Caixin
Jun 25, 2021 05:24 AM
FINANCE

Caixin Summit: Hong Kong to Speed Up Climate Risk Disclosure Rules

HKMA Executive Director (External) Darryl Chan speaks at Caixin Summer Summit.
HKMA Executive Director (External) Darryl Chan speaks at Caixin Summer Summit.

Hong Kong will require financial institutions and publicly traded companies to disclose the financial risks of climate change on their businesses starting next year, according to a top official of the Hong Kong Monetary Authority (HKMA).

Hong Kong’s central banking authority plans to speed up disclosure requirements on climate information that were planned for 2025, HKMA Executive Director (External) Darryl Chan said Thursday at the Caixin Summer Summit. Chan reports to one of three deputy chief executives of the HKMA, according to the organization’s website.

The 2025 disclosure target for climate change-related information was set under a proposal by a cross-agency group including the HKMA and government departments. The requirements would be in line with standards set by the G-20’s Task Force on Climate-Related Disclosures. The disclosure rules would apply to Hong Kong banks, brokerages, insurers and listed companies as part of the region’s goal of developing as a sustainable finance center.

Banks may not be able to fully meet the goal at the same pace as big multinational banks may be faster in developing disclosure measures, Chan said. Regulators need to consider the challenges of climate information disclosure facing small and medium-sized banks and can’t take a “one size fits all” approach, he said.

Hong Kong is also actively participating in a working group led by the People’s Bank of China and the European Union on a common taxonomy, or classification system, for green investments, Chan said. With 40% of loans in the Hong Kong banking system linked to the Chinese mainland, it will be appropriate for Hong Kong to adopt a common international standard on climate disclosure along with the mainland, Chan said.

Hong Kong has been increasingly active in promoting green and sustainable finance. In June 2020, the HKMA published a white paper on green and sustainable banking outlining the regulator’s initial thinking on supervisory expectations for the management of climate risks.

The HKMA is also launching a pilot climate risk stress test involving more than 20 volunteer banks, helping them to better assess and understand the risks their businesses face and formulate countermeasures and action plans, Chan said.

In addressing climate challenges, Hong Hong’s banking sector also faces a shortage of talent, with a high demand for professions in climate-related areas, Chan said.

Contact reporter Denise Jia (huijuanjia@caixin.com) and editor Bob Simison (bobsimison@caixin.com)

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