Hong Kong’s Exchanges Launches Global Carbon Market with HSBC, ANZ, and Tencent

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Hong Kong’s Exchanges and Clearing Ltd (HKEX) announced that it had enlisted major banks including HSBC and companies such as Tencent to develop a global carbon market.

HKEX said in a press release that it was organizing the Hong Kong International Carbon Market Council. But it didn’t mention when it would launch this market.

HKEX partners with companies and financial firms to explore carbon opportunities in the region.

Several big corporations and lenders would be the inaugural members of the Council. These include HSBC, Standard Chartered, BNP Paribas, ANZ, Industrial and Commercial Bank of China, Bank of China, and The Hongkong and Shanghai Banking Corporation Limited.

Tech giant Tencent and Cathay Pacific Airways are also part of the Council. These large firms will play a crucial role in supporting HKEX vision to create a leading carbon market, according to its CEO Nicolas Aguzin. He also added that,

“This is a significant step forward in our collective journey to achieving net zero… And we believe that, over time, more participants sharing the same goal and ambition will join us on this net-zero transition journey, securing the future for the next generation…”

Growing the Global Carbon Market

The main focus of this collaboration is to build an international carbon market via Hong Kong’s position as a global financial center. It will be for making the green finance ecosystem flourish in Hong Kong and Mainland China.

The Council will get insights from its members on how to develop an effective carbon market. Its launch will lay the foundation for Hong Kong to become a carbon hub in Asia. Plus, it will be contributing to achieving a low carbon economy.

This announcement is the most recent in HKEX’s carbon initiatives. Last March, HKEX partnered with Guangzhou-based China Emissions Exchange (CEEX) to explore cooperation in promoting sustainability through carbon finance.

In 2021, HKEX also joined the Glasgow Financial Alliance for Net Zero (GFANZ) and the Net Zero Financial Service Providers Alliance (NZFSPA). They’re part of its ongoing commitment to develop financial markets.

The global efforts to fight climate change have been growing and flooding the voluntary carbon markets. They enable emitters to offset their footprint by buying carbon credits. They are from projects that remove or avoid carbon emissions.

A similar Asian venture to help ramp up the carbon market happened last year when the Singapore exchange launched Climate Impact X.

CIX is also a new global spot trading program for quality carbon credits. It’s a joint venture between DBS Bank, SGX Group, Standard Chartered and Temasek that will launch early next year.

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Pfizer Plans to Reach Net Zero by 2040

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Pfizer revealed its Net Zero path and plans to reduce GHG emissions by 95% from 2019 levels by 2040.

Pfizer is one of the world’s biggest biopharmaceutical companies and also aims to cut its value chain emissions by 90% by 2040.

This commitment is part of Pfizer’s Environmental, Social and Governance (ESG) priorities.

Other pharma companies that have made net zero pledges include Biogen, Bayer, AstraZeneca, Sanofi, Novartis, and J&J.

Pfizer also announced that it had signed a voluntary US Department of Health & Human Services pledge to cut emissions and ramp up climate action.

Pfizer Net Zero Commitment

Pfizer’s net zero pledge builds on more than 20 years of environmental sustainability. For the firm’s CEO and Chairman Albert Bourla,

“With urgency of action, we believe that our commitment to speed up decarbonization of our value chain and achieve the Net-Zero standard… (which aligns with Pfizer’s purpose and ESG priorities)… can help drive positive change and build a healthier, more sustainable world.”

The pharma firm has been delivering emissions reduction goals since 2000. In fact, it was the first in the sector to set up STBi-approved emissions reduction targets.

In 2020, Pfizer declared to become carbon neutral across internal operations by 2030. It also seeks to reduce Scope 1 and 2 GHG emissions by 46% by 2030 from its 2019 baseline.

The image shows the company’s 2019 GHG emissions baseline.

So far, Pfizer’s Scope 1 and 2 emissions for 2021 were 7% lower than its 2019 levels. Most of the reductions are due to COVID-19 responses such as a decrease in field sales operations.

In cutting emissions from its operations, the pharma company plans to achieve that by reducing its reliance on fossil fuels. It also aims to invest in a fleet of hybrid and electric vehicles.

To help reach its net zero pledge Pfizer plans to:

Design greener facilities or renovation projects with reduced environmental impact
Replace equipment at end-of-life with energy-efficient alternatives
Invest in no/low carbon technologies that enable sourcing energy from renewables
Undertake process enhancements within product manufacturing to reduce the resources needed

Pfizer further intends to purchase 80% renewable electricity by 2025, and 100% by 2030.

In 2021, it was able to use 6.5% renewable power. It also entered into a virtual power purchase agreement (PPA) with Vesper Energy for 310 MWh of renewable energy starting in 2023. 

Ramping up climate action across supply chain

Pfizer’s scope 3 (value chain) GHG emissions is over 4x greater than its direct operations. The procurement of goods and services (66%) for producing medicines and vaccines takes the most of its scope 3 emissions.

Other activities contributing to value chain emissions are shown in the graph below.

To reduce scope 3 emissions, Pfizer is urging its suppliers to also set their own STBi aligned reduction targets.

In 2021, Pfizer was recognized as a CDP Supplier Engagement Leader four times in a row for its work to measure and reduce environmental risks in its supply chain.

The company further seeks to tackle residual emissions with verified carbon credits. These are through investing in projects that avoid or reduce GHG emissions.

But the firm didn’t determine yet how much credits it will buy and where.

Other key environmental initiatives

Sustainable Medicines. Pfizer conducts life cycle assessments (LCAs) across its small molecule, large molecule, and device portfolios. It will help guide the company which areas to improve to reduce footprint of medicines.

Waste. Pfizer uses a metric that encourages the hierarchy of control of handling waste: reduce, reuse, recycle, disposal. Each site has targets to improve the circularity of its waste.

Also, its manufacturing sites look for opportunities to reduce, reuse and recycle other materials.

Water Stewardship. Responsibly managing wastewater discharges from internal sites and assessing discharges from supplier sites. Achieved 15% reduction in water withdrawal in 2021 compared to 2020.

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CIX and Nasdaq Join Forces to Develop Global Carbon Market

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Nasdaq and Climate Impact X (CIX) entered into a partnership to boost price transparency and liquidity in voluntary carbon credit market.

The agreement will allow CIX to leverage Nasdaq’s technology to power its spot exchange for quality carbon credits.

Nasdaq is a global tech company serving the capital markets and other industries. Over three thousand public companies trade on the Nasdaq exchange.

CIX is a global marketplace and exchange for quality carbon credits. It was born out of a joint venture between DBS Bank, SGX Group, Standard Chartered and Temasek.

This spot trading platform will launch in early 2023 for financial institutions and institutional investors globally.

CIX – Nasdaq Carbon Exchange Partnership

There are several factors that affect the price of carbon credits. These include the type of project that generates the credits and its location. Credit buyers value both factors in a different way.

It’s for this reason that differences in prices result in inconsistency in the market. In effect, there’s a key challenge when it comes to matching a buyer for a certain credit supplier. Plus, this process can also take much time, making the transaction inefficient.

This is where the CIX and Nasdaq partnership comes in to address the issue.

CIX’s Enabling Role

CIX’s spot exchange will match buyers and sellers based on their certain requirements. So, buyers can find quality credits that meet their regulatory obligations.

CIX exchange also gets rid of some restrictions to supplier financing. It will further help promote growth and development of the carbon markets.

The carbon credit spot exchange will also enable a resilient and scalable trading in Software-as-a-Service (SaaS) environment.

CIX CEO Mikkel Larsen remarked that:

“One of CIX’s goals is to create strong pricing signals for the liquid market… Enabling a trade matching process that is as seamless as possible will help to simplify the buyer’s journey and improve price transparency in the voluntary carbon market.”

Nasdaq’s Part in the Deal

Nasdaq’s SaaS technology powers over 2,300 companies in 50 countries. Its global network spans various industries including capital markets operators, regulators, banks, and other market players.

Nasdaq’s platform will allow CIX to bring trading functions to the VCM. In effect, this will help fix the growing complex needs of buyers and sellers of standardized contracts.

According to CIX, the partnership with Nasdaq will bring unparalleled expertise to the industry. Their joining forces is to build a global carbon exchange supported by quality and transparency.

As per Roland Chai from Nasdaq:

“As a technology partner to trusted market infrastructure operators and new markets around the world, Nasdaq is uniquely positioned to collaborate with a marketplace innovator like CIX… to bring their bold climate vision to life through our SaaS technology platform.”

He also added that Nasdaq’s partnership with CIX will help develop and evolve the carbon credit markets.

This agreement is the most recent move of Nasdaq to bridge technology and carbon market transformation.

Early this year, Nasdaq introduced the world’s first 3 carbon removal indexes. Also, CIX and Nasdaq partner Puro.earth had revealed their recent partnership. It intends to increase access to quality nature- and technology-based carbon removal credits.

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