Green and sustainable finance

We play a key role in the development of green and sustainable finance initiatives to support Hong Kong’s position as a green finance hub within the Greater Bay Area and internationally.

Hong Kong

In September 2018, the SFC published its Strategic Framework for Green Finance, which covers three major areas: (i) enhancing listed company, asset manager and investment product disclosures and their consideration of environmental, social and governance (ESG) factors, especially environmental and climate risks; (ii) facilitating the development of green or ESG-related investment products, and supporting investor awareness and capacity building, and; (iii) promoting Hong Kong as an international green finance centre.[1]

The SFC has established an internal cross-divisional working group to consider policies to develop Hong Kong as a green finance hub.

In May 2020, the SFC initiated the establishment of the Green and Sustainable Finance Cross-Agency Steering Group (CASG) to accelerate the growth of green and sustainable finance in Hong Kong and support the Government’s climate strategies. Co-chaired by the SFC and the Hong Kong Monetary Authority, the group comprises of the Financial Services and the Treasury Bureau, the Environment Bureau, Hong Kong Exchanges and Clearing Limited (HKEX), the Insurance Authority and the Mandatory Provident Fund Schemes Authority.

The CASG announced its green and sustainable finance strategy for Hong Kong in December 2020 and will be following up with actions on the following five points:[2]

Climate-related disclosures aligned with the Task Force on Climate-related Financial Disclosures (TCFD) recommendations will be mandatory across relevant sectors no later than 2025.
Aim to adopt the Common Ground Taxonomy, which is being developed by the International Platform on Sustainable Finance (IPSF) Working Group on Taxonomies co-led by China and the EU.
Support the International Financial Reporting Standards (IFRS) Foundation’s proposal to establish a new Sustainability Standards Board for developing and maintaining a global, uniform set of sustainability reporting standards.
Promote climate-focused scenario analysis to assess the impacts on financial institutions under different climate pathways, such as through the pilot climate risk stress testing exercise for banks and insurers, and the use of scenario analysis by large asset managers.
Establish a platform to act as a focal point for financial regulators, Government agencies, industry stakeholders and the academia to coordinate cross-sectoral capacity building, thought leadership and as a cross-sectoral repository of green and sustainable finance resources.

In August 2022, the SFC published its Agenda for Green and Sustainable Finance [3] to set out further steps to support Hong Kong's role as a regional green finance centre, having achieved the goals set out in its Strategic Framework for Green Finance. Its work will focus on:

Enhancing corporate disclosures;
Monitoring the implementation of and enhancing existing measures relating to ESG funds and expectations for fund managers; and
Identifying an appropriate regulatory framework for any proposed carbon markets.

International

The SFC has been collaborating with overseas regulatory counterparts to consider the development of sustainability practices in the financial sector. The SFC is the Vice-Chair of the Sustainability Task Force of the International Organization of Securities Commissions (IOSCO). It also leads the Sustainable Finance Working Group of IOSCO’s Asia-Pacific Regional Committee.

We are a member of the Network of Central Banks and Supervisors for Greening the Financial System (NGFS) and the Advisory Group of the United Nations Sustainable Stock Exchanges Initiative. We are also a supporter of the recommendations of the Task Force on Climate-Related Financial Disclosures.

SFC initiatives

Response to the ISSB's public consultation

The SFC response to the International Sustainability Standards Board’s public consultation [4] on its proposed standards for climate and sustainability disclosures welcomed the ambitious steps it has taken to develop comprehensive global baseline standards for sustainability reporting to provide investors with decision-useful information.

The SFC added that the proposed standards represent significant progress towards global alignment and shared its high-level observations on the standards’ interoperability, phasing and scaling and the desirability of implementation guidance, with a view to maximising the breadth and pace of international implementation.

Surveys and reports

Carbon Market Opportunities for Hong Kong - Preliminary Feasibility Assessment (30 March 2022)

Survey on Integrating Environmental, Social and Governance Factors and Climate Risks in Asset Management (16 December 2019)

Circulars to licensed corporations

Circular to licensed corporations Management and disclosure of climate-related risks by fund managers (20 August 2021)

Circular to Licensed Corporations Engaged in Asset Management – Survey on Integrating Environmental, Social and Governance Factors in Asset Management (29 March 2019)

Green-related products

List of SFC-authorised ESG funds

Circular to management companies of SFC-authorized unit trusts and mutual funds - ESG funds (29 June 2021)

Executives' speeches and remarks

Synopsis of keynote speech at IFRS Foundation Conference 2022 | Ashley Alder (23 June 2022)

Keynote speech at PRI China Conference: Investing for Net Zero and SDGs | Ashley Alder (27 May 2022)