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Climate Change: Hong Kong property firms are assessing risks and improving resilience, as extreme floods and storms loom on horizon
- About a third of properties used as collateral for loans worth US$370 billion were located in areas vulnerable to flooding and rising sea levels, a stress test found last year
- It’s literally ‘adapt or die’ for Hong Kong’s financial industry, think tank executive says
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Hong Kong property companies have sprung into action – they are assessing their exposure to climate change impact, devising plans and adopting measures to bolster their resilience and capacity to adapt, especially to extreme flood and storm risks.
It remains to be seen, however, whether such plans and their implementation will be sufficient to prevent asset damage and life loss in coming decades due to the uncertainty and severity of climate change.
A stress test found that about 28 per cent of 27 banks’ lending in the city in January last year was exposed to climate risks, besides potential policy changes related to carbon emissions, the Hong Kong Monetary Authority said in January.
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The banks studied had HK$2.9 trillion (US$370.6 billion) in property related loans, half of which were residential mortgage loans. Nearly a third of the properties used as collateral were located in coastal or low-lying areas, and were more vulnerable to the risks of flooding, or a rise in sea levels.
“We must be prepared because we cannot afford not to – it’s literally ‘adapt or die’ for Hong Kong’s financial industry [given the findings],” said Debra Tan, head of Hong Kong-based climate and water risks think tank CWR. “And that was just stress testing at around one metre of sea-level rise, not at the multi-metre levels that the IPCC [Intergovernmental Panel on Climate Change] has warned us about.”
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