HKMA unveils measures to promote green finance development

HKMA is setting up a centre for green finance.

The Hong Kong Monetary Authority (HKMA) unveiled three sets of measures to support and promote green finance development, an announcement revealed. These will comprise green and sustainable banking, responsible investment and establishing a centre for green finance (CGF).

Also read: Hong Kong doubles down to capture the green finance opportunity

According to HKMA, achieving green and sustainable banking will be carried out in three phases. Under phase one, a common framework to assess the “Greenness Baseline” of individual banks will be developed. The HKMA will also collaborate with relevant international bodies to provide technical support to banks in Hong Kong to better understand the green principles and methodology in undertaking the baseline assessment.

During phase two, HKMA will engage the industry and other relevant stakeholders in a consultation on the supervisory expectation or requirement on Green and Sustainable Banking, with a view to setting tangible deliverables for promoting the green and sustainable developments of the Hong Kong banking industry. After setting the targets, banks’ progress will then be monitored and evaluated in phase three.

With regard to promoting responsible investment, the HKMA will prioritise green and environmental, social and governance (ESG) investments if the long term return is comparable to other investments on a risk-adjusted basis.

Also read: Hong Kong eyes $100b fund for green financing

Specifically, to support responsible investment, the HKMA highlighted that it has invested two tranches of US$1b each in the Managed Co-lending Portfolio Programme (MCPP) run by the International Finance Corporation (IFC), with a substantial part of the MCPP targeting sustainable investments across emerging market. As well, it will look to grow the Exchange Fund’s green bond portfolio, through direct investment or investment in green bond funds, and participate in ESG-themed public equities investments through external managers in passive or active mandates targeting ESG benchmark index.

Meanwhile the CGF will be established under the HKMA Infrastructure Financing Facilitation Office (IFFO). It will serve as a platform for technical support and experience sharing for the green development of the Hong Kong banking and finance industry.

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