HKMA consultation on the draft Supervisory Policy Manual for Climate Risk Management

On 20 July 2021, The Hong Kong Monetary Authority (HKMA) released a consultation letter to all authorised institutions (AIs) on the draft Supervisory Policy Manual for climate risk management (GS-1). GS-1 aims to provide guidance to AIs on the key elements of climate-related risk management and sets out the HKMA’s approach to, and expectations for, AIs' reviews of climate-related risk management.

This latest development from the HKMA on climate risk management is a part of ongoing efforts to strengthen Hong Kong's financial ecosystem to support a greener, more sustainable long-term future, supported by the Green and Sustainable Finance Cross-Agency Steering Group co-chaired by the HKMA and the SFC.

One of the key near-term action points announced by the Steering Group is that climate-related disclosures aligned with Task Force on Climate-related Financial Disclosures (TCFD) recommendations will be mandatory in relevant sectors – starting with financial services – no later than 2025.

The consultation says banks need to adopt an appropriate framework for climate strategy, governance, risk management and disclosures to build their climate resilience, and are expected to make their first TCFD aligned climate-related disclosures as soon as is practical and no later than mid-2023.

Deloitte provides end-to-end solutions that helps clients integrate ESG into their day-to-day operations, especially in areas that will attract increasing attention from governments, regulators, investors, and society:

  • TCFD readiness assessment – Rapidly assess your TCFD disclosure readiness using proprietary Deloitte diagnostics and tools
  • TCFD reporting support – Compile reports in accordance with the TCFD framework
  • Risk Appetite, Governance, and Risk Reporting – Incorporate ESG risks, especially climate risks, and sustainability considerations into your existing risk management framework
  • Scenario Analysis and Stress Testing – Identify, develop and implement climate scenarios within your existing risk management framework to ascertain your institution's robustness and resilience
  • Risk Modelling and Asset-Liability Valuation including Stranded Assets – Benchmarking against Pillar 1 and Pillar 2A methodology of existing ESG models

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