The Alliance for Green Commercial Banks, co-launched by the Hong Kong Monetary Authority (HKMA) and the International Finance Corporation (IFC), a member of the World Bank Group, hosted the virtual roundtable, “CEO Talk: BUILDING a Green Future.” This roundtable attracted participants globally from Asia Pacific, Europe, Africa, and the Americas. During the discussion, speakers unveiled the strategies and initiatives in greening the real estate sector as well as opportunities in green building and related financing in Asia. Additionally, the Green and Sustainable Finance Cross-Agency Steering Group announced the next steps to advance its collaborative strategy to bolster Hong Kong’s position as a leader in green and sustainable finance and help transition the financial ecosystem toward carbon-neutrality. As priorities, the Steering Group will focus on climate-related disclosures and sustainability reporting, carbon market opportunities, and the launch of the new Center for Green and Sustainable Finance.
The priorities include:
- Climate risk disclosures and sustainability reporting. Making progress toward mandating climate-related disclosures aligned with the Task Force on Climate-related Financial Disclosures (TCFD) framework by 2025 across relevant sectors, the Steering Group supports efforts by the International Sustainability Standards Board (ISSB) under the International Financial Reporting Standards Foundation (IFRS Foundation) to develop a new standard that would be built on the TCFD framework. The Securities and Futures Commission (SFC) and the Hong Kong Exchanges and Clearing Limited will collaborate with the Financial Reporting Council and the Hong Kong Institute of Certified Public Accountants to work on a roadmap to evaluate and potentially adopt the new standard.
- Carbon market opportunities. Mainland China and key overseas markets are dedicated to transitioning to a green, low-emission, and climate-resilient economy and the global carbon market is expected to grow significantly. As an international financial center, Hong Kong is in a unique position to play a strategic role as China’s gateway and mobilizer of capital to facilitate the national carbon-neutrality goal. The Steering Group is seeking to capitalize on this opportunity and has set up a Carbon Market Work Stream co-chaired by the SFC and the Hong Kong Exchanges and Clearing Limited to assess the feasibility of developing Hong Kong as a regional carbon trading center to strengthen collaboration in the Guangdong-Hong Kong-Macao Greater Bay Area. The Carbon Market Work Stream will actively explore opportunities presented by both the cap-and-trade carbon market and the voluntary carbon market in China and overseas.
- Center for Green and Sustainable Finance. The Steering Group launched the Center for Green and Sustainable Finance to help the financial industry manage the risks and capture the opportunities presented by climate change. The Center will be a cross-sector platform to coordinate the efforts of financial regulators, government agencies, industry stakeholders, and academia in capacity building, thought leadership, and policy development. It will also serve as a repository for resources, data, and analytics to support the transition to a more sustainable development pathway. The Steering Group has identified talent and data as the priority areas of action. Accordingly, the Center has established working groups to develop strategies and roadmaps to promote capacity building and develop data repository and analytics capability. The working groups will consult other stakeholders when formulating their recommendations. The Steering Group will continue to take forward the other action points announced in its December 2020 strategic plan, including participating in the work of the International Platform on Sustainable Finance on taxonomy and promoting climate-focused scenario analysis.
Keywords: Asia Pacific, Hong Kong, Banking, Sustainable Finance, Climate Change Risk, ESG, Reporting, Disclosures, TCFD Recommendations, Carbon Neutrality, HKMA
Dr. Denton provides industry leadership in the quantification of sustainability issues, climate risk, trade credit and emerging lending risks. His deep foundations in market and credit risk provide critical perspectives on how climate/sustainability risks can be measured, communicated and used to drive commercial opportunities, policy, strategy, and compliance. He supports corporate clients and financial institutions in leveraging Moody’s tools and capabilities to improve decision-making and compliance capabilities, with particular focus on the energy, agriculture and physical commodities industries.
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