On 21 Oct 2024, the HKMA launched its Sustainable Finance Action Agenda, proposing a new SPM module on transition planning to require banks to submit Paris-aligned transition plans from 2030 under a 'comply or explain' framework. The HKMA will also consult on implementing Pillar 3 climate risk disclosures and IFRS Sustainability Standards, while advancing capacity building through a new competency module.
This article was generated using SAMS, an AI technology by Timothy Loh LLP.
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Introduction
On 21 Oct 2024, the Hong Kong Monetary Authority (HKMA) launched the Sustainable Finance Action Agenda, outlining eight strategic goals to reinforce Hong Kong's position as a regional sustainable finance hub, with specific regulatory implications for authorized institutions.
Net Zero Transition Planning Requirements
The HKMA proposes that all banks strive to achieve net zero in their own operations by 2030 and financed emissions by 2050, aligned with science-based pathways. The proposals will establish a new Supervisory Policy Manual (SPM) module on transition planning, to be consulted on by end-2024, requiring banks to submit Paris-aligned, robust transition plans on a 'comply or explain' basis from 2030. The HKMA will provide guidance, share distilled good practices from its 2023 survey, and consider embedding climate transition efforts into the Supervisory Review Process, while maintaining a pragmatic approach to implementation under the existing Climate Risk Management framework (SPM module GS-1).
Climate Risk Disclosure Consultation
The HKMA will consult the banking sector on the timeline and approach for implementing the Pillar 3 disclosure framework for climate-related financial risks and the IFRS Sustainability Disclosure Standards, aiming to enhance transparency on climate-related risks and opportunities. This consultation follows the HKMA's analysis of the evolving international disclosure landscape and market expectations.
Capacity Building Initiatives
To address talent and knowledge gaps in sustainable finance, the HKMA will collaborate with the industry to identify training needs through the 'Capacity Building for Future Banking 2026-2030' study and launch a Professional Level module on Green and Sustainable Finance under the Enhanced Competency Framework within 2024.
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