Hong Kong Exchanges and Clearing ( HKEX ) is taking steps towards transforming Hong Kong into a credible hub for voluntary carbon trading in Asia through its Core Climate platform.

To gain insights into the platform’s strategic direction and HKEX’s broader sustainability roadmap, The Asset spoke with HKEX’s group chief sustainability officer ( CSO ) and group general counsel Paul Chow, whose appointment in October 2024 as the exchange’s first group CSO came after years of groundwork in building the platform.

“We’ve always done a lot in sustainability,” Chow explains, “but the creation of this role and our sustainability division helps us coordinate efforts across our diverse roles as regulator, market operator and listed entity.”

The division’s remit spans carbon footprint management, corporate responsibility ( including the HKEX Foundation ) and driving sustainability across HKEX’s many functions. Notably, HKEX achieved carbon neutrality in 2024 and now targets net-zero emissions by 2040.

At the heart of HKEX’s environmental efforts, Chow points out, lies Core Climate, the city’s only carbon trading platform, launched in 2022. While still operating in a voluntary market environment – Hong Kong has no carbon tax or compliance scheme – the platform has grown into a central mechanism for climate-conscious companies seeking high-quality carbon offsets.

However, “unlike Singapore or mainland China, we don’t have policy-driven demand like carbon taxes or compliance markets,” Chow shares. “So, we’ve had to focus heavily on advocacy.”

Thus, the exchange has taken an active role in educating corporates on carbon trading, launching the Hong Kong Carbon Market Council, and hosting the International Carbon Market Summit in collaboration with the territory’s Securities and Futures Commission.

Despite the policy vacuum, the Core Climate platform has found traction among mainland Chinese companies. Many of these firms, particularly exporters, Chow notes, seek carbon credits to meet European Union sustainability regulations, with, for instance, a large mainland Chinese shipping company offsetting the emissions created by its vessels enroute to Europe via credits from the platform.

HKEX is also forging cross-border links. Through memorandums of understanding with the Beijing and Shenzhen Green Exchanges, it is exploring alignment with China’s voluntary carbon markets. These partnerships lay the groundwork for broader connectivity across Greater China.

Further afield, HKEX is working within the Belt and Road Initiative ( BRI )’s International Green Development Coalition – one of only two Hong Kong institutions involved ( the other being the Hong Kong Monetary Authority ). This includes participation in both the Green Investment and Finance Partnership and the Green Low-Carbon Expert Network, with the goal of extending carbon trading collaboration across BRI economies.

Looking ahead, HKEX is evaluating the expansion of Core Climate beyond carbon credits. The platform currently supports Gold Standard- and Verra-certified credits – two of the world’s most reputable standards. And the platform, Chow reveals, is considering additional offerings, such as renewable energy certificates and other environmental assets.

“There’s potential for broader ESG [environmental, social and governance] product development,” he points out, especially as mainland China pushes forward with its ambitious 2030 peak emission and 2060 net-zero targets. Given the pace of investment in renewables and electric vehicles on the mainland, HKEX sees significant opportunity in aligning with China’s energy transition efforts.

Core Climate’s value proposition, Chow states, lies in its ability to serve as a credible, internationally aligned platform in Asia’s fragmented carbon markets. While it cannot yet match the scale or regulatory heft of compliance markets, he concedes, it is positioning itself as a strategic bridge, particularly for Chinese enterprises engaging with global partners.

“We don’t link markets per se,” Chow clarifies, “but we see real demand from mainland companies trading with the EU that want to meet their carbon obligations through our platform.”

Ultimately, in a region where carbon policies and standards vary widely, HKEX is placing a long-term bet that voluntary action, credible certification and cross-border cooperation can carve out a meaningful carbon marketplace in Hong Kong.