Idea Exchange – Johnson Kong, researcher, and Serena Chow, assistant researcher at Our Hong Kong Foundation /【意見交流園地】團結香港基金研究員 江俊燊、助理研究員 周旭晴

The Hong Kong Monetary Authority recently released a white paper on green and sustainable banking. Amid the economic gloom of Covid-19 and the global trend towards sustainability, the regulatory authority is taking an admirable step in making the city’s banks more sustainable. Praiseworthy as it is, though, the question remains how much the kind of banking envisioned in the paper will contribute towards environmental and social sustainability, if at all.

The primary focus of the paper is on “the risks posed by climate change to banks”. Climate change could generate significant risks to banks’ portfolios, such as farm loans not being repaid because of poor crop yields following droughts or utility companies defaulting amid new legislation on carbon emissions. Making sure banks stay strong is certainly important for the HKMA as a banking regulator.

Focused on four key areas – governance, strategy, risk management and disclosure – the HKMA sets out its initial supervisory expectations on how banks should build resilience to climate-related risks. For example, it prompts banks to gauge how their portfolios would be affected under varying scenarios of temperature rises in the future.

However, building a resilient banking system is not the same as fostering environmental and social sustainability, despite overlaps in some areas. To contribute towards sustainability, banks would need to manage their environmental and social impact as well as risks.

In the case of climate change, managing climate risks concerns how climate change affects the banking system, whereas managing the impact relates to how banking activities influence the climate, especially through the economic activities they finance. The latter would, for instance, require banks to cease financing coal power and provide more capital to renewable energy projects.

Unfortunately, banks’ environmental and social impacts take a back seat to risks in the HKMA’s new supervisory expectations. To be fair, the regulator does encourage banks to develop sustainability-related business, but the regulatory focus remains on climate-related risks.

In other words, banks are not really expected to manage their impact on climate, biodiversity or human rights as long as that impact is not financially material to them, which falls short of the United Nations’ Principles for Responsible Banking.

While taking it one step at a time is a reasonable strategy, banks’ management of their environmental and social impact should at least be incorporated into the regulator’s strategic agenda. Failure to manage these impacts, even if it does not constitute direct financial risk to individual banks, is likely to accelerate risks to the banking system.

For example, a recent article published in Science suggests that reducing deforestation can help prevent the next devastating pandemic as deforestation is linked to the emergence of novel animal-to-human diseases previously contained in forested areas. Banks should be expected to consider whether the project or company they finance is associated with rampant deforestation, even if the direct financial risk is minimal.

Meanwhile, banking regulators worldwide are ensuring banks pay attention to their sustainability risk and impact. Like the HKMA, they have set their supervisory expectations with a spotlight primarily on building resilience.

Those expectations are not the only regulatory framework for banks in their jurisdictions, though. For example, large banks are already mandated to disclose sustainability-related information under the Non-Financial Reporting Directive, a law regulating all large companies operating in the European Union.
More importantly, it is not only about sustainability risks. The EU directive also requires large banks to make known their impacts on the environment and society, something omitted in the HKMA framework. For example, it urges banks to consider disclosing information about their lending portfolio contributing to climate change mitigation and adaptation.

Closer to home, the China Banking and Insurance Regulatory Commission has developed one of the most comprehensive sets of mandatory regulatory requirements covering banks’ management of environmental and social risks, as well as environmental impact.
It looks at the sustainability-related governance structure, strategy, management and disclosure the banks have in place, as well as paying close attention to how much money banks lend to green projects. Banks are scored on these aspects, which motivates them to better manage sustainability risks and contribute to sustainable development.
Looking at Hong Kong, its latest supervisory expectations for banks are found wanting in comparison to other economies’ efforts. For Hong Kong’s sustainable banking to live up to its name, more consideration should be given to banks’ management of their environmental and social impact so we can mitigate the sustainability risks facing our economy and banking system.

This article appeared originally in the South China Morning Post on 20 Aug, 2020.

香港金融管理局(金管局)近日公布《綠色及可持續銀行業白皮書》。新冠肺炎造成經濟低迷,加上可持續發展的環球趨勢,金管局於此時提出銀行管理氣候變化相關風險的監管思路,無疑是推動香港銀行業可持續發展的重要一步;但值得反思的是,金管局所推動的「可持續銀行業」,究竟是否真正有助於環境和社會的可持續發展?

當全球氣溫上升,氣候變化的確對銀行業務構成不容小覷的財務風險。例如旱災令農業失收,導致農夫無法償還貸款;又或者碳排放規例重挫傳統能源公司,可能導致破產違約。氣候風險當前,由各國央行組成的綠色金融合作網絡最近亦一連出版多份指引,指導監管機構如何管控氣候風險。金管局作為銀行業監管機構,理應確保銀行有足夠能力應對氣候風險,以維持銀行體系的穩定運作。

應監管銀行的「風險」與「影響」

有見及此,金管局在白皮書中針對管治、策略、風險管理和訊息披露四個關鍵領域,提出初步的監管期望,以提高銀行對氣候相關風險的抗禦能力。這包括要求銀行評估其業務和資產在未來不同的氣候情景下會如何受到影響,並採取應對的措施。

在建立堅實的銀行體系與促進環境社會的可持續發展之間,雖然相關,卻不盡相同。要促進可持續發展,銀行需要管理其環境和社會影響,而不僅僅是風險。以氣候變化為例,管理氣候「風險」(risk)考慮的是氣候變化如何影響銀行,而管理氣候「影響」(impact)則相反,考慮的是銀行營運如何影響氣候,尤其是通過其貸款造成的影響。後者往往牽涉停止為煤炭電廠提供融資,或引導資金流向可再生能源等項目。

可惜,金管局在白皮書中所闡述的監管期望只針對風險管理,卻忽略了銀行的環境和社會影響。雖然金管局鼓勵銀行拓展與可持續發展相關的業務,但仍明確表示監管重點僅在於氣候相關風險。換言之,只要不影響財務狀況,銀行在未來新規下其實仍毋須管理其業務對於氣候、生物多樣性或人權等等的影響。這跟聯合國的「負責任銀行原則」之間有所落差。

從金管局的角度看,環境和社會影響或許超越了其職權範圍,但不可忽視的是,部分環境社會影響雖然未必直接對個別銀行構成財務風險,卻會加劇整個銀行體系面對的系統性風險。譬如最近在《科學》雜誌上發表的一篇文章便指出,減少森林砍伐能有助預防下一場毀滅性的傳染病大流行,因為森林砍伐令原先埋藏於森林、未知的人畜共通傳染病更容易傳染到人類身上。預防勝於治療,要預防如新冠肺炎般帶來的系統性風險,監管機構應要求銀行借貸時考慮其借款項目或公司是否牽涉大規模森林砍伐,即使相關的直接財務風險或許微乎其微。

事實上,銀行業監管納入可持續發展相關的風險和影響,已是全球大勢所趨。歐盟和英國的銀行業監管機構和金管局一樣,就銀行業的氣候風險管理制定了監管期望。然而,這並不是當地唯一和可持續發展相關的銀行監管框架:大型銀行與所有在歐洲運營的大公司一樣,需遵從《非財務報告指令》(Non-Financial Reporting Directive),披露可持續發展相關的訊息。

金管局監管框架有待強化

更重要的是,該指令不僅涉及可持續發展的風險管理,更要求大型銀行報告其環境和社會影響,例如他們的貸款項目如何幫助減緩和適應氣候變化。這正是目前金管局監管框架所忽略的範疇。

另一邊廂,中國銀行業監督管理委員會早於2012年制定了全面的《綠色信貸指引》,涵蓋環境社會風險以及環境影響,並要求銀行滙報相關的管治架構、策略、管理、訊息披露狀況,以至於綠色項目貸款總額。監管機構更會根據這些範疇為銀行評分,鼓勵他們更積極地管理可持續發展相關的風險及影響。

相較國際上對於銀行業的期望,香港的監管框架似乎仍大有改善空間。要讓香港的可持續銀行業名副其實,確保銀行管理其環境和社會影響屬不可或缺的一部分。即使循序漸進,這亦至少應成為監管發展的策略方向之一。金管局應承擔責任,領導銀行業共同預防氣候變化等挑戰帶來的系統性風險,並抓緊可持續發展為香港銀行業帶來的機遇。

文章原載《信報》2020年9月1日


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