【ESG News】Global Trends Biweekly Newsletter Issue 41 (2025.8.25-2025.9.8)

Hong Kong ESG trends

HKMA launches public consultation on Phase 2A prototype of Hong Kong Taxonomy for Sustainable Finance

Building on the publication of Phase 1 of the Hong Kong Taxonomy in May 2024, the HKMA has adopted a phased approach to further enhance the taxonomy, starting with Phase 2A, and progressing through subsequent phases.

The Phase 2A prototype introduce s several enhancements aimed at supporting Hong Kong’s decarbonisation efforts, facilitating the region’s transition to a low-carbon economy, and reinforcing Hong Kong’s position as an international financial centre and a leading green finance hub. The prototype development has been guided by market feedback, government policies, industry needs, and the latest technological advancements.

The key enhancements made in the Phase 2A prototype include:

1.     Expanded sector coverage: Two new sectors critical to the decarbonisation of the region and beyond, namely manufacturing and information and communications technology, have been added to the four sectors under Phase 1, increasing the total number of sectors from four to six;

2.     Increase in economic activities: 13 new economic activities have been added, bringing the total number of economic activities from 12 to 25. Updates have also been made to the technical screening criteria of a number of activities introduced under Phase 1;

3.     Transition elements: Transition elements, including interim decarbonisation targets, measures to support transition and sunset dates (which specify the time by which transition elements will conclude), have been added; and

4.     New environmental objective: A new environmental objective, namely climate change adaptation, has been introduced to address the growing funding needs for managing physical risks and responding to the increasing frequency of extreme weather events.

Source: https: //www.hkma.gov.hk/eng/news-and-media/press-releases/2025/09/20250908-3/

Lianhe Green Insights

This move represents a significant advancement for Hong Kong in the field of green and sustainable finance. It aims to provide market participants with clearer, more transparent, and more reliable definitions of green activities, to facilitate the flow of capital and to eliminate the phenomenon of “greenwashing.” The prototype of Phase 2A has made a number of improvements on the basis of Phase 1, including expanding the covered industries, increasing economic activities, introducing transitional elements and adding the environmental objective of “climate change adaptation.” The public consultation will continue until October 8, and the HKMA welcomes opinions from all sectors, which will help to further refine the taxonomy and consolidate Hong Kong’s position as an international financial centre and a hub for green finance.

International ESG trends

Mainland China ESG trends

Opinions of the General Office of the Communist Party of China Central Committee and the General Office of the State Council on Promoting Green and Low-Carbon Transformation and Strengthening the Construction of the National Carbon Market

The “Opinions on Promoting Green and Low-Carbon Transformation and Strengthening the Construction of the National Carbon Market” (hereinafter referred to as the "Opinions") issued by the General Office of the Communist Party of China Central Committee and the General Office of the State Council have been made public. The main objectives of the Opinions are as follows: by 2027, the national carbon emission trading market will basically cover the main emitting industries in the industrial field, and the national voluntary carbon emission reduction trading market will achieve full coverage in key areas. By 2030, a national carbon emission trading market based on a cap-and-trade system, combining free and paid allocation, will be basically established. A national voluntary carbon emission reduction trading market that is trustworthy, transparent, with unified methods, wide participation, and in line with international standards will also be established. A carbon pricing mechanism with significant emission reduction effects, a sound rule system, and reasonable price levels will be formed.

Source: https://www.mee.gov.cn/zcwj/zyygwj/202508/t20250825_1126119.shtml

Lianhe Green Insights

This “Opinions” is the first central document in China's carbon market field, clarifying the timetable, roadmap, and task book for the medium and long-term development of the national carbon market. As the guiding document for the construction of the national carbon market, the Opinions are not only a specific action to implement the requirements of improving the green and low-carbon development mechanism, giving full play to the role of market regulation, and creating a unified national market, but also mark the formal entry of China's carbon market construction into a new stage of development.

The People’s Bank of China, the Financial Regulation Administration, and the National Forestry and Grassland Administration Jointly Issue the “Notice on Financial Support for High-Quality Development of Forestry”

The Notice proposes to increase innovation in forest tenure mortgage loan products and services, expand the scope of mortgagable forest rights, and extend loan terms in accordance with laws and regulations, in order to boost the volume, quality, and coverage of forest tenure mortgage loans. Regions with the necessary conditions are encouraged to establish forest tenure storage institutions as needed and to encourage social capital to provide forest tenure storage and guarantee services. The Notice also encourages localities to optimize the valuation mechanism for forest rights, establish unified appraisal standards, clarify operational procedures and charging standards, and enhance the scientific and rational nature of appraisal methods. It emphasizes the need to strengthen the management and disposal of mortgaged forest rights to protect the legitimate rights and interests of mortgagees. The Notice calls for the improvement of the forest tenure mortgage registration mechanism and the exploration of the establishment of a forestry database and a trading and circulation platform to standardize and promote the market-oriented trading of forest rights.

Source: http://www.pbc.gov.cn/goutongjiaoliu/113456/113469/5817065/index.html

Lianhe Green Insights

This measure reflects the strong support of finance for the development of forestry. By innovating forest tenure mortgage loans and optimizing the mechanisms for forest tenure valuation and transfer, it promotes the coordinated development of the forestry industry and ecological construction. It also helps to achieve the “dual carbon” goals, promotes high-quality development of forestry, and provides new impetus for rural revitalization and the construction of ecological civilization.

Three Major Exchanges in Shanghai, Shenzhen, and Beijing Solicit Public Comments on Three Application Guidelines

The official websites of the Shanghai Stock Exchange (SSE), Shenzhen Stock Exchange (SZSE), and Beijing Stock Exchange (BSE) announced that, under the guidance of the China Securities Regulatory Commission (CSRC), the respective exchanges have revised the guidelines for the preparation of sustainability reports by listed companies. They propose to add three new annexes titled “Annex III: Pollutant Emissions,” “Annex IV: Energy Utilization,” and “Annex V: Water Resources Utilization” as application guidelines. These new guidelines have been open to public consultation in the market since September 5, 2025.

Unlike the initial “Guidelines for the Preparation of Sustainability Reports by Listed Companies,” the newly added application guidelines focus on the three topics of pollutant emissions, energy utilization, and water resources utilization. They provide detailed guidance and reference examples on key and difficult issues such as the identification and assessment of risks and opportunities in the relevant fields, accounting processes and methods, and key points for disclosure. These additions further provide a “manual” for the sustainability information disclosure of listed companies.

Source: https://www.sse.com.cn/lawandrules/publicadvice/c/c_20250905_10790685.shtml

https://www.szse.cn/lawrules/publicadvice/t20240208_606058.html

https://www.bseinfo.net/public_opinion/200026699.html

Lianhe Green Insights

In recent years, the three major exchanges have deeply integrated the ESG concept into the construction of capital market systems and continuously strengthened the rule-making for the disclosure of sustainable development information. The public consultation on the application guidelines this time marks a further move of China's listed companies' sustainable development information disclosure system towards being more systematic and operable.

MEE Convenes the 2025 National Carbon Market Construction Work Conference

On September 6, the Ministry of Ecology and Environment (MEE) convened the 2025 National Carbon Market Construction Work Conference in Shenzhen, Guangdong. Minister of Ecology and Environment Huang Runqiu attended the meeting and delivered a speech.

Huang Runqiu emphasized that the carbon market is an important policy tool for actively addressing climate change and accelerating the comprehensive green transition of economic and social development through market mechanisms. First, it is necessary to coordinate the relationship between an effective market and an active government. It is essential to fully respect the laws of market development, continuously stimulate the enthusiasm of carbon market trading entities, and at the same time, improve the supervision and management system to ensure the authenticity, accuracy, and reliability of data. Efforts should be made to create a fair, open, and transparent market environment, achieving a balance between "releasing vitality" and "exercising effective control." Second, the relationship between long-term goals and short-term goals should be coordinated. Long-term goals should guide phased tasks, and the realization of short-term goals should support the achievement of long-term goals. The carbon market should be gradually developed and improved to promote the formation of a carbon pricing mechanism with significant emission reduction effects, a sound rule system, and reasonable price levels. Third, the relationship between the whole and the part should be coordinated. It is necessary to strengthen the coordination between the carbon market and other policy systems, promote effective connection and synergistic enhancement between the mandatory carbon market and the voluntary carbon market, and encourage local pilot carbon markets to take the lead in exploring beneficial experiences for the construction of the national carbon market. Fourth, the relationship between domestic and international aspects should be coordinated. While basing on China's national conditions to explore a path and approach that conforms to market laws, it is also necessary to further strengthen international exchanges, dialogue, and pragmatic cooperation to promote the establishment of a scientific, fair, and reasonable global carbon market mechanism.

Source: https://www.mee.gov.cn/ywdt/hjywnews/202509/t20250906_1126977.shtml

Lianhe Green Insights

The meeting emphasized “effective market” and “data authenticity,” signaling that the national carbon market will become more standardized and transparent. Companies need to enhance their carbon management capabilities to meet stricter accounting requirements and can also more flexibly achieve emission reduction targets through market mechanisms, which will redefine their competitiveness.