Risk-based approach in supporting green transformation of corporate customers

55th Floor, Two International Finance Centre, 香 港 中 環 金 融 街 8 號 國 際 金 融 中 心 2 期 55 樓 8 Finance Street, Central, Hong Kong 網 址：www.hkma.gov.hk Website: www.hkma.gov.hk Our Ref.: B1/15C B9/81C 30 September 2025 The Chief Executive All Authorised Institutions Dear Sir/Madam, Risk-based approach in supporting green transformation of corporate customers I am writing to share examples of practical tools that Authorized Institutions (AIs) may adopt for supporting green transformation of their corporate customers, particularly small and medium-sized enterprises (SMEs), under the overarching principle of prudent risk management. These efforts assist corporates in their continuous development while contributing to the broader goal of advancing sustainable development in Hong Kong, Asia and beyond. The Hong Kong Monetary Authority (HKMA) has been promoting green and sustainable finance (GSF), with prudent risk management forming the cornerstone of GSF development 1 . From time to time, the HKMA shares industry good practices to help AIs continuously enhance their risk management capabilities2 . Below are some practical tools and approaches that the HKMA observed during its ongoing supervisory engagement with the industry, and which have the potential for further supporting banks’ risk management as well as customers’ green transformation. /…Page 2 1 In October 2024, the HKMA launched the Sustainable Finance Action Agenda, setting out its vision to further consolidate Hong Kong’s position as the sustainable finance hub in the region and support the sustainable development of Asia and beyond. For details, please refer to https://www.hkma.gov.hk/eng/news-and-media/press-releases/2024/10/20241021-4/. 2 For instance, the HKMA has issued circulars to share good practices related to the due diligence process for green and sustainable products (Link: https://brdr.hkma.gov.hk/eng/doc-ldg/docId/20221209-3-EN) and climate-related risk governance (Link: https://brdr.hkma.gov.hk/eng/doc-ldg/docId/20241024-2-EN).

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  (I) Raising awareness and building capacity of corporate customers (1) Tools for collecting climate data AIs can leverage data collection tools to help their customers understand individual climate risk profiles and transition readiness, which are also relevant to AIs’ climate risk management. One such tool is the Green and Sustainable Finance Cross-Agency Steering Group’s Non-Listed Company Sustainability Questionnaire (CASG Questionnaire 2.0)3 , developed with CDP4 . The CASG Questionnaire 2.0 provides:

• alignment with international standards;

• modularised question sets by complexity and use cases; and

• an upgraded online reporting platform with greenhouse gas (GHG)
  emissions calculation.
  With the help of CASG Questionnaire 2.0 or other equivalent tools, banks can better assist customers to track their sustainability performance, identify opportunities, and focus on areas for improvement. (2) Tailored advisory services Based on customers’ climate risk profile and transition readiness, AIs can design strategic engagement approaches and provide advice on different areas, including:

• enhancing resilience to climate events;

• setting emission reduction targets;

• developing transition strategies and plans; and

• identifying detailed actions such as investing in low-carbon technologies
  and infrastructure.
  /…Page 3
  3 For details of the CASG Questionnaire 2.0, please refer to:
  https://www.sustainablefinance.org.hk/en/data-technology/casg-non-listed-company-sustainability￾questionnaire 4 CDP is a global non-profit organisation that runs an independent environmental disclosure system for companies, cities, states and regions to manage their environmental impacts.

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  As part of such advisory services, AIs may also organise sector-specific seminars together with industry associations where appropriate, to share sustainable development trends, discuss GSF solutions, and address sector-specific financing needs for low-carbon business models. (II) Using Greentech for identifying financing solutions Greentech can empower AIs to support corporate and SME customers in their green transformation by bridging data gaps, measuring and tracking their customers’ carbon footprints, supporting the building of sustainable supply chains, structuring tailor-made GSF products to meet customer needs, and managing the end-to-end product lifecycle5,6 . AIs are encouraged to review the relevance of the above practical tools to their green and sustainable banking activities, and adopt these tools, where appropriate, to support corporate customers’ green transformation. The HKMA will continue to engage with the industry and provide further guidance, including an upcoming circular on good practices for climate risk management. Should you have any queries about this circular, please contact our climate risk supervision team at climaterisk@hkma.gov.hk. Yours faithfully, Carmen Chu Executive Director (Banking Supervision) 5 The HKMA published the Adoption Practice Guide on Greentech in the Banking Sector in February 2025 with case studies demonstrating how Greentech solutions assist AIs in strategic alignment, risk management, and customer engagement. (Link: https://www.hkma.gov.hk/media/eng/doc/key￾functions/banking-stability/Greentech_Adoption_Practice_Guide.pdf) 6 The HKMA, in collaboration with other stakeholders, has recently concluded the 2025 Green Fintech Competition and announced the winners under the key themes. For details, please refer to https://www.hkma.gov.hk/eng/news-and-media/press-releases/2025/09/20250912-3/.