SFC Consults on Climate-risk Requirements for Fund Managers

Clinton MorrowPartner, Charltons

On 29 October 2020, Hong Kong’s Securities and Futures Commission (SFC) published a consultation paper on the management and disclosure of climate-related risks by fund managers (the Consultation Paper) outlining proposed amendments to the Fund Manager Code of Conduct (SFC Fund Manager Code of Conduct) which have been developed with reference to the Task Force on Climate-related Financial Disclosures (TCFD) Recommendations. The proposed amendments would require SFC-licensed fund managers to take climate-related risks into consideration in their investment risk management processes and make appropriate disclosures to meet investor demand for climate risk information and combat greenwashing.

This feeds into the larger effort to develop green finance in Hong Kong, which has included, among other initiatives, the SFC’s September 2018 Strategic Framework for Green Finance and the Stock Exchange of Hong Kong’s (HKEx) amendments to the ESG reporting guide and related listing rules in December 2019. In June 2020, the HKEx also announced plans to launch the HKEx Sustainable and Green Exchange (STAGE), a new information platform for sustainable and green finance investments in the Asia Pacific region. For further information about STAGE, please see Charltons’ June 2020 newsletter.

The consultation on SFC-licensed fund managers’ obligations in relation to climate-related risks will remain open until 15 January 2021.

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