Hong Kong ‘Greenness’ Assessment Framework for Banks by Year-End

The framework will comprise guiding principles and possible metrics for the greenness assessments, drawing from industry feedback and the HKMA’s participation in the NGFS.

The HKMA (Hong Kong Monetary Authority) in a new circular has set out its work plan for its first phase of measures to promote green and sustainable banking in Hong Kong.

Three set of measures for promoting green finance in Hong Kong were unveiled at the Green Finance Forum in May, including a three-phased approach to promote green and sustainable banking in the city.

The three phases outlined sought to:

  • develop a common framework and methodology for individual banks to undertake “Greenness Baseline” assessments;
  • establish tangible deliverables and targets in relation to the banking industry’s promotion of green and sustainable developments; and
  • implement, monitor and evaluate banks’ progress in this regard.

In the first phase, the HKMA will prioritise the development of a common framework to enable comprehensive assessments of the “greenness” of authorised institutions.

The framework will comprise guiding principles and possible metrics for such assessments, to be developed taking into account stakeholders’ opinions, as well as international guidelines and recommended practices, drawing from the HKMA’s participation in the  NGFS (Network for Greening the Financial System).

The NGFS was launched in December 2017 as a voluntary and consensus-based forum for sharing best practices, to contribute to the development of environmental and climate risk management in the financial sector, and to smooth the transition to a sustainable economy.

To develop the greenness assessment framework, the HKMA will collaborate with industry stakeholders to form a Working Group tasked with carrying out this work. The membership of the Working Group will be confirmed “shortly”, the HKMA said.

The first Working Group meeting is expected to be held before the end of August, with an aim to developing the framework by year-end and engaging the industry in consultation at that time.

“Once the framework is finalised by incorporating the industry’s comments as appropriate, the HKMA will conduct a  comprehensive assessment, tentatively in the second quarter of 2020, to inform future policy development,” the circular said.

Separately, the HKMA will organise training programmes and workshops for authorised institutions to enhance their capacity and preparedness on green and sustainable banking.

“I wish to reiterate that it is imperative for all of us to take immediate actions to address the risks arising from climate change,” said HKMA executive direction for banking policy Daryl Ho.

“The HKMA welcomes the industry’s current initiatives on this front, and will step up its effort to work jointly with the industry to address this issue and help to achieve a greener and more sustainable banking environment.

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