Opening Remarks at the Seminar on Managing Climate related Financial Risks
Speeches
27 Oct 2025
Opening Remarks at the Seminar on Managing Climate related Financial Risks
Carmen Chu, Executive Director (Banking Supervision), Hong Kong Monetary Authority
- Good afternoon. Thank you for joining today’s seminar – whether you are in person or tuning in online. We are gathered for the important theme of climate risk management, and your participation signals our shared commitment to fostering green and sustainable growth together.
- Climate risk isn’t a distant issue anymore – it’s real, and it’s affecting us right now. We’ve all noticed those warmer nights, heavier downpours, and the frequent Black Rainstorm Warnings. These events aren’t just reminders; they’re signals that climate change is having tangible impacts on our city and beyond. For banks, these changes test their daily operations, impact collateral values, and affect cash flows. It’s clearer than ever: climate risk is financial risk. Managing these risks effectively is critical, and so is maximising the opportunities that climate action brings. It is equally critical to support bank clients as they transition to net zero.
- The HKMA’s vision on this is strong and clear. Through our Sustainable Finance Action Agenda, we are solidifying Hong Kong’s role as the leading sustainable finance hub in the region. And we are supporting sustainable development here in Asia and further afield. Central to this is building a financial system that’s truly climate-resilient.
- If you’re familiar with our Supervisory Policy Manual – specifically module GS-1 – you’ll know it offers guidance on the essentials of climate-related risk management for banks. Over the past year, through various circulars, we’ve shared best practices and tools that go above and beyond the minimum requirements. Our climate risk stress tests – the pilot and second round – have also helped banks refine their approaches to measuring and assessing climate exposures.
- After another round of industry consultative sessions and on-site examinations, we’ll soon be rolling out additional guidance that captures the good practices we’ve seen. Let me highlight three key themes:
- First, the emergence of quantitative frameworks. More banks are now assigning numbers when they measure climate risk. For example, we’ve seen more risk appetite statements with metrics and limits. Some banks are also leveraging fintech to make risk management more efficient.
- Second, the adoption of data-driven approaches. We’ve seen some banks bridging their data gaps, and therefore climate factors can now be included in their credit decisions. And to do this, banks made use of tailored ESG questionnaires, alternative datasets and proxy methods. These tools help produce richer insights, whether they’re for banks’ business development or strengthening risk management.
- Third, the drive towards more holistic views. It is encouraging that more banks are now embedding climate considerations across various risk disciplines, including operational, market, liquidity and reputational risks. For those of you involved in WISE, or Whole Industry Simulation Exercise, you’ll know this year’s theme is “extreme weather”. It is no coincidence; it reinforces the need for banks to prepare for climate change impacts in order to achieve operational resilience holistically.
- In today’s seminar, we will share good practices in strengthening climate risk management. No single institution has all the answers, but sharing ideas fosters continued learning. And collaboration is necessary for the journey ahead.
- Before we start, I would like to thank our speakers from Bank of China (Hong Kong), Standard Chartered Bank, HSBC, and ING. Your insights and willingness to share experiences will surely benefit us all, as we progress on this area collectively.
- I look forward to an engaging and constructive discussion.
- Thank you.
