As one of China's most open and economically vibrant areas, the GBA’s Outline Development Plan for the Guangdong-Hong Kong-Macao Greater Bay Area includes sustainable development concepts such as green development and improving people’s livelihood. HSBC has released the first GBA ESG Index in Q4 2022 to effectively reflect the status and direction of sustainable development in the GBA.
Developed in partnership with China Energy Conservation and Environmental Protection Group (CECEP) Environmental Consulting Group Limited, a consultancy specialising in sustainable management as well as green and sustainable finance, the HSBC GBA ESG Index provides holistic insights into the area’s sustainable development.
The GBA ESG Index uses a combination of macro and micro methodologies and is updated quarterly. As well as the main GBA ESG Regional Index, a number of sub-indices are compiled, including City Sub-indices, Industry Sub-indices and Sub-indices by company size. The GBA ESG Index aims to objectively reflect and track the GBA’s sustainable development and its ESG.
From a macro perspective, we analyse the region, cities and industrial characteristics from five areas: policy, environment, economic and social development, corporate governance, and green and sustainable finance. The ESG performance of companies is evaluated from a micro perspective using the following five first-level indicators: environmental, social, governance, green and sustainable finance, and external assurance. To these an adjustment indicator, ESG reputation, is added which takes negative or controversial ESG events into consideration.
The GBA is innovating quickly and at scale, with investment in sci-tech and consumer goods in focus for Q3 2024. The GBA is also bolstering its ESG standards for businesses, and the hydrogen sector is poised to develop further across the region.
In Q3 2024, the Greater Bay Area ESG Regional Index increased by 3% year-on-year, reaching a value of 121.68. In Q3, Shenzhen and Hong Kong took steps to perfect their ESG standards, focusing on disclosures for small and medium-sized enterprises and alignment with international ESG reporting standards, respectively. The Green, Social, Sustainable, and Sustainability Performance-Linked (GSSS) bond market within the GBA recovered in Q3 2024, with governments accounting for 60% of the total issuance of GSSS bonds within the GBA. In addition, the GBA now has a large number of hydrogen energy companies, that are poised to grow in the near future.
Sci-tech and consumer goods trade-in were key areas of focus in Q3 2024, where, according to public data, loans issued by financial institutions to support sci-tech industries have increased. Mid- and long-term loans to the scientific research and technology services sector increased 23% year-on-year in Guangdong Province. Furthermore, at the end of August 2024, Guangdong Province rolled out a policy to further support the trade-in of green products. By the end of September, over the space of one month, the number of applications to qualify for the household appliance trade-in subsidy exceeded 9.30 million, with more than 1.45 million appliances being replaced.
Furthermore, the issuance of GSSS bonds recovered in Q3 2024, with the volume of GSSS bonds issued in the GBA reaching RMB54.31 billion, representing a quarter-on-quarter increase of 11%. Governments were the most significant source of GSSS bonds, according to our research, followed by the financial sector. Over the same period, the Hong Kong government issued a large volume of green bonds under the Government Sustainable Bond Programme, accounting for around 46% of the total issuance volume of green bonds within the GBA.
In Q3 2023, the average value of the GBA ESG industry Sub-indices recorded a year-on-year increase of 20%, reaching a value of 211.67. Among the key industries described in the report, hydrogen is demonstrating clear growth. The Pearl River Delta cities have explored the production of green hydrogen to broaden the scope of application for hydrogen energy. Hong Kong is also looking for opportunities to tap into the decarbonisation potential of hydrogen within the context of existing infrastructure. The report also discusses green and sustainable financing available for the hydrogen industrial chain. Certain activities within the supply chain have been recognised as potential green project types according to leading green and sustainable taxonomies. Differences in taxonomies can create increasing financing opportunities.
There is no standard definition of, measurement criteria, or methodology for ESG/Sustainability assessments. HSBC did not conduct specific due diligence on the methodology used in the research for this report. ESG/Sustainability assessment is an evolving area and new regulations and measurement criteria may come into effect which may affect how a specific criteria such as a geographical area, industry or business sector is categorised or labelled. A criteria such as geographical location, industry or business sector which is considered to fulfil ESG/sustainable criteria today may not meet those criteria at some point in the future.
Today we finance a number of industries that significantly contribute to greenhouse gas emissions. We have a strategy to help our customers to reduce their emissions and to reduce our own. For more information visit www.hsbc.com/sustainability
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