The HKMA issued its Common Assessment Framework on Green and Sustainable Banking on 13 May 2020. The Framework assesses an institution’s readiness and preparedness to address climate and environmental-related risks and allows the HKMA to determine the “Greenness Baseline” of individual banks.
However, it is more than just an assessment. The value generated from this self-assessment process is identifying the gaps and actions needed to futureproof the organisation. The objective now should be to set a firm-wide ESG strategy covering all aspects of governance and planning through to disclosures and communication. While risk management is not a new concept for banks, connecting climate-related impacts to financial risks is a complicated task that requires multi-disciplinary expertise in ESG, risk management and banking.