【ESG News】Global Trends Biweekly Newsletter Issue 59 (2026.5.11-2026.5.25)

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Hong Kong ESG trends

Cross-Agency Steering Group welcomes first sector-based operational guide on transition finance

On May 15, The Hong Kong Green and Sustainable Finance Cross-Agency Steering Group (Steering Group) welcomed the release of Transition Finance Operational Reference Guide – Phase 1 Report: Mobilizing Finance for the Transition of the Technology Sector (the Report). The Report was developed by an industry working group under the Steering Group’s transition finance workstream to drive the development of transition finance in Hong Kong.

Building on the Steering Group’s strategic priorities for 2026 to 2028 to scale up transition finance with practical guidance, the Report provides a useful toolkit for financial institutions and corporates to operationalize global frameworks and principles in this respect, and promotes good practices through a sector-based approach.

Source: https://www.hkma.gov.hk/eng/news-and-media/press-releases/2026/05/20260515-3/

Lianhe Green Insights

The roll-out of this sector-specific practical guidance for transition finance carries profound significance. It fills the gap in implementation details, providing financial institutions with operational rules to conduct transition business. Leveraging Hong Kong’s mature financial ecosystem, this guidance will effectively channel capital toward low-carbon upgrading projects in high-carbon industries, further consolidating Hong Kong’s competitive edge as a sustainable finance hub while providing a high-quality reference blueprint for regional transition finance development.

 

International ESG trends

Singapore Partners with the World Bank Group to Launch Singapore Carbon Markets Programme

The Singapore Government is collaborating with the World Bank Group on a new Singapore Carbon Markets Programme. The Singapore Carbon Markets Programme aims to tackle common problems that hinder the development and scaling up of carbon markets, and to support countries to enhance technical capabilities, institutional capacity and digital infrastructure in building capacity to benefit from high-integrity carbon markets. The programme will have three key components: 

·       Strengthening carbon market infrastructure and technology: The program will deliver toolkits to help countries develop interoperable carbon registries that are aligned with international standards and enable digital carbon abatement monitoring, reporting, and verification (MRV) to new credit types, including regenerative agriculture.  

·       Facilitating monetizing carbon credits: The program will pilot new ways of aggregating carbon credit demand and supply at the buyer-level and country-level to reduce transaction costs, crowd in demand, and de-risk projects for developers in underserved markets. 

·       Supporting host countries’ capacity building and market readiness: The program will support the development of national carbon market strategies, policies, and institutions, including through cross-country learning.  

Source: https://www.nccs.gov.sg/singapore-partners-with-the-world-bank-group-to-launch-singapore-carbon-markets-programme/#:~:text=Benedict%20Chia%2C%20Director%2DGeneral%20(,climate%20action%20and%20sustainable%20development.

Lianhe Green Insights

This initiative underscores Singapore’s strategic ambition in green finance: a pivotal transition from a mere trading hub to a formulator of foundational rules and market infrastructure for the global carbon market. The ingenuity of this program lies in its dual leverage—it channels financial capital while effectively securing a technological foothold in future carbon credit frameworks. By proliferating digital MRV and interoperable registry systems deeply engineered by Singapore across developing nations, the city-state is systematically establishing a standardized cross-border framework for carbon data.

Against the backdrop of global supply chain decarbonization pressures fueled by the EU and US Carbon Border Adjustment Mechanisms (CBAM), Singapore’s partnership with the World Bank strategically bridges high-integrity carbon credits with the trade corridors of developing economies. This approach not only mitigates the risk of long-tail markets being marginalized due to regulatory deficits, but also fortifies an institutional moat for Singapore to solidify its position as the premier carbon pricing, clearing, and settlement center for the Asia-Pacific region and beyond.

 

UN Carbon Market Body Adopts N₂O Methodology To Cut Industrial Emissions

The UN body overseeing the Paris Agreement's carbon market has adopted a new methodology to cut nitrous oxide (N₂O) emissions from nitric acid production, expanding the scope of climate action under the Paris Agreement Crediting Mechanism.

In addition to the N₂O methodology, the Supervisory Body also adopted other key methodological products to enhance implementation:

·       A methodological tool on lock-in risk, helping ensure that activities avoid “locking in” older, high-emitting technologies or practices that are not aligned with long-term climate goals.

·       A revised standard on the demonstration of additionality, strengthening how projects show they go beyond business-as-usual.

Source: https://unfccc.int/news/un-body-adopts-new-carbon-market-methodology-to-cut-potent-greenhouse-gas-from-industry

Lianhe Green Insights

This initiative marks a significant acceleration of the carbon market under Article 6.4 of the Paris Agreement (the 6.4 Mechanism) in driving global industrial deep decarbonization and transforming market quality and efficiency. By incorporating nitrous oxide (N₂O), an industrial gas with a high global warming potential (GWP), for the first time, the new methodology precisely addresses the emission pain points of heavy industries such as nitric acid production, substantially expanding the supply boundaries and premium potential of compliant carbon credits.

 

Mainland China ESG trends

 

Notice of the National Development and Reform Commission and the Ministry of Finance on Issuing the Implementation Plan for Advancing Comprehensive Ecological Compensation

Comprehensive ecological compensation is an effective approach to strengthen the protection of key regions and critical ecosystems and to stimulate the endogenous motivation of ecological protection entities by coordinating various ecological compensation policies. It carries profound significance for reinforcing national ecological security barriers, promoting coordinated regional development, and advancing common prosperity. To enhance the comprehensive benefits of ecological protection compensation, this Implementation Plan has been formulated with the approval of the State Council.

Source: https://www.ndrc.gov.cn/xxgk/zcfb/tz/202605/t20260522_1405365.html    

Lianhe Green Insights

Anchored in market-oriented and rule-of-law principles, this plan establishes a cross-departmental collaborative mechanism to bridge the transmission pathway from ecological value to economic value. Balancing conservation with development, the plan refines supporting mechanisms across compensation funds, factor trading, and green finance, while strengthening incentives and constraints. This effectively bolsters the "Dual Carbon" targets and coordinated regional development, providing a systemic and actionable institutional framework for national ecological governance.

 

Notice of the National Development and Reform Commission and the National Energy Administration on Matters Concerning the Orderly Promotion of Multi-User Green Power Direct Connection Development

On May 20, the National Development and Reform Commission (NDRC) and the National Energy Administration (NEA) issued the Notice on Matters Concerning the Orderly Promotion of Multi-User Green Power Direct Connection Development (hereinafter referred to as the "Notice"), systematically deploying the development of multi-user green power direct connection across three core dimensions: entity innovation, operational mechanisms, and market rights and responsibilities:

First, encouraging joint ventures to act as independent project entities. The Notice clarifies that, in principle, power sources and loads shall establish joint ventures to undertake project investment, construction, and operation as independent entities. This design breaks through the inherent model of load acting as the solely responsible unit. By establishing a community mechanism of shared benefits and risk-sharing, it provides crucial institutional support for exploring the integration of source-network-load-storage and nurturing a newly integrated ecosystem for green power consumption.

Second, constructing a "flexible yet resilient" operational mechanism. To standardize the operation of multi-user green power direct connection projects, the Notice establishes a control mechanism of "limiting total volume and adhering to bottom lines." This mechanism effectively secures safety boundaries while stimulating market vitality, forming a collaborative development model for the new power system characterized by "grand interconnection + micro balance."

Third, promoting projects to fairly participate in the market and fulfill social responsibilities. To this end, the Notice constructs an operational mechanism featuring clear rights and responsibilities, a combination of centralized and decentralized approaches, and the unification of safety and efficiency. By coordinating market efficiency with fairness and justice, as well as model innovation with system safety, it drives the compliant, orderly, fair, and sustainable development of multi-user green power direct connection projects.

Source: https://www.ndrc.gov.cn/xxgk/zcfb/tz/202605/t20260520_1405313.html

Lianhe Green Insights

This Notice marks a critical step for China's power system reform toward a "micro-ecosystem," with its core lying in reshaping the commercial paradigm of distributed green power and its synergistic relationship with the power grid. Through the institutional innovation of joint ventures acting as the "power source + load" entity, it breaks the limitations of the traditional model dominated solely by load, utilizing a community of shared interests to resolve the games among source, network, load, and storage. Furthermore, the "flexible yet resilient" mechanism of "limiting total volume and adhering to bottom lines" essentially carves out a distributed market space of "grand interconnection + micro balance" under the centralized architecture of the main grid.

This not only effectively resolves the bottleneck of local green power consumption, but also, under the prerequisite of ensuring system safety, provides a highly efficient and low-friction new supply model of low-carbon electricity for China's industrial green supply chain through market-oriented restructuring with matched rights and responsibilities.