At first sight it might appear that banks and other financial institutions, as service companies, have less responsibility for environmental protection than other companies, notably those whose industrial processes have a direct impact on the environment. However, this would be to ignore the central role in the economy that banks have as financial intermediaries. While they may not be polluters themselves, they will probably have a banking relationship with some companies that are polluters or could be in the future. This creates a number of risks for the banks, and raises the question of how these risks should be identified, measured, monitored and controlled. This is primarily a matter for banks’ management to deal with, and I hope that today’s conference will help them to do so. But it is also an issue for banking regulators, particularly with the increased focus on risk-based supervision. In the case of the HKMA, this is a process whereby we try to assess the extent to which banks are exposed to various types of risk and the quality of the systems used for managing these risks. For this purpose, we have identified eight different types of risk: credit, market, interest rate, liquidity, operational, legal, reputation and strategic. Environmental risk straddles a number of these risks. In particular, it is a subset of credit, legal and reputation risk: •  Credit risk can arise indirectly where banks are lending to customers whose businesses are adversely affected by the costs of cleaning up pollution or by changes in environmental regulations.

A messaging standard is a common set of rules for exchanging relevant payment information in order to enable efficient communication with participants and related infrastructures. Messaging standards cover such things as: •  How senders and receivers identify each other;  •  How key properties of a payment message, such as currency, amount and value date, are represented; and  •  What additional information can be included. The Bank is committed to transitioning to a new standard, specifically ISO 20022, as is the New Payment System Operator (NPSO). This is an open and global standard which can continually evolve to meet the needs of users. It is network agnostic to enhance interoperability with various operating systems and it has substantially increased data carrying capacity. Ultimately, in the very long term, ISO 20022 could also enable us to include a diverse range of characters from existing languages and other communications systems, though we will focus on ensuring we get the basics right first. In any case, this transition from the legacy and 3  Bank of England, RTGS Renewal Programme Proof of Concept: Supporting DLT Settlement Models, https://www.bankofengland.co.uk/news/2018/july/rtgs-renewal-programme-proof-of-concept-supporting-dlt-settlement-models 4 Bank of England, Call for interest: Synchronised settlement in central bank money, https://www.bankofengland.co.uk//media/BoE/Files/payments/rtgs-call-for-interest-synchronised-settlement-in-central-bank-money  5  All speeches are available online at www.bankofengland.co.uk/speeches  5  restrictive standards currently used will have far-reaching implications and benefits for not only the UK’s payments system, but participants and their customers.