The Securities and Futures Commission (SFC) today launched a consultation on proposed requirements for fund managers to take climate-related risks (Note 1) into consideration in their investment and risk management processes and make appropriate disclosures to meet investors’ growing demands for climate risk information and combat greenwashing (Note 2).
Under the proposals, the Fund Manager Code of Conduct would be amended and the SFC will set out expected baseline requirements and standards to facilitate fund managers’ compliance (Note 3).
“Addressing the threat of climate change and the associated risks is becoming a major priority on the global regulatory agenda,” said Mr Ashley Alder, the SFC’s Chief Executive Officer. “The proposed requirements will help ensure that fund managers properly handle climate-related risks and promote clear, comparable and high-quality disclosures to help investors make more informed decisions.”
Market participants and other interested parties are invited to submit their comments to the SFC on or before 15 January 2021 via the SFC website (www.sfc.hk), by email ([email protected]), by post or by fax to 2284 4660.
- Climate-related risks may represent physical risks which stem from the direct impact of extreme weather events and progressive, longer-term shifts in climate patterns or transition risks associated with the move to a low-carbon economy. Liability risks may also be triggered by the responsibility to compensate financial losses related to physical or transition risks. Although the proposed requirements focus on climate-related risks, fund managers are welcome to consider a broader spectrum of sustainability risks.
- For example, asset managers market themselves as “green” or “sustainable” but do not fully integrate these factors into the investment process.
- As part of its strategic framework published in September 2018 to contribute to the development of green finance in Hong Kong, the SFC has engaged with the asset management industry to develop expected standards and industry practices for integrating climate-related risks into fund management processes.