Arthur Yuen: Opening remarks - Green and Sustainable Banking
Conference
Opening remarks by Mr Arthur Yuen, Deputy Chief Executive of the Hong Kong
Monetary Authority, at the Green and Sustainable Banking Conference, Hong Kong, 11
December 2023.
* * *
Good afternoon, everyone. It is my pleasure to welcome you all to the first Green and
Sustainable Banking Conference held by the HKMA.
We are here because of the challenge of climate change. A challenge that is growing in
magnitude. Some scientists have recently announced that 2023 is the hottest year on
record and they expect 2024 to be even warmer.1
Earlier in March, the UN Secretary-General called on parties to fast-track climate efforts
2
and move forward their net-zero deadlines. Indeed, just last month, a report by the UN
said that current pledges under the Paris Agreement are not enough. They are putting
the world on track for a 2.5 to 2.9°C temperature rise by the end of the century, and this
is a clear miss of the target of 1.5°C in the Paris Agreement.3
So, it is absolutely clear that the world must act, and act fast, in the transition to
netzero. But action must be guided by knowledge. We all know that with the power of
finance, banks do play a central role in achieving climate goals alongside driving
economic development. But banks must build up their knowledge about the latest
technologies that support the transition to net-zero. This would allow banks to
effectively channel capital and lending to support the development of such technologies
and to support the transition path. Technology experts, on the other hand, need to
better understand how banks evaluate a project in order to secure financing.
This is where today's conference comes in. Through this conference, we try to provide
a platform for the banking sector and the technology sector to discuss solutions, acquire
knowledge and speed up the adoption of technologies that support the
transition. Bankers will hear from energy and green building experts how their
technologies can help reduce carbon emissions. On the other hand, technology
experts can hear from the financial industry how they assess the investment value of
different technologies.
What then, you may ask, is the role of the HKMA in all these? We are a banking
supervisor, so we need to make sure banks manage climate risks properly. But we also
see ourselves as an enabler. We enable change through strengthening the green
finance ecosystem and supporting banks' financing of the transition. One example is
the development of a green classification framework. The framework will help banks
and other financial institutions to identify environmentally sustainable activities, and
then align their business decisions with global climate goals in order to support the
transition to a low-carbon future. As a first step, we released a discussion paper in May
this year and we will issue the first version of the framework very soon. To make the
taxonomy more complete and usable, we will continue to expand the coverage of
sectors and activities within the framework, such as including transition activities.
Our role as an enabler is not confined to setting frameworks and rules. We also
endeavour to address the pain points faced by the industry. Very often, a common view
point cited by the industry is that they lack data and are not sure about the quality of the
green and climate data they can get. So even though it may deviate from the
conventional role of a banking supervisor, we are ready to roll up our sleeves to step in
and provide common utilities for the industry.
A key example is our cloud-based platform for physical risk assessment which we will
soon be launching for banks to use. We understand that banks have difficulties in
collecting and using data related to physical risk assessment, which is why the platform
will enable banks to assess the impact of physical hazards on real estate under
different climate scenarios by simply inputting the address of a property in Hong
Kong. It will also contain downloadable datasets on Hong Kong's climate. As far as we
are aware, we are one of the first banking supervisors in the world to provide this kind
of utilities for the banking industry to use. You will be getting a preview of it later so I will
not dwell on it, but we will certainly continue to improve the platform to facilitate banks'
climate risk management.
I can just go on with laying out the roles and efforts of the HKMA in terms of promoting
a more sustainable future. But today's conference is not about the HKMA. It is really
about the innovative ideas of the 69 companies which entered our Green Fintech
Competition, ranging from AI-powered data analytic tools that help banks assess
physical risks, blockchain-based systems for ESG impact reporting, to digital tools that
assess the transition readiness of companies. If you have not yet done so, I will strongly
encourage you to visit the exhibition area to look at the solutions offered by the winners
and runners-up of our Green Fintech Competition. I must thank both the participants as
well as the judging panel for their hard work in making the competition such a success.
Let me finish by emphasising that the science is already very clear that carbon
reduction has to happen much faster. To do so, technology is indispensable, and all of
us here today have a role to play to bring about that change. I do hope that you will
make the most of today's event to connect, exchange ideas, share knowledge and most
importantly, begin to act. On this, perhaps we can borrow a line from the late Professor
Stephen Hawking, one of the greatest scientists of our time. He said, "Climate change
4
is one of the great dangers we face, and it's one we can prevent if we act now." Six
years have passed since he made that statement, so time is of the essence for actions
to begin in a more meaningful manner. As the theme of this conference suggests, let's
work together to accelerate the net-zero transition through technology. Thank you very
much!
1
https://climate.copernicus.eu/2023-track-be-hottest-year-ever-whats-next
https://press.un.org/en/2023/sgsm21730.doc.htm
3
https://www.unep.org/resources/emissions-gap-report-2023
4
https://www.bbc.com/news/science-environment-40461726