##3 investment and green banking offers opportunities for financial institutions to develop their business, including cross - border business. 22. many jurisdictions in this part of the world have in place roadmaps for promoting green and sustainable finance. however, the level of adoption of green finance varies, and adoption is not without challenges. 23. among the challenges we currently face is the difference in taxonomies that define green economic activities for the purpose of esg investment. these taxonomies help mobilise capital by reducing the need for financial institutions to conduct their own assessments of environmental impact. at present the two leading taxonomies are those recently developed by the mainland and by the european union. the two taxonomies differ in some important aspects, including definitions of economic activities eligible for green investment. such differences could present impediments in tackling what is a global challenge : this has particular relevance for hong kong, which is a regional hub for global institutions committed to responsible investment. 24. it is therefore gratifying to know that in may this year, the mainland authorities have taken important steps to reconcile some of the critical differences between the two taxonomies. for example, clean coal is no longer considered green in the revised bond catalogue. we 3 / 5 bis central bankers'speeches expect more harmonisation work to be done by the two sides, though this may take a bit of time. 25. we are making progress on “ harmonisation ” within hong kong, too. this year, the hkma, together with other financial regulators and relevant government bureaux, formed the green and sustainable finance cross - agency steering group. the steering group has two main aims : to co - ordinate management of climate and environmental risks to the financial sector ; and to help accelerate the growth of green and sustainable finance in hong kong. one of the first tasks of the steering group is to develop a local green taxonomy that would incorporate the harmonisation work currently being done by the mainland and eu authorities and take into account local circumstances. the aim is simple : there should only be one local taxonomy for use by all financial regulators in hong kong. 26. at the global level, the hkma is an active member of international and regional networks devoted to addressing climate risk. through our participation in these networks we are able to contribute to international efforts and to draw on some of the best expertise in these fields. we will do our best to align practices in hong kong with international developments. 27. when considering international experience

, we have to accept that there is no one - size - fitsall solution. this is something we are keenly aware of as we develop our regulatory approach on green and sustainable banking. while we base this approach on international best practices, we also take into account local conditions, recognising that banks in hong kong come in many shapes and sizes, and that their progress in green and sustainable banking varies considerably. we will be flexible, proportionate and inclusive in developing and applying regulatory requirements. it will take time for the less prepared banks to build capacity to address climate - related issues ; we are ready to work with them to help them catch up. at the same time, the fast - movers or market leaders are encouraged to make the most of the work they have already done. building capacity 28. the three transformations – in fintech, cross - border banking, and green finance – are still quite new for hong kong ’ s banking sector. making the most of the opportunities they bring will require changes to work flows and risk management practices by banks, as well as adjustments in our regulatory approach. above all, these changes require a wide spectrum of skills, both specialised and general. this summer, hkib, hkab4 and the hkma have jointly undertaken an exercise to take stock of potential talent gaps in the banking industry. 29. that exercise found gaps in three key areas : technological and data skills ; banking knowledge – especially about the greater bay area ; and specific ‘ soft ’ skills, such as creativity and adaptability. it is, perhaps, no coincidence that these are the very skills needed for managing the three transformations i have described, and for leveraging on the opportunities they offer. shortages in expertise are a worldwide challenge, so we cannot rely on the importing of outside talent alone. developing the skill sets required takes time and effort. over the next few years, our banks, our professional associations and our education institutions will have to devote substantial resources to talent development in these areas. 30. we are now working with the industry to narrow the gaps in capacity. the solutions include the reskilling of existing staff through continuing professional development. importantly, banks need to invest in new talent capable of capitalising on the changes already in progress, and equipped for the challenges that lie ahead. to this end, the hkma will be working with the universities and the other stakeholders to make sure they are aware of the knowledge and skills needed by the banking industry, so that graduates are