Investment demand in carbon credits as an asset class is expected to grow.
Globally, market interest in VCMs has grown significantly, driven by the
threat of an EU carbon tax on imported goods, corporate social
responsibility, and the surge in the number of companies and countries
setting carbon neutrality goals. Over 200 companies have committed to The
Climate Pledge as of March 2022, which involves implementing decarbonisation
strategies and neutralising any remaining emissions with carbon credits.7
Furthermore, at least one fifth (21%) of the world’s 2,000 largest public
companies whose sales revenue together accounted for US$14 trillion and 220
global asset managers with US$57 trillion in assets under management have
committed to meet net-zero targets,8 and will drive demand for carbon credits to
neutralise unabated emissions. Other markets are also taking steps to become
leading carbon credit trading hubs.
HKEX’s Net-Zero Guide and enhanced ESG reporting requirements are also
expected to drive HKEX-listed companies, including A/H share companies, to
decarbonise. These will likely boost demand for carbon credits to neutralise
unabated emissions.
On the compliance market front, momentum to strengthen existing ETSs and foster
global cooperation on emission reductions will continue to be driven by the
Mainland’s “Dual Carbon” goals 9
and outcomes from the 26th United Nations
Climate Change Conference (COP26). Under the official policy document
endorsed by the State Council on Providing Financial Support for the Development
of the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) (the Opinion)10 and
major policies from the People’s Government of Guangdong Province, there is a
need to build a GBA platform for emission rights trading and financial
services, and to enable further participation from qualified foreign investors.