February Global Regulatory Brief: Green finance

Bloomberg Professional Services

February 20, 2025

The Global Regulatory Brief provides monthly insights on the latest risk and regulatory developments. This brief was written by Bloomberg’s Regulatory Affairs Specialists.

Green finance regulatory developments

The financial sector continues to face new rules and government expectations as part of the broader effort to aid the green transition. The following green finance policy developments represent a sample of wider regulatory and policy coverage available to Bloomberg Terminal customers. Run REGS <GO> to find out more or contact your Bloomberg representative to learn more.

Hong Kong: CASG sets 2025 priorities for sustainable finance
UK: FCA publishes 2025 adaptation report
Malaysia: Financial regulators set out policy priorities for climate resilience

Explore the latest regulatory insights with our outlooks, webinars, research and analysis.

CASG sets 2025 priorities for sustainable finance in Hong Kong

The Green and Sustainable Finance Cross-Agency Steering Group (CASG) sets out three key priorities for this year to foster the growth of sustainable finance in Hong Kong:

Developing a comprehensive sustainability disclosure ecosystem: Support the implementation of ISSB Standards in Hong Kong, provide technical assistance on sustainability reporting, develop a sustainability assurance framework, and deliver capacity-building programs with the industry.
Reinforcing Hong Kong’s role as a leading sustainable and transition finance hub: Expand the Hong Kong Taxonomy to include transition elements and new activities, develop guidance for transition finance, establish a Transition Finance Knowledge Hub, and engage stakeholders to make Hong Kong an Asia Pacific carbon trading hub.
Harnessing data and technology to facilitate sustainability reporting and promote sustainable financing activities: Develop the Hong Kong Green Fintech Map to be published in the first half of 2025, enhance public utility data tools on the website, including greenhouse gas emissions calculation tools and a Climate and Environmental Risk Questionnaire for non-listed companies and SMEs.

Wider context: In December 2024, the HKSAR Government launched the Roadmap on Sustainability Disclosure in Hong Kong, providing a well-defined pathway for large publicly accountable entities in Hong Kong to fully adopt the ISSB Standards no later than 2028.

In May 2024, the HKMA published Phase 1 of the Hong Kong Taxonomy for Sustainable Finance, encompassing 12 economic activities under four sectors, namely power generation, transportation, construction, and water and waste management.

In March 2024, the Steering Group launched the Prototype Hong Kong Green Fintech Map with Cyberport and Invest Hong Kong.

About the CASG: Established in May 2020, the Steering Group is co-chaired by the Hong Kong Monetary Authority and the Securities and Futures Commission. Members include the Financial Services and the Treasury Bureau, the Environment and Ecology Bureau, the Insurance Authority, the Mandatory Provident Fund Schemes Authority, the Accounting and Financial Reporting Council, and Hong Kong Exchanges and Clearing Limited. The Steering Group aims to coordinate the management of climate and environmental risks to the financial sector, accelerate the growth of green and sustainable finance in Hong Kong and support the Government’s climate strategies.

UK FCA publishes 2025 Adaptation Report

The UK Financial Conduct Authority (FCA) has published its Adaptation Report 2025, which responds to the Department for Environment, Food and Rural Affairs’ (DEFRA) invitation to report on climate change adaptation challenges faced by financial services firms.

The report is based on informal engagement with financial services firms and the FCA’s understanding of market dynamics, but the FCA flags that it is not a comprehensive assessment and further research is needed to verify the findings. It also notes that the report is not intended to set out regulatory expectations for firms.

Issues: The report focuses on three key challenges and highlights the need for better integration of climate risk into financial decision-making.

1. Data and modelling to help financial services quantify and manage climate risks:

The availability and quality of data remain a major barrier to assessing climate risks, especially physical risks such as flooding, heatwaves, and storms.
Many firms struggle with climate scenario analysis, which is crucial for long-term planning.
The lack of standardized methodologies leads to inconsistent risk assessments across the industry.

2. Barriers and enablers to insurance underwriting for climate risks and, as a consequence, lending and investment:

The insurance industry plays a key role in climate adaptation, but there are challenges in pricing climate risks accurately.
The withdrawal of insurance in high-risk areas (e.g., flood-prone regions) could have knock-on effects on mortgages and investments.
The report highlights the importance of public-private partnerships and innovative insurance solutions to maintain market stability.

3. Barriers and enablers to financial services in allocating capital to adaptation:

Financial markets need to direct more capital toward climate adaptation initiatives, such as infrastructure resilience and nature-based solutions.
However, regulatory uncertainty and short-term investment horizons hinder the flow of capital into long-term adaptation projects.
The FCA recognises that investors need clearer guidance on how to assess and disclose climate adaptation risks.

FCA’s areas of focus and next steps: The FCA does not set out new regulatory requirements but emphasises that firms should integrate climate risk assessments into their governance, strategy, and risk management frameworks.

The FCA warns firms must protect their critical infrastructure, particularly IT systems, while ensuring that net-zero transition plans consider necessary adaptation.

The Climate Financial Risk Forum (CFRF) will continue providing best practices on managing climate risks.

The FCA is collaborating with organisations like the Met Office to improve physical risk data and modelling.

Malaysia financial regulators set out 2025 policy priorities for climate resilience

The Joint Committee for Climate Change (JC3), composed of Malaysia’s central bank Bank Negara Malaysia and the capital markets regulator Securities Commission, issued a statement setting out Malaysia’s priorities in 2025 for developing climate resilience in the nation’s financial sector.

Three key priorities: The JC3 will continue to focus on building climate resilience in the following three areas:

Address data challenges.

Facilitate Small and Medium Enterprises’ (SME) transition: JC3 will intensify efforts to support SMEs in building climate resilience by providing SME-centric solutions that are affordable, credible and practical. These include strengthening collaboration between banks and strategic partners under the Greening Value Chain Programme to provide SMEs with affordable disclosure solutions to help them meet demand for disclosure on their GHG emissions.

Design climate finance solutions with a focus on sectors aligned with the National Energy Transition Roadmap (NETR) and New Industrial Masterplan (NIMP): JC3 discussed the progress to establish the Climate Finance Innovation Lab (CFIL) spearheaded by Bank Pembangunan Malaysia Berhad (BPMB) which aims to accelerate the development of innovative climate finance solutions to complement and scale up financial flows towards transition and green activities.

Transition finance instruments: The JC3 also discussed the Application Handbook for Issuances of Sustainable and Responsible Investment (SRI)-Linked Sukuk and Sustainability-Linked Bonds for the Malaysian capital market. The Handbook aims to provide a better understanding of the process in setting of Key Performance Indicators and Sustainability Performance Targets, supported by case studies across various sectors.

Additional note: Sustainability is one of the central themes of Malaysia’s ASEAN Chairmanship in 2025. JC3 will support the Government in pursuing various strategic thrusts that align with its objective of building climate resilience within the Malaysian financial sector.

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