Hong Kong's central banking authority is examining potential requirements that would compel banks to enhance their climate-related financial disclosures. The Monetary Authority is planning a study next year to assess how lenders are utilizing the city's sustainable finance taxonomy, with findings set to guide the integration of this framework into supervisory practices.

According to Yee Chan, the authority's executive director for banking policy, specific details remain undecided, but such requirements would likely involve lenders reporting to the regulator on metrics like the scale of investments or financing categorized under the taxonomy. Chan noted that the scope of activities covered by the classification system is expected to broaden in the future.

Earlier this month, the authority launched a public consultation on a new draft version of the taxonomy, which was initially introduced two years ago. The updated framework is designed to assist banks in classifying financing for coastal management and flood prevention projects, both of which are significant climate risks for Hong Kong. Additionally, the revised version expands the range of economic activities and technical criteria used to determine what qualifies as green or transition financing.