In December 2021, the Hong Kong Monetary Authority (HKMA) issued the results of its pilot climate risk stress test (CRST).  The CRST assesses the potential impact of climate change on the Hong Kong banking sector.  It marks the latest such publication by a regulator on the topic, with French regulator, Autorité de contrôle prudentiel et de résolution (ACPR), having published the results of its climate risk stress test in Q2 2021 and a number of other countries’ regulators undertaking similar analyses during 2022.

The CRST indicates that the Hong Kong banking sector should remain resilient to climate-related shocks given the Banks’ strong capital buffers. However, it was noted that simplified assumptions and use of historical data in modelling could mean the potential impact could be more serious than predicted.

The exercise identified various climate-related vulnerabilities for Banks to seek to address and highlighted gaps in terms of insufficient granular, reliable data, as well as a lack of widely-accepted standards for classifying and identifying climate risk exposures.  HKMA notes that addressing these issues will require concerted efforts of the industry.

In this Blog Post, we set out a high level summary of the CRST in terms of the scope of the CRST, pertinent findings and actions required to enhance climate risk management going forward.


Continue Reading HKMA Publishes Report On First Climate Risk Stress Test Of The Hong Kong Banking Sector

In order to implement the “Plan for the Reform of the Legal Disclosure System of Environmental Information” issued by China’s Ministry of Ecology and Environment (MEE) in May 2021, the MEE has issued new disclosure rules (Rules) that will require domestic entities to disclose a range of environmental information

The pressure on States and corporates to take action to address the socio-economic and environmental impacts of climate change is rapidly increasing. This pressure has resulted in a substantial rise in the number of climate change-related disputes. Although many of these disputes have thus far been brought before national courts, arbitration is likely to become an increasingly important method for resolving climate change-related disputes in the near future, since these disputes are often of an international nature and may benefit from the use of a neutral forum. In particular, there is likely to be an increase in climate change-related investment treaty arbitration, given the rising influence of climate change in the investment treaty landscape. This will bring into focus a variety of considerations affecting investments which are subject to the protection of one or more investment treaties.

Continue Reading Climate Change and Investment Treaty Arbitration

On December 16, 2021, the US Office of the Comptroller of the Currency (OCC) released draft principles for managing exposures to climate-related financial risks (Climate Principles). The OCC regulates national banks, federal savings associations, and federal branches and agencies of foreign banking organizations.

The Climate Principles are targeted at banks with

On December 15, 2021, the Singapore Exchange (SGX) responded to two consultations addressing a range of ESG-related topics that could significantly change the ESG reporting landscape for listed companies in Singapore. The consultations address the implementation of (i) mandatory climate-related disclosures for certain sectors aligned with the Recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), (ii) mandatory diversity-related disclosures for all issuers and (iii) a list of 27 “Core ESG Metrics” to help listed companies align their ESG disclosures with international standards and best practices on a voluntary basis.

As SGX otherwise requires ESG reporting on a comply-or-explain basis only, these proposals represent a shift toward an increased focus on mandatory climate and diversity disclosures that, in particular, has taken hold among Asian regulators. Just this month, the Stock Exchange of Hong Kong implemented mandatory gender diversity requirements and Hong Kong’s Cross-Agency Steering Group reported “progress towards mandating climate-related disclosures aligned with the TCFD framework by 2025 across relevant sectors”, while a group of Malaysian regulators announced their intention to implement mandatory TCFD disclosures by the end of 2024.

In this Blog Post, we highlight key aspects of the recent SGX announcements and provide guidance on how companies are already implementing ESG frameworks incorporating TCFD and more.


Continue Reading Singapore Regulator Prioritizes TCFD, Diversity and ESG Metrics in New Disclosure Rules and Guidance

During the COP26 summit, a coalition of 190 countries and organisations committed to phase out coal energy by 2040 as part of their commitment to transition to a low-carbon economy.  The coalition also stated, in their ‘Global Coal To Clean Power Transition Statement’, that they would provide a framework to support affected workers, sectors and communities to make a “just transition” away from unabated coal power.  The coalition’s concern is that the transition to a low-carbon economy may leave many coal-dependent economies at risk of economic hardship and social unrest.

The ‘Just Transition Assessment‘ (the Assessment) recently published by the World Benchmarking Alliance (WBA) provides important insight into the metrics that NGOs may lobby for in order to achieve what they view as a “just transition” (for information on some of the WBA’s other initiatives, please see our Corporate Human Rights Benchmark publication).  In carrying out the Assessment, the WBA states that it has measured the actions that some of the world’s most influential companies have taken to support workers and communities whilst they transform to low-carbon business models.

The Assessment contends that there is a “systematic lack of action by  companies to identify, prepare for and mitigate the social impacts of their low-carbon strategies”.  The Assessment goes on to state that these purported inadequacies need to be addressed, as transition risks being adversely affected by social unrest among those whose livelihoods are threatened.


Continue Reading Just Transition: The World Benchmarking Alliance Publishes Its ‘Just Transition Assessment’

On November 10, 2021, the Association of Southeast Asian Nations (ASEAN) released Version 1 of the ASEAN Taxonomy for Sustainable Finance (the “ASEAN Taxonomy“). First announced in March 2021, the ASEAN Taxonomy will provide a common language for sustainable finance among the ten ASEAN Member States (AMS) that, together, comprise the fifth largest economy in the world. This is a necessary and timely development as ASEAN remains highly vulnerable to climate change, which has had a significant impact on the people, businesses and governments of ASEAN.

Version 1 is a significant step in ASEAN’s sustainability journey, as this initial document will provide the framework for continuing discussions among AMS as the ASEAN Taxonomy develops. In this Blog Post, we highlight key aspects of Version 1 of the ASEAN Taxonomy and compare this new framework against the world’s most prominent sustainability taxonomy, the EU’s Taxonomy Regulation (the “EU Taxonomy“).


Continue Reading ASEAN Releases Sustainability Taxonomy for Southeast Asia

On November 8, 2021, the acting head of the Office of the Comptroller of the Currency (OCC), Michael J. Hsu, issued a call to action on climate change to the boards of directors of OCC-regulated banks. Specifically, he outlined an initial series of climate change-related questions that boards should be asking bank management

This blog was first published by Law.com

As usual, things ran over, but eventually the parties meeting under the United Nations Framework Convention on Climate Change and, separately but together (kind of), under the Paris Agreement, adopted two “Decisions” by consensus, being CP.26 and CMA.3 respectively.

Continue reading at Law.com.