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    HKMA Consults on Assessment Framework on Green and Sustainable Banking

    December 31, 2019

    HKMA issued a letter to the Hong Kong Association of Banks and the DTC Association for consultation on the common assessment framework for green and sustainable banking. HKMA had announced, in May 2019, the adoption of a three-phased approach to promote green and sustainable banking in Hong Kong. Regarding the work in phase I, with the support of a working group consisting of 22 authorized institutions, HKMA has developed the common assessment framework. The framework aims to assess the “greenness” of authorized institutions, the results of which would, in turn, facilitate authorized institutions’ setting of appropriate strategies, plans, or targets in managing climate and environment-related risks. HKMA is requesting comments by January 21, 2020.

    The framework consists of two parts (Part A and Part B) that collect information surrounding 21 sub-elements grouped under six elements:

    • Governance in terms of Board and senior management oversight and the roles and responsibilities of the board and senior management of an institution
    • Corporate planning and tools, including stress testing
    • Risk management process, including risk reporting
    • Business policies, products, and services
    • Performance and resources
    • Disclosure and communication, including plan to disclose information in accordance with recommendations of the FSB Task Force on Climate-Related Financial Disclosures

    These elements and sub-elements represent the major areas on which an institution would focus in managing climate and environment-related risks and are usually found in standards, initiatives, or recommendations of international bodies and regulators of other jurisdictions. In light of the diversity of the authorized institutions in terms of size, nature, and complexity of business, HKMA intends to initially implement the framework on selected authorized institutions. 

     

    Comment Due Date: January 21, 2020

    Keywords: Asia Pacific, Hong Kong, Banking, Sustainable Banking, Common Assessment Framework, Disclosure, Climate Related Risks, ESG, Stress Testing, Reporting, HKMA

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