Hong Kong | Financial authorities unveil plan for climate disclosures, stress tests

Hong Kong’s two main financial authorities outlined a plan for increased climate disclosures and stepped up management of risks linked to climate change for banks and fund managers in the city.
The city’s financial sector’s contribution to climate is “much, much” bigger than its territorial size would suggest given its role in facilitating flows to and from mainland China and internationally, according to Ashley Alder, chief executive officer at the Securities and Futures Commission, Hong Kong’s top regulator.
“The footprint of Hong Kong’s markets is enormous,” he said in a phone interview yesterday. “In particular, it’s the place with a heavy bias to mainland China businesses” and asset managers investing across the region, he said.
The plan calls for aligning Hong Kong with the Task Force on Climate-Related Financial Disclosures to make disclosures mandatory across relevant sectors no later than 2025, a group co-chaired by the Hong Kong Monetary Authority (HKMA) and the SFC said in a joint statement.
According to the authorities, it will aim to adopt standards through so-called common ground taxonomy, which is being developed by the International Sustainable Finance Platform and is expected to be published in mid-2021.
HKMA is preparing a pilot climate risk stress test in 2021 to check the resilience of the banking sector while SFC proposes large fund managers will be required to assess the resilience of their investments to climate related risk.
Hong Kong companies are “just getting started” on complying with climate-related financial disclosures, said Alder. While some companies comply, it’s now a “question of how to evolve them.”
Michael Bloomberg, the founder and majority shareholder of Bloomberg LP, the parent company of Bloomberg News, is the chair of the disclosure task force.
MDT/Bloomberg