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    HKMA Sets Out Key Focus Areas of Sustainable Finance Strategy

    December 17, 2020

    HKMA announced that the Green and Sustainable Finance Cross-Agency Steering Group has set out the green and sustainable finance strategy for Hong Kong. The strategic plan sets out six key focus areas: strengthening climate-related financial risk management; promoting the flow of climate-related information at all levels to facilitate risk management, capital allocation, and investor protection; capacity building for the financial services industry; exploring initiatives to facilitate capital flows toward green and sustainable causes; capitalizing on the Mainland opportunities to develop Hong Kong into a green finance center in the Guangdong-Hong Kong-Macao Greater Bay Area; and strengthening regional and international collaboration.

    The Steering Group welcomed the announcement that Hong Kong will strive for carbon neutrality before 2050 and stands ready to support the strategies and measures that will come out of the updating of the Hong Kong’s Climate Action Plan in mid-2021. The Steering Group agreed to the following key near-term action points:

    • Climate-related disclosures aligned with the Task Force on Climate-related Financial Disclosures (TCFD) recommendations will be mandatory across relevant sectors no later than 2025. Building on the existing requirements of listed companies to provide climate-related disclosures for financial years commencing on or after July 01, 2020 as well as on initial steps taken with respect to banks and asset managers, the Steering Group will take active steps to enhance climate-related disclosures of financial institutions, including banks, asset managers, insurance companies and pension trustees, and increase the coverage of mandatory disclosure as soon as practicable.
    • The Steering Group aims for the adoption of the Common Ground Taxonomy, which will be developed by mid-2021 by the International Platform on Sustainable Finance (IPSF) Working Group on Taxonomies; this working group is co-led by China and EU.
    • The Group will support the IFRS Foundation’s proposal to establish a new Sustainability Standards Board for developing and maintaining a global, uniform set of sustainability reporting standards; it will also support complementary efforts by other standard-setting organizations to converge sustainability reporting standards globally.  
    • Work will done to promote climate-focused scenario analysis to assess the impact on financial institutions under different climate pathways, such as through the pilot climate risk stress testing exercise for banks and insurers and the use of scenario analysis by large asset managers. 
    • Another plan is to establish a platform to act as a focal point for financial regulators, government agencies, industry stakeholders, and the academia, to coordinate cross-sectoral capacity building and thought leadership, as well as to act as a cross-sectoral repository of green and sustainable finance resources.

    Keywords: Asia Pacific, Hong Kong, Banking, Climate Change Risk, ESG, TCFD, Reporting, IPSF, Reporting, Disclosures, Stress Testing, Sustainable Finance, HKMA

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