As global regulatory focus intensifies on climate risks, Hong Kong Securities and Futures Commission (SFC) is proposing specific regulatory requirements on Hong Kong licensed fund managers to take into account climate-related risks in investment and risk management processes, and make appropriate disclosures to investors on climate-related risks, combat greenwashing.

Under the “Consultation Paper on the Management and Disclosure of Climate-related Risks by Fund Managers”, the Fund Manager Code of Conduct is proposed to be amended and a circular to be issued, to introduce baseline requirements that shall apply to managers of collective investment schemes, with enhanced standards expected of large fund managers of assets under management (AUM) of HK$4 billion or above, for fund-level disclosure on weighted average carbon intensity (WACI) of Scope 1 and Scope 2 GHG emissions associated with the funds’ underlying investments, on top of entity-level disclosures expected of all fund managers.

Proposed requirements involve four key elements, covering (a) governance, (b) investment management, (c) risk management and (d) disclosure.  For each key element, the Consultation Paper provides examples on how these key elements may be applied in practice.

Further background and details are outlined in our legal update:

The full Consultation Paper is available on the website of the SFC:

Consultation Paper on the Management and Disclosure of Climate-related Risks by Fund Managers

Market participants and interested parties are invited to submit comments to the SFC by 15 January 2021.