Strengthening Airport Resilience
The year 2021/22 marked another challenging year for Hong Kong International Airport (HKIA) while COVID-19 continues to affect different industries in Hong Kong as well as the global economy. We remained on course in our sustainability efforts and made steady progress in transitioning towards a more sustainable path amidst the pandemic. Here are the updates on our key initiatives:
- Sustainable Finance Framework - We have had a strong kickoff to 2022 with the publication of AAHK’s Sustainable Finance Framework (SFF), which sets out how AAHK intends to enter into Sustainable Finance Transactions to fund expenditure on projects that will deliver environmental and/or social benefits. The SFF has been prepared in line with the latest international standards and supports our pledge to become the world’s greenest airport.
- Second Party Opinion - We have also obtained a Second Party Opinion from Sustainalytics for the SFF, with respect to its alignment with the Green Bonds Principles, Green Loan Principles, Social Bond Principles, Social Loan Principles and Sustainability Bond Guidelines.
- A Five-year Green Bond - Following the establishment of the SFF, we are very pleased to announce the successful issuance of the 5-year US$ 1bn green tranche as part of the US$4bn offering on 5 January 2022. The 5-year green tranche was well-received by global green investors, and has also been issued the Green Finance Certificate (pre-issuance stage) by the Hong Kong Quality Assurance Agency. Further details about the green bond issuance are included in the ‘Spotlight’ section.
- HKIA Business Partners Carbon Support Programme - To support the HKIA Net Zero Carbon Pledge and 2035 midpoint target, AAHK has partnered with the Business Environment Council to develop and deliver the HKIA Carbon Capacity Building Programme for airport business partners. The launch event was held online on 4 Mar 2022 with around 70 attendees from 27 different companies. We are in the process of establishing Technology Working Groups to pilot new technologies among the airport community and push forward innovative and energy efficient solutions. A Green Innovation and Technology Fund will be launched to support this piloting process.
We also have obtained a number of recognitions which I am proud to share below:
- Terminal 2 Concourse (T2C) and Air Traffic Control Tower – Provisional Platinum - Together with a new Air Traffic Control Tower, the T2C is a new terminal facility of the 3RS Project with green and innovative features incorporated into its design. The project has attained the Provisional Platinum rating under BEAM Plus. It is designed with high energy-performance glazing on building façades to provide excellent thermal insulation performance.
- Climate Change Business Journal Business Achievement Award 2021 - The Climate Resilience Study conducted by AAHK was selected for Climate Change Business Journal Business Achievement Award 2021- Industry Leadership: Airport Resilience. The study was underpinned by scenario analysis and developed a Climate Adaptation & Resilience Plan based on an assessment of prioritized physical climate risks relating to key assets and operations, and a transition risk analysis to examine potential impacts associated with the transition to a low-carbon economy.
As we move forward into 2022, sustainability will remain at the centre of our recovery plan and long term development vision. We will continue to engage with our airport business partners and ensure the smooth implementation of our sustainability programmes make HKIA a more sustainable airport.
Peter Lee
General Manager, Sustainability
Airport Authority Hong Kong
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AAHK's Sustainable Finance Framework and Green Bond
Q & A with Julian Lee, Executive Director, Finance, AAHK
Q: What is a green bond? How is it different from traditional bonds?
Green bonds differ from traditional bonds in the use of proceeds, with proceeds from green bonds used to finance projects that have positive environmental benefits exclusively, in our case, these would be the eligible projects under AAHK's Sustainable Finance Framework (SFF).
AAHK’s SFF sets out how AAHK intends to enter into Sustainable Finance Transactions (SFTs) to fund expenditure on projects that will deliver environmental and/or social benefits and support AAHK’s objective to become the world’s greenest airport, which will also further the development of sustainable urban infrastructure in support of the United Nations Sustainable Development Goals.
Q: Why would AAHK issue a green bond?
There has been strong momentum in the sustainable finance market sector, with investment activity across global markets reaching record heights. We believe this is due to growing awareness of sustainability issues, as well as the increased understanding among investors on long-term impacts relating to climate change. Along with the recent announcement of our new airport-wide Net Zero Carbon Pledge, we considered this to be an excellent opportunity to leverage our sustainability performance with the issuance of our inaugural green bond. The issuance of a green bond also demonstrates our support of the Hong Kong Government’s policy to develop Hong Kong as an international sustainable finance hub.
I also note that the green bond issuance forms part of our US$4.0 billion multi-tranche offering across 5, 10, 30 and 40-year tenors, with the 5-year tranche being the green bond. We are very pleased with the successful launch of this jumbo bond offering, which represents the first Hong Kong issuance in 2022. This landmark transaction has set multiple records; it is the largest bond issuance for an airport operator globally, the largest bond deal since 2004 from Hong Kong issuers, and the largest ever debut corporate ESG bond in Hong Kong and Asia Pacific, just to name a few.
Q: How will the proceeds be used (generally)?
As I mentioned earlier, green bonds are finance instruments whereby funds are allocated to environmental projects, so we will use the proceeds of our 5-year green tranche to finance or re-finance Eligible Green Projects under AAHK’s SFF. The eligible environmental project categories include green buildings, clean transportation, energy efficiency, renewable energy, pollution prevention and control, water and wastewater management, climate change adaptation, and terrestrial and aquatic biodiversity. As you can see, the list is quite extensive, and this is evidence of our ongoing efforts and commitment towards driving sustainable growth at HKIA.
Q: What were investors interested in, and what common expectations did they have?
We received overwhelming responses from investors around the world, with the 5-year green tranche receiving encouraging demand from global green investors, which accounted for 59.4% of final allocation.
Having AAHK's inaugural SFF and the Second Party Opinion (SPO) by Sustainalytics published in November 2021 placed us in a strong position, as investors showed significant interest in our sustainable development initiatives and were appreciative of our efforts to date. Some questions posed by investors were related to ESG, particularly in the areas of carbon emissions, past sustainability performance and governance.
It is important to note that due to the targeted nature of the green bond, there is demand for transparency and disclosure in the use of proceeds towards financing green projects and initiatives. We will monitor the use of proceeds for each sustainable finance transaction and report our progress on eligible projects in our Green Bond Report via AAHK’s annual sustainability reports on an annual basis until full allocation. We aim to provide all investors with a transparent and accurate insight into our sustainable development efforts.
Q: How could a green bond benefit AAHK and the wider community?
As interest in sustainable finance continues to grow rapidly across the globe, we saw this as an opportune window to highlight our sustainability management practices and initiatives at HKIA. The green bond issuance enables us to continue achieving our sustainable development objectives, fostering a robust culture of sustainability across the organisation and reinforcing AAHK’s commitment to becoming the world’s greenest airport.
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Updates on Task Force on Climate-related Financial Disclosures (TCFD)
Investor and shareholders are expecting more companies, especially those within vulnerable sectors, to report the impact of climate-related risks systematically, and demonstrate their readiness to adapt to climate change impacts. Such disclosure allows investors to easily compare companies’ exposure to climate-related risks and opportunities and they will be better equipped to incorporate these risks into their investment and business decisions.
To this end, disclosure of climate-related information and alignment with the Task Force for Climate-related Financial Disclosures (TCFD) recommendations is becoming increasingly common. Meanwhile, Hong Kong’s Green and Sustainable Finance Cross-Agency Steering Group has announced plans for mandatory TCFD-aligned climate-related disclosures by 2025.
Published in 2017, the TCFD was set up by the Financial Stability Board to provide a framework based on a set of consistent disclosure recommendations for use by companies as a means of providing transparency about their climate-related risk exposures to investors, lenders and insurance underwriters. The TCFD Recommendations are structured around four pillars - governance, strategy, risk management, and metrics and targets, that represent core elements of an organization’s operation. The TCFD also published supplemental guidance which provides additional context and suggestions for implementing the recommendations.
In October 2021, TCFD published two additional documents to support decision-useful disclosures. One of these is the Guidance on Metrics, Targets, and Transition Plans to support preparers in disclosing decision-useful information and linking those disclosures with the estimates of financial impacts. The other document contains updates to Annex on Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures which was initially published in 2017.
AAHK launched its first TCFD Statement in 2020/21 Sustainability Report last year making HKIA one of the first Asian airports to publish a statement, setting precedence for other airports.
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Launch of HKIA Carbon Capacity Building Programme
In March 2022, AAHK launched the HKIA Carbon Capacity Building Programme in partnership with the Business Environment Council (BEC) to support business partners to achieve the HKIA 2050 Net Zero Carbon Pledge and 2035 midpoint target. The Programme aims to leverage insights from other businesses via BEC’s Low Carbon Charter (LCC) and provide training to ensure all business partners have the necessary skills to effectively manage carbon and plan for carbon reduction initiatives.
The first event was held online on 4 Mar 2022 to provide further information on the programme with guest speakers, Sophie Punte from We Mean Business Coalition to provide insights on how climate change is impacting businesses from international perspective, and Prof. Christine Loh to talk about the local drivers and corporate responsibility to decarbonisation.
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Cathay Pacific co-founds the Aviation Climate Taskforce
Cathay Pacific (CX) has formed the Aviation Climate Taskforce (ACT) together with Boston Consulting Group and other airline leaders. The ACT is a non-profit organisation that focuses on tackling carbon emissions in aviation through innovation and collaboration. It aims to drive new innovations and accelerate the research and development life cycle of emerging technologies, such as synthetic fuel, bio-based sustainable aviation fuel pathways, and hydrogen technologies, to devise short- to long-term carbon reduction solutions.
Together with CX’s pioneered efforts in decarbonisation technologies over the years, this cross-sector partnership contributes to the airline’s ongoing decarbonisation efforts and commitment to reaching net-zero carbon emissions by 2050.
Learn more.
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Hactl Releases Sustainability Report 2021
Hactl released its Sustainability Report 2021 to showcase the concerted programme of sustainability actions over the past year. The report covers Hactl’s environmental, social, and governance (ESG)-related performance from 1 January to 31 December 2021. It also features HACTL’s achievements, ongoing focus and plans for the future, and highlights its human-centric approach in practising and promoting sustainability.
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We are eager to share and showcase environmental and sustainability practices. Please contact Tammy Fung and Iris Pang to discuss your ideas.
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