Hong Kong Institute of Bankers Study Guide Quiz

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Questions and Answers

What is the primary purpose of the publication?

To promote financial products

To provide consultancy services

To serve as an educational resource (correct)

To offer legal advice regarding green finance

What liability does the Hong Kong Institute of Bankers disclaim in relation to the content of the study guide?

Liability for inaccuracies in financial data

Liability for direct or indirect losses (correct)

Liability for user misunderstanding

Liability for any copyright infringements

Which of the following is NOT provided by the Hong Kong Institute of Bankers?

Technical support

Consultancy services

Legal opinions (correct)

Educational material

What is prohibited regarding the content of the publication?

Reproducing it without permission Signup and view all the answers

Which aspect is not ensured by the Hong Kong Institute of Bankers regarding the study guide?

Completeness of the content Signup and view all the answers

What is the maximum grant amount for green and sustainable bond issues where the issuer has a recognized credit rating?

HKD2.5 million Signup and view all the answers

Which of the following is NOT considered an eligible expense for the grant amount?

Marketing expenses outside Hong Kong Signup and view all the answers

What is the criteria related to the issuance size for eligible bond issues?

At least HKD100 million Signup and view all the answers

How many eligible loans can each entity apply for subsidy?

Two Signup and view all the answers

Which requirement must eligible green, social, or sustainability-linked loans meet?

Pre-issuance external review for alignment with standards Signup and view all the answers

What is the primary purpose of a transition label on a debt financing instrument?

To communicate the issuer's strategic alignment with climate-related risks. Signup and view all the answers

What must an issuer establish before issuing a transition-labelled instrument?

A corporate strategy addressing climate change-related risks. Signup and view all the answers

Which temperature limit should guide an issuer's climate strategy?

At most 1.5°C increase ideally, and well below 2°C at the minimum. Signup and view all the answers

How should disclosures regarding corporate strategies be aligned?

With recognized reporting frameworks like TCFD. Signup and view all the answers

What does climate transition finance entail for an issuer’s financing program?

It supports the implementation of the issuer's climate change strategy. Signup and view all the answers

What is a corporate climate change strategy expected to do in response to stakeholder expectations?

Purposefully seek to contribute positively to the Paris Agreement. Signup and view all the answers

Which of the following is NOT part of establishing a climate transition strategy?

Creating a long-term growth plan unrelated to climate change. Signup and view all the answers

What role do climate change scenario providers play in the strategy design process?

They inform the design of the climate strategy. Signup and view all the answers

What should a borrower communicate to lenders regarding a green loan?

The process for determining eligibility and environmental sustainability objectives Signup and view all the answers

How should the proceeds from a green loan be managed by the borrower?

Proceeds must be tracked in a separate account or in a designated manner Signup and view all the answers

What is a recommended practice for borrowers concerning environmental standards?

They are encouraged to disclose any relevant green standards or certifications Signup and view all the answers

What type of information should borrowers keep available regarding the use of green loan proceeds?

Up-to-date information on project allocations and expected impacts Signup and view all the answers

What should be included when borrowers report on their green loan projects?

A list of projects, amounts allocated, and their expected impacts Signup and view all the answers

Why is it important for borrowers to establish an internal governance process for tracking funds?

To promote transparency and integrity of the loan product Signup and view all the answers

How often should borrowers update the information regarding their green loan proceeds?

Annually until fully drawn and as necessary thereafter Signup and view all the answers

What is a critical aspect of project evaluation and selection for borrowers?

Determining how projects meet eligibility criteria and assessing environmental risks Signup and view all the answers

What is one of the major risks mentioned that threatens mankind's well-being?

Climate change Signup and view all the answers

Which organization is committed to promoting green and sustainable finance in Hong Kong?

Hong Kong Monetary Authority (HKMA) Signup and view all the answers

What is the focus of Phase I in HKMA's three-phased approach?

Developing a common framework to assess greenness Signup and view all the answers

Which of the following statements best characterizes the GLP and GBP?

They are frameworks adopted by various financial entities Signup and view all the answers

What is one of the outcomes that HKMA aims to achieve through its engagement with stakeholders?

Setting standards for green investments Signup and view all the answers

What role does HKMA play in relation to international forums?

It collaborates to support global green finance development. Signup and view all the answers

What type of assessment does the HKMA emphasize in Phase I?

Greenness Baseline assessment Signup and view all the answers

What aspect of the banking industry is the HKMA primarily targeting for development?

Green and sustainable banking Signup and view all the answers

What is one potential use of the funds in the blue finance mechanism?

Promoting individual projects adhering to blue principles Signup and view all the answers

What does the blue finance mechanism aim to catalyze?

High-impact projects for public sector development Signup and view all the answers

Which instrument is NOT mentioned as part of the blue finance mechanism?

Traditional bank loans Signup and view all the answers

What role do ocean health credits play in the blue finance mechanism?

Offer a return rate comparable to ESG products Signup and view all the answers

How can ocean health credits be structured to benefit project proponents?

With increasing rates over time Signup and view all the answers

What type of capacity-building support can the blue finance mechanism provide?

Assistance in developing project pipelines Signup and view all the answers

What is a key characteristic of returns on ocean health credits?

Stepping up over a specified period Signup and view all the answers

What option do investors have regarding their ocean health credits upon maturity?

Hold until maturity or exchange for equity Signup and view all the answers

Study Notes

Green Finance and Sustainability

This is a study guide published by the Hong Kong Institute of Bankers
It covers topics related to green finance and ESG.
The guide was last updated in July 2024
The guide is for educational purposes only and doesn't provide legal or expert advice.
The guide is not liable for any losses or damages arising from its use.

List of Chapters

Chapter 1: Overview of Green Finance and ESG
Chapter 2: Green Finance Instruments
Chapter 3: ESG Investing Considerations
Chapter 4: Green Finance Certification and ESG Rating

Chapter 1: Overview of Green Finance and ESG

Learning Outcomes: Upon completion, learners will be able to describe ESG and ESG strategies, discuss ESG equity and debt investment, describe the relationship among ESG, green finance and sustainability, list the influence and impact of climate risk on the banking industry, identify ESG regulatory development, identify the guidance to issuers in relation to the climate transition finance, discuss the green loan principles, green bond principles, social bond principles and sustainability bonds guidelines, identify the green regulatory development, and discuss the emergence of blue finance.
List of Topics: Introduction to ESG, What is ESG, ESG Strategies, ESG Equity and Debt Investment, Relationship among ESG, Green Finance, and Sustainability, Influence and Impact of Climate Risk on the Banking Industry, ESG Regulatory Development, Climate Transition Finance, Company's Climate Transition Strategy, Company's Business Model Environmental Materiality, Company's Climate Transition Strategy to be Science-based, including Targets and Pathways, Company's Implementation Transparency, Introduction to Green Loans and Green Bonds, Green Loan Principles, Green Bond Principles, Social Bond Principles, Sustainability Bonds Guidelines, Green Regulatory Development, Emergence of Blue Finance, Chapter Summary, References Summary, Review Questions, Further Reading

Chapter 2: Green Finance Instruments

Learning Outcomes: Upon completion, learners will be able to distinguish between green loans and green bonds, identify the eligible green projects, describe the bond issuer green framework, discuss the green washing risks, describe the green securitisation, distinguish green securitisation and green bonds, and discuss the green auto ABS, solar ABS, green RMBS, green CMBS and green CLO.
List of Topics: Green Debt, Green Loans vs. Green Bonds, Identification of Eligible Green Projects, Bond Issuer Green Framework, Green Washing Risks, Green Securitisation, Defining Green Securitisation, Green Securitisation vs. Green Bonds, Green Auto Loan ABS, Solar ABS, Green RMBS, Green CMBS, Green CLO, Chapter Summary, References Summary, Review Questions and Further Reading.

Chapter 3: ESG Investing Considerations

Learning Outcomes: Upon completion, learners will be able to identify the key ESG value drivers, discuss the analysis of environmental, social and governance factors, identify the ESG risks and opportunities from banks' perspective, discuss the ESG valuation for equities and fixed income, describe the ESG investment guidelines, discuss the ESG asset allocation and company analysis, and discuss socially responsible investing (SRI).
List of Topics: ESG Analysis, ESG Value Drivers, Analysis of Environmental Factors, Analysis of Social Factors, Analysis of Governance Factors, Identifying ESG Risks from Banks' perspective, Identifying ESG Opportunities from Bank's perspective, ESG Valuation, ESG and Valuation Models, ESG in Equity Valuation, ESG in Fixed Income Valuation, ESG Investment Decision Process, ESG Investment Guidelines, ESG Asset Allocation, ESG Company Analysis, Socially Responsible Investing (SRI), Chapter Summary, References Summary, Review Questions, and Further Reading.

Chapter 4: Green Finance Certification and ESG Rating

Learning Outcomes: Upon completion, learners will be able to identify the green certification and ESG rating market development, discuss HKQAA green finance certification approach, and discuss MSCI ESG rating methodology.
List of Topics: Overview of Green Finance Certification and ESG Rating Global Practice, Green Certification: Market Development, Major Players, ESG Ratings: Market Development, Major Players, HKQAA Green Finance Certification, Green Finance Design: Core Reference and Qualitative Approach, Green Finance Scheme Setting: Pre-Issuance and Post-Issuance Stages, Green Certification Process, MSCI ESG Rating, MSCI ESG Rating Scale, MSCI ESG Rating Methodology Three Pillars, MSCI ESG Rating Process, Chapter Summary, References Summary, Review Questions, and Further Reading.

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Description

Test your knowledge on the guidelines and criteria set forth by the Hong Kong Institute of Bankers. This quiz covers the primary purposes, liabilities, grant details, and eligibility concerning green and sustainable bond issues. Assess your understanding of essential aspects of the study guide and its applications.