HKMA’s Common Assessment Framework on Green and Sustainable Banking

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.