Hong Kong’s Core Climate aims to facilitate trading of carbon credits, while the Hub plans to expedite Singapore’s ESG ecosystem growth.

By Farhana Sharmeen, Paul A. Davies, and James Bee

On 28 October 2022, the Hong Kong Exchange and Clearing Limited (HKEX) launched Core Climate, Hong Kong’s International Carbon Marketplace. The birth of Core Climate is a further step toward the growth of ESG initiatives in Asia, which are gaining particular traction among the continent’s stock exchanges.

HKEX hopes that Core Climate will support the global energy transition by facilitating an effective and transparent trading of carbon credits. Participants on the Core Climate platform will be able to trade, hold, settle, source, and retire voluntary carbon credits, and the platform’s carbon credits will come from internationally certified projects around the world, including carbon avoidance, reduction, and removal projects. All projects listed on Core Climate are verified against international standards, but whether HKEX will publish a specific list of international standards acceptable for this purpose is not clear at this stage.

Core Climate follows on from STAGE, an online portal that HKEX launched in 2020 to provide information on a wide range of green and social investment products; and the Hong Kong International Carbon Market Council that was developed earlier in 2022 and brought together corporates and financial institutions focused on supporting the development of an international carbon marketplace.

Core Climate is not the only recent ESG development in the Asia-Pacific region. Project Greenprint, a collection of initiatives which aims to enable a more efficient and transparent ESG ecosystem for green and sustainable finance by harnessing technology and data, has gained significant support in Singapore. On the back of strong industry interest in Project Greenprint, the Monetary Authority of Singapore (MAS) launched the ESG Hub (the Hub) on 5 October 2022 to spur collaboration between ESG fintech startups and solution providers, financial institutions, and real economy stakeholders.

With already 15 ESG fintechs and organisations set up in the Hub, the MAS stated that the aim of the Hub is to expedite the Singapore ESG ecosystem growth on three fronts:

• Growing ESG Fintechs: Facilitating the discovery, scaling, and deployment of technology solutions to address ESG needs of corporates and financial institutions, notably in terms of accurate measurement, reporting, and verification of climate and sustainability data
• Anchoring ESG Enablers: Engaging knowledge partners, financial institutions, and investors to organise key ESG initiatives out of the Hub, such as ESG fintech accelerator programmes, training and capacity-building workshops, and thought leadership events
• Supporting ESG Stakeholders: Procuring the Hub community to deploy its programmes and solutions to drive material, quantifiable impacts that support sectoral transition efforts, with particular emphasis on the eight focus sectors identified by the Green Finance Industry Taskforce (GFIT).

The establishment of the Hub is a critical milestone in the Project Greenprint journey and augments MAS’ plans to launch a digital Greenprint Marketplace in 2023.

Latham & Watkins will continue to monitor ESG developments in the Asia-Pacific region and around the globe.