Tough COVID-19 restrictions curb Hong Kong’s ambition to become green investment hub

A general view of Two International Finance Center (IFC), HSBC headquarters and Bank of China are seen in Hong Kong, China July 13, 2021. REUTERS FILE PHOTO

SYDNEY/HONG KONG — Hong Kong’s ambition to become a hub for green and sustainable business is under threat as the city persists with stringent COVID-19 border controls, making it tougher for financial institutions to attract sector specialists.

Bankers and advisors said the risks of Beijing’s “zero-COVID” policy, which has already led to a broader talent crunch in the Chinese territory, are growing as most other countries significantly ease restrictions introduced to fight the coronavirus pandemic.

Flight bans, lengthy and costly quarantine requirements, limited access to public services and the threat of families being separated should one member test positive for the virus have all spooked potential talent.

“It is getting harder and harder to find staff in Hong Kong,” said Tony Wong, founder of ESG specialist Alaya Consulting, a strategy and reporting firm.

“The city is trying to be a green investment hub globally but we cannot get the staff. COVID and the restrictions have made it harder to attract staff.”

Hong Kong had stepped up efforts in recent years to become a leader in Environmental and Social Governance (ESG), including the creation of working groups with government officials and global firms to develop a local talent pool.

Hong Kong Monetary Authority (HKMA) Deputy Chief Executive Edmond Lau last October named strengthening the city’s position as a regional green and sustainable finance hub as a priority. The HKMA had no immediate comment.

ESG funds have grown increasingly popular as the global transition to a low-carbon economy gains pace and institutional investors increasingly find themselves graded on the sustainability of their holdings. ESG investment exceeded $35.3 trillion, according to a report from the Global Sustainable Investment Alliance.

However, the ongoing tough COVID restrictions are putting Hong Kong’s ambitions to the test, with the existing foreign talent pool shrinking.

Adding to the bad news, the city this week delayed the launch of its inaugural retail green bond worth HK$6 billion ($768 million) this week because of the rapid spread of coronavirus cases.

The surge in new infections has spurred the city to impose some of the toughest current restrictions in the world, despite growing skepticism from some business leaders, medical experts and diplomats about the viability of a zero-COVID policy.

Flight bans on arrivals from nine countries, including the United States, United Kingdom and Australia, are in place until April 20.

Among other measures under the zero tolerance policy, entertainment venues are closed, compulsory testing can be imposed on entire buildings and close contacts of cases are sent to quarantine camps. In some cases, parents were separated from their hospitalised young children.

“The demand for ESG talents is massive but one would look at Hong Kong thinking they can’t travel and meet their family,” a senior sustainability executive at a global asset manager told Reuters. He declined to be named as he was not authorised to speak to the media.

Rival Singapore

The stringent COVID restrictions come on the heels of political ructions, including worsening Sino-U.S. ties, that saw an earlier exodus of expats more broadly from Hong Kong.

The ESG depletion is also being exacerbated by an easing of restrictions in Singapore, a rival regional finance and ESG hub.

Traditionally seen as risk averse, Singapore is opting for a more balanced approach of living with COVID, aiming to protect people in the densely populated island while reopening its economy and borders.

Singapore’s central bank set up a $2 billion green investments program in 2019 and has encouraged asset managers to beef up local ESG teams. A senior executive at a global asset manager said the central bank, the Monetary Authority of Singapore (MAS), was incentivising companies to boost headcounts and preferred senior management be based in Singapore. MAS had no immediate comment.

Andrea Wong, an associate director at headhunter Robert Half, said she was aware of a couple of ESG professionals relocating to places including Singapore in recent months.

“The travel and quarantine restrictions does inevitably make relocating talents from overseas to Hong Kong more difficult”, said Wong.

($1 = 7.8135 Hong Kong dollars)

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