On 16 Dec 2024, the HKMA shared non-binding good practices on transition planning based on a 2023 survey of 38 authorized institutions, following its August 2023 principles and October 2024 Sustainable Finance Action Agenda. The HKMA is developing a new Supervisory Policy Manual module (GS-2) to formalize regulatory expectations for net-zero transition risk management, which will be consulted with the industry before implementation.
This article was generated using SAMS, an AI technology by Timothy Loh LLP.
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Introduction and Background
On 16 Dec 2024, the Hong Kong Monetary Authority (HKMA) issued a circular sharing key observations and good practices on transition planning, based on survey responses from 38 authorized institutions (AIs) conducted in Q4 2023. This follows the HKMA’s August 2023 circular outlining high-level transition planning principles and the October 2024 launch of the Sustainable Finance Action Agenda, which includes Goal #1 requiring banks to achieve net-zero in own operations by 2030 and financed emissions by 2050.
Key Content and Future Regulatory Path
The circular provides non-binding good practices derived from the survey, encouraging AIs to reference these in their transition planning. It clarifies that the HKMA is preparing a new Supervisory Policy Manual module (GS-2) on 'Transition Planning' to formalize expectations for managing net-zero transition risks and fulfilling Goal #1 of the Action Agenda. This module, currently in draft stage, will be consulted with the industry upon completion, superseding the current guidance framework. The HKMA will also monitor international developments, including Basel Committee discussions, for potential future guidance.
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