate change questionnaire. planning and design phase. GBA companies are seeking to building materials.31
Source: CDP, CECEPEC choose low-carbon materials and give preference to suppliers

It is worth noting that a number of real estate companies in Decarbonisation is necessary to mitigate climate change.
the GBA, especially Hong Kong, have adopted Task Force on The real estate sector plays a vital and leading role in Hong Kong’s Leading Practices in the Product Phase
Climate Related Disclosures (“TCFD”) recommendationsxxxvii reducing carbon emissions in society. As previously With more Hong Kong developers expanding their green material procurement, CIC
to manage climate-related risks and report the relevant mentioned, the real estate sector is one of the major carbon and Hong Kong Green Building Council (HKGBC)xlii launched a product certification
information to investors and other stakeholders. Following the emitters, and the sector’s carbon emissions primarily come scheme called CIC Green Product Certificationxliii in November 2019. The raison d’être
international framework, the GBA companies have established from the building lifecycle. of the CIC Green Product Certification Scheme is to assess sustainable building and
a series of strategies and adopted measures to mitigate and construction materials or products. The CIC also launched a Carbon Assessment Tool
adapt to climate change. Furthermore, some leading real estate The lifecycle carbon footprint of a building consists of the (CAT), an online carbon assessment platform, to help developers assess full-cycle
companies in Hong Kong actively participate in international carbon emissions from the extraction of materials and carbon footprint, including simulation of embodied carbon emissions at the design and
and regional sustainability initiatives, such as the Business manufacturing process, transportation, and construction planning phase.32 Some leading Hong Kong real estate companies have standardised
Ambition for 1.5°C campaignxxxviii and the Carbon Neutrality works; maintenance, repairs, and replacement of materials the process of tracking embodied carbon by utilising the CAT. Furthermore,
Partnershipxxxix, to more actively pursue their low-carbon during the building’s lifecycle, and knockdown and end-of- incorporating green procurement requirements into the construction contract is one
transformation and support the Hong Kong government’s call life processing of building materials. Energy consumption of the innovative and leading practices. Also, since 2020, a leading Hong Kong real
for carbon neutrality by 2050. during the operational life, i.e., use and maintenance phase, estate company has included procurement of low-carbon construction materials in its
of the building and the embodied carbon emissionsxl from specifications with main contractors for its new development projects.33
We also found that some PRD real estate companies are construction materials represent a significant carbon footprint
actively involved in formulating industry standards to support in the lifecycle of buildings. The GBA’s real estate sector has
the development of low-carbon communities and energy-
saving buildings.
adopted various approaches to reducing carbon emissions
during key phases of the building lifecycle.
2 Construction Phase
Energy consumption has a major impact on carbon go even further to generate and utilise renewable energy, for
Figure 14. Building lifecycle emissions during the construction phase.34 Carbon instance, by installing solar lighting and solar water heating
reduction requires the efforts and joint commitment of systems.
Construction both developers and contractors. Developers in the GBA
Product Phase Use and Maintenance Phase End-of-Life Phase
Phase increasingly require their contractors to commit to energy Innovations in construction methods have enabled the real
saving in tender documents and construction specifications. estate sector to reduce its carbon emissions and environmental
Raw material Operational Waste transport Site electrification is a fundamental means of reducing impact during the construction phase. Technologies such
Manufacture Transport to site Use and Repair and Deconstruction
Supply and energy and processing carbon emissions in the construction phase. Grid electricity as Building Information Modelling (BIM)xliv, digital twinsxlv
products and installation maintenance refurbishment and demolition
transport and water and disposal supply and battery energy storage systems can replace the and Design for Manufacture and Assembly (DfMA)xlvi are
use of diesel generators at construction sites, and hence gaining popularity in mainland China and Hong Kong. In 2022,
achieve a significant reduction in carbon emissions and air Guangdong Province published the Implementation Plan for
According to the China Association of Building Energy Efficiency, the product phase accounts for 55% of the carbon
footprint of buildings, while the use and maintenance phase accounts for 43%. pollution. Construction sites in the GBA have adopted energy Industrial Development of New Buildings, which specifically
conservation measures, such as using smart electricity meters mentions the use of BIM and establishes the targets for
Source: RMI,xli China Association of Building Energy Efficiency (Source) and monitoring systems, LED lighting and energy-efficient prefabricated buildings to account for more than 30% of new
xxxvii TCFD recommendations, on climate-related financial disclosures, is a globally-recognised framework and is widely adaptable and applicable to organisations
construction equipment and tools. Some construction sites building area by 2025, and 50% by 2030.35
across sectors and jurisdictions. It guides organisations and companies to identify, manage and disclose climate-related risks and opportunities The
recommendations are structured around four thematic areas that represent core elements of how organisations operate: governance, strategy, risk management
and metrics and targets. xlii Hong Kong Green Building Council (HKGBC) works to promote the development of sustainable buildings in Hong Kong.
xxxviii The Business Ambition for 1.5 Campaign was launched in the lead-up to the 2019 Climate Action Summit in an effort to raise the ambition on climate action and xliii The certification scheme, which currently covers 28 product categories and over 800 certified products as in July 2022, provides a transparent platform whereby all
push companies to set science-based targets aligned with 1.5°C as opposed to 2°C or well-below 2°C (Source). stakeholders are informed of the sustainable criteria.
xxxix Through the Carbon Neutrality Partnership, the Hong Kong Government encourages Carbon Neutrality partners from public and private sectors to take lead to xliv BIM is the use of software to generate and manage digital building information throughout the building lifecycle, encompassing the building design and
deepen and accelerate their pace in pursuing low-carbon transformation, so as to set examples for different sectors in society and the public, drive the green construction processes. BIM can help avoid building material waste and reduce energy consumption.
economy, create more green employment opportunities and promote climate action (Source). xlv A digital twin of a construction project is a digital replication of the built environment in a 3D model, displaying actual real-world use and performance data using
xl Embodied carbon is most often used in the context of the built environment, where it is presumed to include emissions from raw material extraction, cameras, sensors and Internet of Things (IoT) devices.
transportation of materials, materials wasted, building operations and maintenance, and the emissions a building continues to produce after it is no longer in use. xlvi DfMA is a design approach with a focus on the ease of manufacturing and efficiency of assembly.
xli RMI is an independent, non-partisan, nonprofit organization of experts across disciplines working to accelerate the clean energy transition and improve lives.

24 25
 Hong Kong’s Leading Practices in the
Construction Phase
Hong Kong in particular supports the adoption of MiC, as MiC can reduce on-site
pollution, save construction time and address the problem of labour shortage in
Hong Kong’s construction industry. In 2019, the Hong Kong government introduced
the gross floor area (GFA) concession for MiC, where 6% of the floor area
constructed by MiC could be disregarded from the calculation of the allowable build
area of development, on top of the existing 10% GFA concession for sustainable
built environments that are Building Environmental Assessment Method (BEAM)
Plus certified.36 The 2022-23 Budget further raised the GFA concession for MiC from
6% to 10%, while providing a 10% site coverage (SC) concession and supporting
applications for minor relaxation of building height restrictions in recognition of the
additional floor area and storey height required by MiC.37
3 Use and Maintenance Phase
As building operation and maintenance account for a large
portion of the carbon emissions of the building lifecycle,
GBA real estate companies strive to adopt low-carbon
practices in two key ways: firstly, by enhancing building
operational efficiencies through the use of advanced
technologies and renewable energy, and secondly, by
implementing green lease to lock in collaboration between
landlords and occupiers to achieve green targets.
Hong Kong’s Leading Practices in the Use and
Maintenance Phase
BEAM Plus is Hong Kong’s well-established benchmark for assessing the operational
efficiency of green buildings. It is widely used by owners to assess and improve the
sustainability performance of their buildings. For example, HK’s first AI-enabled smart
building used the BIM-enabled asset management system to track energy consumption
through machine learning and predictive maintenance.38 It achieves 34% annual energy
saving compared with BEAM Plus baseline performance.39
In addition to ensuring that new building have a high energy
efficiency, the retro-commissioning and retrofitting of
existing buildings is equally important in the move towards
decarbonisation, especially in Hong Kong where existing
buildings make up a large part of the building stock. 85% of
buildings in Hong Kong are at least 10 years old and in need of
extensive retrofitting.40 Installing renewable energy systems,
such as solar panels and waste-to-energy tri-generation
systems, in existing buildings is an important measure on the
xlvii HVAC is one of the major sources of a building’s energy use in sub-tropical climates like in Asia.
26
Use of Technologies and Renewable Energy
Adopting advanced technologies has been the key to green
building operation and maintenance. Advanced technologies
used in green building operation include BIM, Internet of
Things (IoT), AI-powered building management systems, and
Automation, which optimise energy consumption and increase
the efficiency of buildings during the operational stage.
path to decarbonisation. Moreover, the upgrading of heating,
ventilation and air-conditioning (HVAC)xlvii systems plays a
significant role in energy saving. Overcrowded development
is an important issue in Hong Kong due to limited land
supply. High-rise buildings, coupled with high-density urban
development, exacerbate the Urban Heat Island effect in Hong
Kong. This results in higher energy demand for air-conditioning
and the associated carbon emissions.
Hong Kong’s Leading Practices in the Use and
Maintenance Phase
A leading real estate investment trust (REIT) in Hong Kong has identified more than
40 existing sites in their portfolio for installing solar power systems in the future,
which would collectively have the potential to become the largest private solar power
generation project in the city by 2024.28 In another instance, a leading property
developer aims to have 100% renewable energy in all its GBA rental properties by the
end of the financial year 2026.41
A leading provider of HVAC engineering services headquartered in Hong Kong has
worked with many property owners in Hong Kong to upgrade or maintain their HVAC
system in compliance with evolving energy efficiency standards.42
Green Leasing: Collaboration with Landlords and and occupation. For landlords, obligations in green leases
Occupiers to Achieve Green Targets. may include increasing the building’s efficiency through
capital improvements, and installing nature-based or on-site
A green lease incorporates clauses relating to environmental renewable energy systems. On the other hand, tenants might
obligations thereby facilitating landlord-tenant collaboration to agree to minimise waste and reduce energy consumption
achieve carbon emission reduction across building operation when carrying out repairs and alternations.
Hong Kong’s Leading Practices in the Use and
Maintenance Phase
Real estate companies in Hong Kong have adopted innovative and leading-edge
practices with regard to green leasing. For instance, in 2022, a leading Hong Kong
company launched Green Performance Pledge (GPP)xlviii, a landlord-tenant partnership
to reduce energy, waste and water.43 The GPP also helps the company meet its Scope 3
GHG reduction targets which aim to reduce tenants’ carbon emissions.
xlviii GPP is a performance-based landlord-tenant partnership. The GPP covers the entire tenancy cycle in the two core areas of fit-out, and operation, with the intention
of achieving a significant impact in terms of energy, water, and waste reduction.
27
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2
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Glossary 3
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Term/Acronym/Abbreviation Interpretation
4
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BEAM Building Environmental Assessment Method
BIM Building Information Modelling 5
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CECEPEC CECEP Environmental Consulting Group Limited
6
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CIC Construction Industry Council
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GBA Guangdong-Hong Kong-Macao Greater Bay Area 7
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GHG Greenhouse gas

8
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GPP Green Performance Pledge
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GSSS bonds Green, social, sustainability and sustainability-linked bonds
HKGBC Hong Kong Green Building Council 9
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HKGFA Hong Kong Green Finance Association
10
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HKMA Hong Kong Monetary Authority
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HVAC Heating, ventilation and air-conditioning
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KPIs Key Performance Indicators 11
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SASAC State-owned Assets Supervision and Administration Commission of the State Council
12
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SBTi Science Based Targets initiative
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SFCS Sustainable Finance Certification Scheme 13
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SLLs Sustainability-linked loans ESG Framework. https://www.hkex.com.hk/News/Regulatory-Announcements/2023/230414news?sc_lang=en

SOEs State-owned enterprises

14
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SPTs Sustainability Performance Targets
The Index HSBC Greater Bay Area ESG Index 15
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PBOC The People’s Bank of China https://m.mp.oeeee.com/a/BAAFRD000020230329777822.html
PRD Pearl River Delta
PRI Principles for Responsible Investment
16
Hong Kong Monetary Authority. (2023). HKSAR Government’s Institutional Green Bonds Offering.
https://www.hkma.gov.hk/eng/news-and-media/press-releases/2023/06/20230601-5/
PV Photovoltaic
TCFD Task Force on Climate-Related Financial Disclosures 17
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UNSDG United Nations Sustainable Development Goals https://www.hkma.gov.hk/eng/news-and-media/press-releases/2023/01/20230105-4/

Note: In alphabetical order

18
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19
GovHK . (2023). Guangdong-Hong Kong-Macao Greater Bay Area financial institutions deepen collaboration in green finance
https://www.info.gov.hk/gia/general/202304/24/P2023042400316.htm?fontSize=1

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Guangdong-Macao In-Depth Cooperation Zone in Hengqin. (2023). 关于印发《横琴粤澳深度合作区企业赴澳门发行债券专项办法》的通知. http://
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21
Hong Kong Monetary Authority. (2023). Discussion Paper: Prototype of a Green Classification Framework for Hong Kong(Annex). https://www.
hkma.gov.hk/media/chi/doc/key-information/guidelines-and-circular/2023/20230530c1a2.pdf
39
HKBGC. BEAM Plus Online Exhibition. https://greenbuilding.hkgbc.org.hk/projects/view/211
40
JLL. (2022). Hong Kong must increase retrofit rate to reach net-zero targets: JLL
85% of buildings in the city require extensive retrofitting and set decarbonisation goals.
https://www.jll.com.hk/en/newsroom/buildings-require-extensive-retrofitting-and-set-decarbonisation-goals

22
SCMP. (2023). Green finance: Greater Bay Area pilot for climate-mitigation projects to meet international standards, draw global investors 41
New World Development Company Limited. (2022). New World Development Announces Approval of Near-Term 1.5°C. Aligned Science Based
https://www.scmp.com/business/article/3218463/green-finance-greater-bay-area-pilot-climate-mitigation-projects-meet-international-standards- Targets and Commitment to Net-Zero. https://www.nwd.com.hk/content/new-world-development-announces-approval-near-term-15%C2%B0c-
draw aligned-science-based-targets-and#:~:text=In%20January%202021%2C%20NWD%20launched,for%20all%20Greater%20China%20rental

23
National Bureau of Statistics, the People’s Republic of China. (2023). 分行业增加值构成-房地产业增加值. https://data.stats.gov.cn/easyquery. 42
HKTDC, LINK. (2023). Hong Kong Green Capabilities in Real Estate Development and Property Management: RCEP Opportunities. https://
htm?cn=C01 portal.hktdc.com/resources/RMIP/20230427/dckgk9qe-SEtUREMgeCBMaW5rIEdyZWVuIEJ1aWxkaW5nIFJlcG9ydA==.pdf

24
Census and Statistics Department, The Government of the Hong Kong Special Administrative Region, Table 310-34101: Gross Domestic 43
Swire Properties. Green Performance Pledge. https://www.swireproperties.com/en/about-us/50th-anniversary/sustainability/27-green-pledge/
Product (GDP) by economic activity at current prices. https://www.censtatd.gov.hk/en/web_table.html?id=310-34101

25
Statistics and Census Service, Government of Macao Special Administrative Region. (2023). Macao in Figures 2023 https://www.dsec.gov.mo/
getAttachment/1a9589b1-d0e4-4268-9227-53421c0aff47/E_MN_PUB_2023_Y.aspx

26
Construction Industry Council. CIC Sustainable Finance Certification Scheme. https://sfcs.cic.hk/en/About#:~:text=To%20support%20the%20
HKSAR%20Government%20in%20positioning%20Hong,assessment%20system%20for%20entities%20implementing%20sustainable%20
construction%20practices.

27
China Green Building Technology and Investment Development. (2022). 研究丨中国建筑节能协会发布《2022中国建筑能耗与碳排放研究报告》.
http://www.gbtic2060.com/nd.jsp?groupId=62&id=586 Table of Indicators
28
Link Asset Management Limited and HKTDC Research. (2023). Hong Kong Green Capabilities in Real Estate Development and Property
Management: RCEP Opportunities. https://portal.hktdc.com/resources/RMIP/20230427/dckgk9qe-SEtUREMgeCBMaW5rIEdyZWVuIEJ1aWxkaW
5nIFJlcG9ydA==.pdf Figure 15. Indicators for regional/cities and industry level

29
广东省住房和城乡建设厅. (2021). 关于印发《广东省绿色建筑创建行动实施方案（2021-2023）》的通知. http://zfcxjst.gd.gov.cn/gkmlpt/content/3/3581/ First-level Indicator Second-level Indicator
post_3581862.html#1422
Corporate CDP disclosure performance
Corporate science-based climate commitments
30
The Government of the Hong Kong Special Administrative Region. (2021). Hong Kong’s Climate Action Plan 2050. https://www.climateready.
gov.hk/files/pdf/CAP2050_booklet_en.pdf Air quality
Energy use efficiency
Environment
31
《广东省建筑节能与绿色建筑发展“十四五”规划》. 广东：到2025年，绿色建材应用形成长效机制. http://www.cbminfo.com/BMI/zx/_465637/7151766/ Water use efficiency
index.html
Electricity use efficiency
Public sector’s contribution to environmental protection
32
Construction Industry Council. CIC Carbon Assessment Tool. https://cat.cic.hk/
Urban greenness
33
Swire Properties. (2023). Sustainable Development Report 2022. https://sd.swireproperties.com/2022/pdf/en/ Economic development
SwirePropertiesSustainableDevelopmentReport2022_EN.pdf Economic contribution of tertiary industry
Economic and Social Development Employment situation
34
Chen, L., Huang, L., Hua, J. et al. (2023). Green construction for low-carbon cities: a review. Environ Chem Lett 21, 1627–1657.
Public sector’s contribution to education
https://doi.org/10.1007/s10311-022-01544-4
Innovation and technological advancement
35
广东省住房和城乡建设厅. (2022). 广东省住房和城乡建设厅等部门关于加快新型建筑工业化发展的实施意见. Activeness of market players
Corporate Governance
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Activeness of market players
36
Buildings Department. (2019). Concession for Gross Floor Area for Buildings Adopting Modulated Integrated Construction. https://www.bd.gov.
Investor commitment to sustainable investing
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Volume of sustainable debt instruments
37
Hong Kong Government. (2022). The 2022-2023 Budget. https://www.budget.gov.hk/2022/eng/budget23.html Number of ESG mutual funds
Policy Policies related to sustainable development in the GBA
38
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Source: CECEPEC
gov.hk/sites/default/files/2023.03%20Discover%20new%20ideas%20and%20business%20opportunities%20in%20Hong%20Kong%20
%E2%80%93%20The%20City%20of%20Smart%20Green%20Buildings.pdf

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