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SFC Launches New Green and Sustainable Finance Agenda

Hong Kong’s Secturities and Futures Commission’s (SFC) newly launched agenda focuses on three key areas: enhancing corporate disclosures, monitoring the implementation of and enhancing existing measures, and identifying an appropriate regulatory framework for any proposed carbon markets. On climate disclosures, the SFC noted that there are a “plethora” of sustainability disclosure initiatives and frameworks worldwide, but this has led to fragmented sustainability reporting which is incomplete and inconsistent across jurisdictions, industries and companies, raising concerns about mispricing of assets, misallocation of capital, and the risk of greenwashing. Longer-term climate disclosure considerations in the agenda include the digitalisation of climate reporting information, capacity building needs, and the development of an assurance framework in Hong Kong. On monitoring implementations, the SFC has already adopted requirements for fund managers to take climate-related risks into consideration in investment, risk management and disclosure processes, but plans to enhance supervision, address data-related issues, and provide further clarification and guidance to fund managers. The SFC highlighted efforts by the Carbon Market Work Stream, set up in July 2021, which is in the process of creating a detailed roadmap, implementation plan and indicative timeline for establishing a carbon market in Hong Kong. In March, a preliminary feasibility assessment of carbon market opportunities in Hong Kong concluded that it will take further steps to consider appropriate market and regulatory models, which the Carbon Market Work Stream will aim to address.  

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