Our Hong Kong Foundation Calls for a Sustainable Banking System

Gearing Hong Kong towards a Sustainable Banking System
Resilient to Environmental and Social Challenges

(26 June 2020, Hong Kong)   The Covid-19 pandemic and accelerating climate change have prompted further reflections on the financial materiality of environmental and social issues. A banking system resilient to environmental and social risks and further harnessing the power of banks to address these challenges are crucial in helping Hong Kong create a more resilient and sustainable future. 

Our Hong Kong Foundation (OHKF), in collaboration with the Hong Kong Green Finance Association, today organised a webinar ‘Sustainable Banking: Now and the Way Forward’. Prominent speakers included:

• Mr Joseph H.L. Chan, Under Secretary for Financial Services and the Treasury, the HKSAR Government;
• Ms Pratima Divgi, Regional Director, CDP Worldwide;
• Mr Jonathan Drew, Managing Director of Sustainable Finance, Real Assets & Structured Finance, Global Banking, Asia Pacific, HSBC;
• Professor Christine Loh, Chief Development Strategist, Division of Environment and Sustainablility, Institute for the Environment, HKUST & Visiting Professor, Anderson School of Management, UCLA;
• Dr Ma Jun, Chairman and President, Hong Kong Green Finance Association;
• Professor Colin Mayer, Peter Moores Professor of Management Studies, Saïd Business School, University of Oxford & Academic Lead, Future of the Corporation Programme, British Academy

The international panel of experts discussed the future of sustainable banking in Hong Kong and globally, including key policy instruments to be leveraged and the role of governments, policymakers, and regulators. 

Key takeaways include the importance of sustainable banking in: 1) enhancing the resilience of banks against social and environmental risks; and 2) mobilising capital by banks for more sustainable business activities. Hong Kong’s regulatory framework should align with international best practices to capture these opportunities and facilitate innovative products, such as sustainability-linked loans. 

Mr Joseph H.L. Chan, Under Secretary for Financial Services and the Treasury of the HKSAR Government, said: ‘The HKSAR Government has been a keen supporter of green finance development in Hong Kong with a wide range of measures in place, and we will continue to work closely with industry experts and think tanks to bolster Hong Kong’s position as a leading green and sustainable finance centre in Asia and globally.’

As the APAC/ANZ Regional Director of CDP, Ms Pratima Divgi highlighted the need for technical data and expertise. ‘We now see more and more banks reaching out for guidance on managing their environmental risks, which highlights the importance of sustainability data and expertise. This is not the sole responsibility of banks alone, but requires the combined efforts of stakeholders ranging from non-profit organisations to local governments.’

Mr Jonathan Drew, in his capacity as the Managing Director of Real Assets & Structured Finance, Global Banking, Asia Pacific at HSBC, remarked that: ‘Climate risks, including physical risks and transition risks, are very complex. There is a need for banks, policymakers, and regulators to work together to identify what is feasible and what is meaningful so that the efforts can be focused and targeted.’

Speaking from her experience as former Under Secretary for the Environment of the HKSAR Government, Professor Christine Loh noted: ‘The green transition will take hold faster if policymakers, regulators, and financial institutions work together to direct the flow of funds to green projects. Hong Kong has laid the initial green finance foundation over the last three years—it’s now time to work on specific sectors.’

Dr Ma Jun, Chairman and President, Hong Kong Green Finance Association, also commented: ‘Hong Kong needs to step up its efforts and be more innovative in order to become a leader in green finance. In particular, Hong Kong should recognise that regulators should drive the process of greening the financial system, incentives need to be in place, capacities of the market participants should be enhanced.’

Professor Colin Mayer, Peter Moores Professor of Management Studies, Saïd Business School, University of Oxford, highlighted: ‘The pandemic has shown us how society’s sustainability impacts banks. Now is a good time to reflect upon the purpose of banks, which may not just be about making profits and minimising risks. Banks could play a key role in addressing the social and environmental challenges the world currently faces.’

Mr Stephen Wong, Deputy Executive Director and Head of Public Policy Institute of OHKF, welcomed the Hong Kong Monetary Authority’s Common Assessment Framework on Green and Sustainable Banking. He further noted: ‘We recommend the HKSAR Government to evaluate Hong Kong’s strategic role in sustainable finance and focus on building banks’ capacity for assessing, as well as managing sustainability risks.’

‘Sustainable Banking: Now and the Way Forward’
Full live webinar: https://youtu.be/ILWmcgNjTUc?t=231