Provost and Deputy Vice Chancellor Tam, Dean Cai, honoured guests, fellow members of the Faculty of Business and Economics, ladies and gentlemen.
Good afternoon to you all.
Many speeches start with polite words about what an honour it is to address the audience.
For me, though, that has never been more true than it is today.
When I graduated from the University of Hong Kong in 1983, it would never have occurred to me that I might one day be called upon to address a graduating class.
I have maintained a close connection with the university – and the many friends I made there – since I left.
But this is a homecoming that I never expected.
And I am truly humbled by, and grateful for, the opportunity to speak to you.
In the 1980s, every fellow undergraduate I knew at HKU was from Hong Kong. We spoke Cantonese, ate in the canteens and small local restaurants down the slope in Water Street and chatted together in the courtyards around the Main Building.
Today, HKU is a much more cosmopolitan place – especially the Faculty of Business and Economics.
I see people here from all over the world. And I understand that’s it easy to find people talking Korean, or eat a good Indian curry, at HKU today.
It’s pleasing to hear that may aspects of student life endure from my time. I’m told intramural sports remain popular and that friendships are still forged in the halls.
There’s a lot that’s new as well. The Centennial Campus, for example, and the Mass Dance competitions…
In my time, people wanted to enter the civil service, business or banking after they graduated.
Today, you are much more likely to become entrepreneurs or pursue careers in the technology sector.
In fact, I hear some of you have already started and are involved with multiple start-ups while still at university.
I’m delighted to hear that entrepreneurialism is alive and well at HKU – and that young business people understand the value of diversification…
Since 1911, HKU has been steadfast in its commitment to academic excellence.
It has attracted and developed the very best talent from Hong Kong and beyond.
All of you should be very proud – as I am – to be part of an institution with such a distinguished heritage.
I know you have all worked very hard to be here today.
But I’m afraid I have news for you…
That was just the beginning.
The world needs your talents.
We face many complex problems today.
But perhaps the most fundamental – and urgent – is climate change.
It represents a powerful and irreversible threat to individuals, societies, habitats, businesses and potentially even entire economies around the globe.
Average global temperatures have increased by about one degree Celsius since the late 19th century.
We’re already seeing the effects of climate change through more severe weather events.
The arctic ice cap is shrinking and sea levels are rising. This is a real threat in Asia where many of our biggest cities – including Shanghai and Guangzhou – occupy low-lying coastal areas.
And air, water and soil pollution endanger the health and wellbeing of millions of people.
Air pollution in this city is estimated to cost more than thirty billion Hong Kong dollars per year, including medical bills and productivity losses. It is also believed to cause millions of deaths a year around the world.
I could go on. But you might start thinking you have accidentally turned up at the graduation ceremony for the Faculty of Science…
So allow me to explain why a banker is talking to you about climate change today – and why I believe the global response to this threat will be the defining opportunity for your generation of businesspeople, bankers and investors.
In December 2015, almost two hundred countries committed to the global fight against climate change by adopting the Paris Agreement.
COP 21, as it was known, committed us to country-specific projects and ambitious targets in an attempt to limit the global average temperature rise to well below two degrees Celsius – or even one point five degrees Celsius – above pre-industrial times.
Success in this fight will come at a huge price.
Some 100 trillion US dollars will need to be invested in infrastructure around the globe over the next fifteen years – both to replace ageing systems and to accommodate growth.
And that doesn’t even take into account addressing the impact of climate change.
My generation and those before us have achieved more rapid economic growth than the world has ever seen.
Across the world – and especially in Asia – there has been a revolution in standards of living.
But we achieved this at a great cost to the environment.
Slowly – perhaps too slowly – we have come to recognise the true cost of our success.
And we have begun to take action.
But we are leaving the next generation – all of you – a warming planet and a huge investment requirement.
We must identify and finance a new, more sustainable economic model.
And time is running out to make this happen.
Some scientists believe that global carbon emissions must peak and start to fall by 2020 for the target of two degrees to be achievable.
This is more than a challenge; it’s a crisis. But, like every crisis, it’s also an opportunity.
I believe it’s an opportunity for mainland China, for Hong Kong, for the financial industry – and for you.
Let’s start with mainland China.
Historically, the world’s biggest polluters were developed countries in the West. Economic growth and sheer scale mean that China has been the world’s biggest emitter of greenhouse gases since 2007.
Today, China is feeling the impact of a carbon-intensive growth model. Five of the most polluted cities in G20 countries are in China.
But continued growth, affluence and urbanization means China’s energy needs will only increase.
The government recognizes the problem and is emerging as a global leader in efforts to limit the impacts of climate change.
In the run-up to the Paris Agreement, China submitted a climate pledge. Its key target was to reduce the carbon intensity of China’s GDP by sixty to sixty-five percent by 2030 versus its 2005 levels.
Ordinary people in China also recognise the need for more sustainable lifestyles and consumption patterns.
A survey conducted by the market research firm Ipsos in July, for example, showed China with the most respondents worried about climate change in their country.
Twenty-five percent named it as among their top three concerns. That compares with twenty-one percent in Canada, the second-highest out of twenty-six countries polled. The global average was just nine percent.
This will come as no surprise to those of you who visit Mainland China and have seen thousands of bicycles on street corners and at subway stations.
China’s urban middle class, increasingly concerned about their health and quality of life, have taken up bike-sharing with great enthusiasm.
According to Mobike, a bike-sharing start-up whose investors include Tencent, its hundred million users have more than doubled their use of bicycles within a year, while cutting their car trips by half.
This is just one example of how a more sustainable economy is creating business opportunities.
China installed almost three times more wind power capacity – over twenty-three gigawatts – than the US last year, taking its total wind power capacity to about one third of the global total.
And its solar energy capacity more than doubled last year, turning China into the world's biggest producer by capacity.
Modern technologies will allow China to transition to a lower-carbon economy much more quickly. When Western economies were trying to reduce their carbon emissions, many clean-tech solutions were not yet commercially viable.
Now, more and more of them are viable business models. And these new, high-tech sectors such as electric vehicles, cutting-edge solar panels, wind turbines, batteries, high-tech recycling and waste management systems are boosting the economy and creating high quality jobs.
Having graduated from HKU in 1983 and then started a career in banking, I was eager to see Oliver Stone’s film Wall Street when it was released in 1987. I suspect many of you have seen it too.
In the film, the financier Gordon Gecko declares that: “greed is good.”
I would suggest instead that “green is good.”
Green is not just good for the environment - it’s also good for business.
And it’s clear that a more sustainable economy is a policy priority for the government, an opportunity for businesses – and it’s what consumers want.
But how will this massive transition be financed?
The development of the green bond market, globally and in China, will be vital.
Green bonds only differ from normal bonds in that they come with a certification that the money they raise will be invested in sustainable projects such as renewable energy or schemes to reduce carbon emissions.
China’s green bond market has accelerated rapidly from a standing start. More than thirty three billion US dollars of Chinese green bonds were issued in 2016, over one third of the global total and up from just one billion dollars in 2015
Asian companies are embracing environmental sustainability and disclosure more rapidly than those in any other region, according to a survey commissioned by HSBC and released in September.
And investor demand for assets that align with environmental, social and governance – or ESG – principles is large, and growing.
As of early 2016, there were some twenty-three trillion US dollars of assets being managed under responsible investment strategies. This is more than a quarter of all professionally-managed assets globally and it continues to grow.
Admittedly, asset management in accordance with ESG is still in its infancy in Asia.
In Europe, roughly half of investors by assets under management follow an ESG strategy.
In North America about one-fifth.
In Asia, it’s less than one percent.
But our survey found that more than two thirds of Asian investors plan to increase their climate-related or low carbon investments.
This means the conditions are in place for rapid growth in the green bond market in China and Asia.
What we need now is to bring together the companies who want to raise capital for sustainable projects with the investors who want invest in accordance with ESG principles.
This is a great opportunity for Hong Kong, which has long been an international financial centre for China.
The government has signaled its commitment to promote the development of green finance here.
In her policy address, the Chief Executive of the Hong Kong SAR said the government would take the lead in arranging the issuance of a green bond in the next financial year.
It will also continue to encourage public sector bodies to follow suit and promote the establishment of local green bond certification schemes that meet with international standards.
Green bonds are not a new form of financing in Hong Kong: local corporates including MTR and Link REIT have already issued them.
But it’s great to see Hong Kong looking to the future for the financial industry, in which I believe sustainable financing will be centrally important.
And this is where I believe the opportunities will come for you, graduates in Business and Economics in the class of 2017.
As today’s students, you should be no strangers to sustainability.
I know HKU itself has put in place a number of initiatives this year to reduce its environmental impact. This includes ring-fencing the energy savings made possible by HK Electric’s tariff rebate for carbon reduction and other sustainability work.
But you are tomorrow’s corporate leaders, investors and bankers.
You are uniquely well-positioned to capitalise on China’s transition to a more sustainable economy – and Hong Kong’s commitment to being a green financial centre.
Climate change is a complex challenge. Responding to the threat it creates is going to require more than ingenuity and hard work.
It’s going to need a highly flexible, open-minded approach to work and business.
Business leaders, consultants and insurers will need to understand climate science as well as cashflow statements – because this will be key to managing risks to businesses.
Asset managers and institutional investors will need to understand environmental policy as well as earnings multipliers – because changes in policy could have a profound impact on investment portfolios.
Bankers will need to understand how the push towards sustainability is changing the market for capital – and how they can help their clients understand, and benefit from, this shift.
The old distinctions between professional disciplines are beginning to fall away. You’re going to have to think across boundaries.
You’re going to have to adapt to a constantly evolving combination of scientific, technological, regulatory, commercial and financial factors.
I think rising to this challenge is going to test us all – and the stakes could not be higher.
But Hong Kong – and its oldest university, our alma mater – has a proud tradition of rising to the occasion.
I congratulate you all once again on your graduation.
And I challenge you to embrace the challenge of developing solutions to the profound and urgent threat posed by climate change.
This is an epic task.
It’s also an historic opportunity to serve society in the broadest sense – and to renew the global economy for generations to come.