Is Green Finance Green Enough? A Call to Action


As more and more people wake up to the realities of global warming, the concept of green finance has been gaining traction. In a nutshell, green finance is the concept of funnelling of financial investments into projects which are deemed to be ‘sustainable’ development.

As a regional financial powerhouse, it has become government policy to take a lead in green finance in recent years with various policies aimed at promoting low-carbon transition and sustainable infrastructure building. This is exemplified by the government’s policy address announcing Hong Kong’s intention to take the lead on green bond issuance via the green bond scheme.

But the question comes down to, have these initiatives truly benefited our world’s environment or is the old way of doing things causing more damage (with ‘green’ nothing more than being a cosmetic makeover on the surface)?

Is it Green Enough?

“Leadership is action, not position.”

- Donald H McGannon

As it stands, the existing definition of green finance is, sadly, a loose one. In this connection, assets and/or projects and/or products which ‘aims’ to deliver positive sustainable impact may already be considered as ‘green’. This is reflected in, amongst others, Hong Kong’s green bonds and other green instrument.

The result is that a number of a number of private developers have been able to obtain financial benefits from the jurisdiction’s green initiative despite the fact that they have failed to achieve any of the green objectives as set out, leading to much criticisms by the public in turn.

The Missing Factors

To address the existing policies’ shortcoming, this article proposition that instead of simply assessing a project of it’s green value ab initio, administrators ought to consider the entire lifecycle of a project before coming to the conclusion whether a project is truly green (e.g. commencement, operative life cycle and retirement).

For example, it is well known that despite the fact that wind energy is considered a form of renewable energy, not enough attention has been paid in whether the sequence of events leading to the live running of the ‘green’ infrastructure is green as well. Alas, Green Finance has been known to have ignored its own direct impact on the climate and environment, a weakness of which often leads to an erosion of faith in the initiative itself.

Take the number of ‘physical’ green conferences (pre-COVID era) leading up to the issuing of the green bond for example, none of the environmental expenses in the form of travelling (by jets), meetings, months of fossil fuel generated electricity consumed are taken into consideration. Conversely, the tonnes of CO2, chemicals and pollutants emitted during the course of construction of a green infrastructure are similarly oftentimes omitted.

“It is hard to LEAD a calvary charge if you think you look funny on a horse.”

- Adlai E. Stevenson

How to Green-Calibrate?

The good news is, the power rests with the investor. Green investors should therefore, as a matter of green due diligence (“Green DD”), consider greening their investment process by requiring projects to declare their carbon development costs and seeking to have options that requires the neutralization of their adverse impact with the product lifecycle factored in.

On the execution level, it can be insisted as a term of the bond that options can be exercised and credits retired where the project is to guarantee that the total carbon impact of the bond has been positively offset.

Alas, more attention should be drawn towards whether “embedded carbon” in supply chains and industrial process has been accounted for. Until the government have a more stringent process in allowing which projects to self-identify as green, the problem of failure in Green DD will still exist.


“You don’t lead by hitting people over the head. That’s assault, not leadership.”

- Dwight Eisenhower

Regulators and government administrators do not need to re-invent the wheel. Already, there are plenty of widely acknowledged standards which can guide various bodies in properly identifying which projects are green and which are not. Whilst this articles calls for government to step in to standardize the assessment of whether projects are green (and their entitlement to government incentive thereof), that is not to say that the government should come in with a heavy hand.

Alas, industries must be shown the benefits of pursuing green objectives rather than sticking to the status quo.

On the private side, both investors and developers should pay more attention to Green DD with specific terms and conditions incorporated to ensure that the ultimate carbon benefit is in the positive, otherwise, such project will be doing more harm than good, making it nothing more than a white elephant.


Solicitor, ONC Lawyers

Joshua Chu is a Litigation Solicitor qualified to practice in Hong Kong. Before becoming a lawyer, Joshua worked in the healthcare industry serving as the IT department head at a private hospital as well as overseeing their procurement operations.

Since embarking upon his legal career, his past legal experience includes representing the successful party in one of Hong Kong’s first cryptocurrency litigation cases as well as appearing before the Review Body on Bid Challenges under the World Trade Organization Government Procurement Agreement concerning a health care industry related tender.

Today, Joshua’s practice is mainly focused in the field of dispute resolution and technology law.

Aside from his legal practice, Joshua is currently also a Senior Consultant with a regulatory consulting firm which had been founded by ex-SFC Regulators as well as being a management consultant for the Korean Blockchain Centre.

Consultant, ONC Lawyers