HKMA Develops Assessment Framework for Green and Sustainable Banking
HKMA published the finalized common assessment framework on green and sustainable banking in Hong Kong. The framework assesses the readiness and preparedness of an institution in addressing climate (both physical and transition) and environmental risks. HKMA intends to implement the assessment on about 50 authorized institutions based predominantly on their asset sizes and business activities. Selected authorized institutions will have 12 weeks to complete this initial round of assessment, taking into account the current COVID-19 situation.
The framework was developed with the support of a working group consisting of 22 authorized institutions. It will collect information about the stage of development with respect to climate risks and environmental risks under six key elements and 20 sub-elements:
- Governance, including board and senior management oversight and roles and responsibilities
- Corporate planning and tools, including strategic plan, business plan, financial plan, scenario analysis, and stress testing
- Risk management process, including identification, measurement, monitoring, reporting, and control and mitigation
- Business policies, products, and services, including lending and investment
- Performance and resources, including indicators, targets, staff capacity, and data collection and processing
- Disclosure and communication
These elements and sub-elements represent the major areas on which an institution would focus in addressing climate and environment-related risks and are usually found in the standards, initiatives, or recommendations of international bodies and regulators of other jurisdictions. The framework is intended to help authorized institutions formulate strategies and approaches and to inform the design of supervisory expectations and requirements under Phase II of the three-phased approach of HKMA to promote green and sustainable banking in Hong Kong.
Keywords: Asia Pacific, Hong Kong, Banking, Sustainable Finance, Climate Change Risk, ESG, Stress Testing, Disclosures, Governance, Reporting, Common Assessment Framework, HKMA
Featured Experts

James Partridge
Credit analytics expert helping clients understand, develop, and implement credit models for origination, monitoring, and regulatory reporting.

Emil Lopez
Credit risk modeling advisor; IFRS 9 researcher; data quality and risk reporting manager

Karen Moss
Senior practitioner in asset and liability management (ALM) and liquidity risk who assists banking clients in advancing their treasury and balance sheet management objectives
Previous Article
OSFI Revises Instructions and Reporting Form for Pension PlansRelated Articles
ISSB Sustainability Standards Expected to Become Global Baseline
The finalization of the two sustainability disclosure standards—IFRS S1 and IFRS S2—is expected to be a significant step forward in the harmonization of sustainability disclosures worldwide.
IOSCO, BIS, and FSB to Intensify Focus on Decentralized Finance
Decentralized finance (DeFi) is expected to increase in prominence, finding traction in use cases such as lending, trading, and investing, without the intermediation of traditional financial institutions.
BCBS Assesses NSFR and Large Exposures Rules in US
The Basel Committee on Banking Supervision (BCBS) published reports that assessed the overall implementation of the net stable funding ratio (NSFR) and the large exposures rules in the U.S.
Global Agencies Focus on ESG Data, Climate Litigation and Nature Risks
At the global level, supervisory efforts are increasingly focused on addressing climate risks via better quality data and innovative use of technologies such as generative artificial intelligence (AI) and blockchain.
ISSB Standards Shine Spotlight on Comparability of ESG Disclosures
The finalization of the IFRS sustainability disclosure standards in late June 2023 has brought to the forefront the themes of the harmonization of sustainability disclosures
EBA Issues Several Regulatory and Reporting Updates for Banks
The European Banking Authority (EBA) recently issued several regulatory publications impacting the banking sector.
BCBS Proposes to Revise Core Principles for Banking Supervision
The Basel Committee on Banking Supervision (BCBS) launched a consultation on revisions to the core principles for effective banking supervision, with the comment period ending on October 06, 2023.
US Proposes Final Basel Rules, Transition Period to Start in July 2025
The U.S. banking agencies (FDIC, FED, and OCC) recently proposed rules implementing the final Basel III reforms, also known as the Basel III Endgame.
FSB Report Outlines Next Steps for Climate Risk Roadmap
The Financial Stability Board (FSB) recently published the second annual progress report on the July 2021 roadmap to address climate-related financial risks.
EBA Plans on Ad-hoc ESG Data Collection and Climate Scenario Exercise
The recognition of climate change as a systemic risk to the global economy has further intensified regulatory and supervisory focus on monitoring of the environmental, social, and governance (ESG) risks.