On May 21, the State Administration for Market Regulation held a press conference in Guangzhou to promote the "Bay Area Standard" to help the "soft connectivity" of the Guangdong-Hong Kong-Macao Greater Bay Area, systematically summarizing the five-year construction achievements of the "Bay Area Standard" and announcing that a new batch of 9 standards will be implemented soon.

The full name of the "Bay Area Standard" is the common implementation standard of the Guangdong-Hong Kong-Macao Greater Bay Area, which refers to various standards such as international standards, national standards, industry standards, local standards, and group standards that are jointly implemented in the Guangdong-Hong Kong-Macao Greater Bay Area after consultation and confirmation by stakeholders in the Guangdong-Hong Kong-Macao Greater Bay Area.

Over the past five years, the list of "Bay Area Standards" has been continuously expanded, covering transportation, medical care, food, elderly care, childcare, meteorology, catering, culture and other fields. The research and development subjects of the "Bay Area Standard" are continuously increasing. At present, there are 3,563 units participating, including 2,752 units in the Mainland, 499 units in Hong Kong, and 312 units in Macau, covering scientific research institutions, colleges and universities, industry associations, enterprises and institutions, etc.

The willingness to implement the "Bay Area Standard" is also continuously increasing. The number of units that have declared the use of the "Bay Area Standard" has reached 6,827 times, including 5,710 units in the Mainland, 682 units in Hong Kong, and 435 units in Macau. The implementation scenarios of the "Bay Area Standard" are also continuously expanding, and are widely used by all sectors of society as technical specifications, service guidelines, and training guidelines.

According to the Guangdong-Hong Kong-Macao Greater Bay Area Standard Information Public Service Platform, at present, there are 244 projects included in the Bay Area Standard List, including: infrastructure interconnection (45); internationally competitive modern industrial system (24); ecological civilization construction (5); high-quality living circle suitable for living, working and traveling (170).

The new batch of 9 "Bay Area Standards" focuses on the industry, business, culture and other aspects of the Greater Bay Area, and is mainly divided into three categories:

● The first category focuses on the scientific and technological achievements and cutting-edge technologies of the Greater Bay Area. Including 3 standards: "Calculation and Application Requirements of Tone Value (CTV) for Printing Process Control", "Technical Specifications for Lightning Protection of Integrated Buildings (Structures) of Bridges, Islands and Tunnels", and "Specifications for Planning and Design of Information and Communication Infrastructure Projects".

● The second category focuses on the government and business cooperation among the three places. Including 3 standards: "Technical Specifications for Cross-border Identity Authentication of Legal Persons and Other Organizations", "Operation Specifications for Jewelry Retail Enterprises", and "Specifications for Information Disclosure of Environmental Benefits of Green Bonds".

● The third category focuses on the characteristic culture and customs of the Greater Bay Area. Including 3 standards: "Chaozhou Cuisine Fish Balls (Soup)", "Chaozhou Cuisine Ginger Vinegar Eggs", and "General Rules for Traceability of Imported Fish Maw".

In the field of ESG, "Specifications for Information Disclosure of Environmental Benefits of Green Bonds" has attracted the most attention and directly hit the pain points of the market.

For a long time, there have been differences in the information disclosure standards referenced by green bonds in the Guangdong-Hong Kong-Macao Greater Bay Area. The disclosure standards for environmental benefit information in the green bond market in the Guangdong-Hong Kong-Macao Greater Bay Area are not unified, and the corresponding green industry classification catalogs and indicators are inconsistent. It is difficult to fully and truly reflect the environmental benefits generated by the bond funds actually invested in green projects in the Greater Bay Area, and it is difficult to effectively quantify and count environmental benefit data, which is not conducive to the standardized development of the green bond market in the Guangdong-Hong Kong-Macao Greater Bay Area and the orderly implementation of the "dual carbon" goals.

According to the "Guangdong-Hong Kong-Macao Greater Bay Area Green Bond Development Report (2024)" (data as of the end of 2023):

● In terms of disclosing project industry classification, Guangdong green bond issuers follow the requirements of the domestic bond market and mainly disclose the industry classification of green bond fundraising projects based on the "Green Bond Support Project Catalog (2021 Edition)" (hereinafter referred to as the "Green Bond Support Catalog"). Hong Kong and Macao mainly refer to the industry classification proposed by international industry rules such as the "Green Bond Principles" and "Climate Bond Standards" to disclose the industry to which green projects belong, and some issuers also refer to the "Green Bond Support Catalog" for disclosure.

● In terms of disclosing environmental benefit indicators, Guangdong refers to the requirements of domestic green bond issuance supervision policies, and the region has not issued clear regulations on green bond environmental benefit information disclosure indicators. The disclosure indicators of green bond issuers in Hong Kong and Macao are voluntary and autonomous, and mainly refer to the Harmonized Framework for Impact Reporting of the International Capital Market Association (ICMA) for environmental benefit information disclosure.

The latest "Green Bond Environmental Benefit Information Disclosure Indicator Specifications"(to be implemented from October 27, 2024) refers to the "Green Bond Support Project Catalog (2021 Edition)" issued by the People's Bank of China and other departments, and combines the issuance and disclosure practices of green bonds in Hong Kong and Macao. It summarizes and extracts 47 environmental benefit information disclosure indicators covering 276 sub-projects. The sub-projects and environmental benefit information disclosure indicators together constitute the environmental benefit information disclosure indicator system. This indicator system realizes the systematic quantification of the environmental benefits of green bond funds raised in the Guangdong-Hong Kong-Macao Greater Bay Area by project. It is the first environmental benefit information disclosure indicator system in the Guangdong-Hong Kong-Macao Greater Bay Area that is formulated based on the "Green Bond Support Project Catalog (2021 Edition)" and compatible with the mainstream green bond information disclosure standards in Hong Kong and Macao. It plays an important role in comprehensively and systematically quantifying the environmental contribution of green bond funds raised, and helps to build a unified green bond environmental benefit information disclosure indicator system in the Guangdong-Hong Kong-Macao Greater Bay Area.

(Image source: Green Bond Environmental Benefit Information Disclosure Index Specification)

In addition, the establishment of a green bond environmental benefit information disclosure index system that is mutually recognized by the mainland and Hong Kong and Macao based on the Guangdong-Hong Kong-Macao Greater Bay Area market will 1) help improve the openness and transparency of the environmental benefit information disclosure of green bonds in the Guangdong-Hong Kong-Macao Greater Bay Area and promote the standardization and regularization of environmental benefit information disclosure; 2) help improve the information disclosure quality of issuers and certification agencies in the Guangdong-Hong Kong-Macao Greater Bay Area; 3) help provide decision-making basis for other market players in the Guangdong-Hong Kong-Macao Greater Bay Area to participate in the green bond market; 4) help the management departments of the Guangdong-Hong Kong-Macao Greater Bay Area to scientifically formulate green bond market development policies; 5) help provide a Chinese solution for the healthy development of the global green bond market and enhance the international influence of China's green bond market.

When the "environmental benefits" of green bonds have a unified yardstick, ESG investment can truly move from concept to precise practice.

The "Bay Area Standard" is not only a technical path for the soft connection of the Greater Bay Area, but also a key tool for promoting the implementation of the green and sustainable development strategy. The "Bay Area Standard" is vigorously promoting the deep integration and development of the Guangdong-Hong Kong-Macao Greater Bay Area, and effectively promoting the interconnection and connectivity among the three places in the fields of infrastructure, people's livelihood, humanities and so on.

Author：Qinger