The Hong Kong Monetary Authority (HKMA) has written to the chief executives of all authorized institutions (AIs) detailing a series of principles for banks to follow for the transition to a net-zero economy.
In the August 29 letter, HKMA’s executive director of banking policy, Daryl Ho, laid out six high-level principles designed to assist AIs in planning for a net-zero transition.
The principles – based on the findings and recommendations of international bodies – include setting clear objectives and targets, setting up a robust governance framework, devising initiatives to achieve objectives, engaging with clients, reviewing performance and maintaining transparency.
“For AIs which are local subsidiaries or branches of foreign banks, while their transition planning is likely to be conducted by their parent or head office, they should ensure that such planning has taken into account, and is applicable to, the AIs’ local operation,” the letter stated.
Ho concluded by stating that each of the six principles may be enhanced subject to developments in the international community, such as any guidance from the Basel Committee on Banking Supervision (BCBS).
HKMA added that it will continue its dialogue with the industry, and will conduct a survey on AIs’ practices in transition planning, tentatively in the fourth quarter of this year.