Hong Kong needs a more coordinated policy environment and an ESG policy roadmap, to provide greater certainty and foster confidence for institutional investors, the FSDC says.
Hong Kong’s FSDC (Financial Services Development Council) has issued a new paper offering policy recommendations to further develop the ESG investment ecosystem in the city.
According to the paper, Hong Kong has entered its growth phase as an ESG investment hub. It maps out the various ESG initiatives of various Hong Kong regulators, and highlights areas where the public and private sectors can be coordinated to further develop the ESG ecosystem.
Among the recommendations, the paper says Hong Kong needs a more coordinated policy environment and an ESG policy roadmap, to provide greater certainty and foster confidence for institutional investors.
In particular, the paper suggests the Green and Sustainable Finance Cross-Agency Steering Group, set up in May to coordinate the management of climate and environmental risks for the financial sector, could be tasked with developing the ESG policy roadmap, which would help to avoid duplicated efforts among different regulators.
Such a roadmap would include a stock-take of existing policy initiatives of various Hong Kong regulators, while also mapping out action plans and opportunities for the city’s sustainable finance and investment market, based on regulators’ work plans and followed by a progress tracking.
With regard to ESG disclosures already required of listed companies in Hong Kong, the paper says that while the volume of disclosures has increased, the quality remains deficient. As such, it recommends that regulators commence preparatory work on strengthening oversight of non-financial reporting.
Insurance firms should be encouraged by the Insurance Authority to explain their ESG risk considerations in their policies, and to provide their boards with information on climate-related risk exposures.
Further, the paper says smaller companies need to be provided greater support to carry out ESG reporting in the form of training subsidies, given the shortage of ESG talent available. This can be provided initially on a pilot basis for one year.
Finally, given the rapidly developing global ESG investment landscape, an information-sharing platform should be established to promote best practices, policy harmonisation and capacity-building.
The full report is available here.