Hong Kong’s financial regulator is considering new requirements for banks to enhance disclosure on climate finance as part of its evolving framework to support projects aimed at reducing carbon emissions and managing climate-related risks. The Hong Kong Monetary Authority (HKMA) announced plans to conduct a survey in 2027 to assess how banks utilize its sustainable finance taxonomy, a classification system designed to standardize what qualifies as green or transition financing.

Donald Chen, HKMA’s executive director for Banking Policy, indicated that the survey responses would inform how the taxonomy might be integrated into supervisory practices. While specific disclosure obligations have not yet been finalized, Chen said they could include requirements for banks to report on the extent of investments benchmarked against the taxonomy.

Earlier this month, the HKMA released an updated version of its taxonomy for public consultation, expanding guidance particularly in areas related to shoreline protection and flood management—key climate risks facing Hong Kong. The revised taxonomy adds new eligible activities and technical criteria spanning six sectors: energy, transportation, buildings, telecommunications, risk management and response, and water management. Examples include installation of automated grid controls, vegetation management near power infrastructure, and deployment of off-grid renewable energy systems with battery storage.

Chen noted that some other jurisdictions compel banks to disclose product alignment with taxonomies, and Hong Kong may consider a similar approach after completing a systematic collection of information from financial institutions. The overarching goal of the taxonomy is to channel increased private capital toward climate adaptation and mitigation projects within Hong Kong, as well as potentially extending to mainland China and Southeast Asia.

Since 2020, entities based in Hong Kong have issued about US$150 billion in labeled debt instruments tied to environmental, social, and governance (ESG) standards, with individual transactions ranging from US$10 million to US$800 million in size. Presently, the city mandates that both listed and unlisted financial firms evaluate and manage their exposure to climate risks and disclose material impacts on financial performance where applicable. The HKMA has also introduced a physical risk assessment tool to aid companies in identifying potential vulnerabilities.

Examples of financial institutions responding to climate risks include Standard Chartered Plc, which reported in September 2025 that 16.6% of its Hong Kong wealth and retail banking portfolios secured by property collateral are exposed to flood risk. HSBC Holdings Plc began incorporating physical-risk assessments at the point of mortgage origination for retail clients last year. Meanwhile, Hang Seng Bank Ltd, now part of HSBC, highlighted that its largest commercial real estate portfolio in Hong Kong is primarily vulnerable to flooding risks, including coastal inundation and tropical cyclones.

Last week, the Hong Kong government unveiled its first five-year economic plan emphasizing climate goals, including phasing out coal for electricity generation by 2035 and increasing the share of zero-carbon energy to between 60% and 70%. Chen described the taxonomy as a “living document,” which will continue to evolve and expand its list of qualified activities in response to emerging challenges and opportunities in sustainable finance.