HKMA studies requiring banks to enhance climate finance disclosure

The Hong Kong Monetary Authority is studying requiring banks to enhance climate finance disclosure. Arthur Yuen, Deputy Chief Executive of the HKMA, said the authority plans to conduct a survey next year to understand how banks use the Hong Kong Taxonomy for Sustainable Finance, and the findings will determine how the taxonomy is incorporated into regulatory practice. In an interview with the media, Yuen said specific details have not yet been determined, but generally speaking, this could mean banks would need to disclose to the authority, for example, the scale of investment or financing assessed under the taxonomy. He noted that the activities covered by the taxonomy will continue to expand in the future. Earlier this month, the HKMA launched a public consultation on a new prototype version of the Hong Kong Taxonomy for Sustainable Finance, which was introduced two years ago, aiming to help banks classify financing for coastal management and flood prevention management projects. Both are important climate risks facing Hong Kong. The new version also adds more economic activities and technical standards to define which businesses qualify as green financing or transition financing.