On 30 May 2023, the Hong Kong Monetary Authority (HKMA) released a discussion paper titled “Prototype of a Green Classification Framework for Hong Kong” seeking feedback on developing and adopting a green taxonomy for Hong Kong. In an effort to support Hong Kong’s role in linking green financial flows between Mainland
On 20 December 2022, the Green and Sustainable Finance Cross-Agency Steering Group (the “Steering Group”) co-chaired by the Hong Kong Monetary Authority (“HKMA”) and the Securities and Futures Commission (“SFC”) announced that it has entered into a collaboration arrangement with CDP, an international non-profit organisation that runs the global environmental disclosure system for companies, cities, states and regions.Continue Reading HKMA and SFC Cross-Agency Steering Group Announces Collaboration with CDP to Facilitate Climate-Related Risk Disclosures by Small and Medium Enterprises
The Hong Kong Monetary Authority (“HKMA”) released a research report last week showing evidence that about one-third of global corporate green bond issuers are reaping the benefits of issuing green bonds without cutting down their greenhouse gas (“GHG”) emissions. This type of ‘greenwashing’ behaviour impedes progress on combating climate change and…
On October 12, 2022, the Green and Sustainable Finance Cross-Agency Steering Group (the “Steering Group”) co-chaired by the Hong Kong Monetary Authority (“HKMA”) and the Securities and Futures Commission (“SFC”) launched the Sustainable Finance Internship Initiative (the “Initiative”). The Initiative aims to create more internship opportunities in…
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
On 20 July 2021, the Hong Kong Monetary Authority (HKMA) issued draft guidelines (the Draft Guidelines) on the management of climate-related risks by authorised institutions (AIs). The Draft Guidelines further develop the HKMA’s approach to climate risk, initially outlined in its June 2020 White Paper on Green and Sustainable Banking, and incorporate leading international standards and practices to provide comprehensive climate risk management guidance for banks in the areas of governance, strategy, risk management and disclosure.
In this Blog Post, we highlight key aspects of the Draft Guidelines and takeaways for AIs considering how to approach these new proposals in Hong Kong. For more information about evolving regulatory approaches to climate disclosure and risk management around the world, please see our comprehensive analysis, Climate Disclosure and Risk Management: Global Approaches.Continue Reading Hong Kong Proposes Climate Risk Management Guidelines for Banks
On 15 July 2021, Hong Kong’s Green and Sustainable Finance Cross-Agency Steering Group (Steering Group), representing a critical mass of Hong Kong’s financial regulatory bodies, announced next steps to advance green and sustainable finance in the Special Administrative Region (the Announcement). According to the Announcement, the regulators will prioritize:
- climate-related disclosures;
- carbon market opportunities; and
- a new cross-sector platform to help the financial industry manage climate change-related risks and opportunities.
In this Blog Post, we highlight key aspects of the Announcement and points for market participants to consider as Hong Kong moves toward a more sustainable future.Continue Reading Mandatory Climate Disclosures, Carbon Markets Attract Regulatory Attention in Hong Kong
On May 4, 2021, the Hong Kong Monetary Authority (HKMA) released the details of its Green and Sustainable Finance Grant Scheme (GSF Grant Scheme), which will consolidate Hong Kong’s existing Pilot Bond Grant Scheme and Green Bond Grant Scheme into one new program. According to the Chief Executive of the HKMA, Mr. Eddie Yue:
“The global green bond market has grown from practically non-existent ten years ago to US$270 billion in 2020. In Hong Kong, we have taken early and proactive steps to strengthen Hong Kong’s position as a regional green and sustainable finance hub, including the issuance of two rounds of Government green bonds since 2019 and the establishment of the Green and Sustainable Finance Cross-Agency Steering Group to coordinate cross-agency market development efforts. The launch of a new [GSF] Grant Scheme to support green and sustainable bond issuance and lending will further enrich the green and sustainable finance ecosystem in Hong Kong.”
Continue reading for more details on the GSF Grant Scheme.Continue Reading Hong Kong’s New Green And Sustainable Finance Grant Scheme Begins May 10