Hong Kong Monetary Authority signals green finance push

October 4, 2021|Written by David Clarke|Hong Kong Monetary Authority

The chief executive of the Hong Kong Monetary Authority has laid out steps the institution is taking to support green finance and a low-carbon transition, calling it a “key development priority” for the de-facto central bank of the semi-autonomous territory.

In a keynote address to the Hong Kong Institute of Bankers last week, Eddie Yue said the authority is finalising new supervisory requirements on climate risk management and working on a new taxonomy for green securities.

The HKMA issued a consultation paper on its new supervisory framework for climate risk earlier this year. Under the proposals, banks will be expected to institutionalise their monitoring and management of climate-related risks, bringing the expectations of the Hong Kong regulator into line with its counterparts in the EU, Singapore and the UK.

In a bid to burnish Hong Kong’s reputation as a global centre for green finance, the HKMA is supporting initiatives to make it easier for investors to channel their money into green projects. The authority is teaming up with the Bank of International Settlements’ Innovation Hub in Hong Kong to investigate whether the purchase of green bonds can be streamlined via the deployment of blockchain technology.

Earlier this year the authority also supported the Hong Kong government to issue a 30-year green bond, the first issuance of its kind by a governmental institution in Asia. The government plans to issue green bonds worth HK$175.5 billion (US$22.5 billion) over the next five years, with hopes to make it a market benchmark.

In his speech, Yue warned that although banks have a key role to play in the low-carbon transition by channeling more finance to green activities, they should beware of the potentially disruptive effects of rapidly off-ramping high-carbon investments without an effective transition plan for the businesses involved.

This page was last updated October 4, 2021

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