Why is ESG important to MPF Funds?
The investment horizon of MPF funds stretches over several decades, making them vulnerable to long-term investment risks. Environmental, social and governance (ESG) risks are among those evolving long-term investment risks that should be taken into account in the investment and risk management processes.
ESG Integration for MPF Funds
In November 2021, the MPFA issued the Principles for Adopting Sustainable Investing in the Investment and Risk Management Processes of MPF Funds (Principles) which laid down a high level framework that serves to assist MPF trustees in integrating ESG factors into the investment and risk management of MPF funds from a financial risk management perspective and making relevant disclosure to MPF scheme members.
The Principles cover four key elements: governance, strategy, risk management and disclosure:
- MPF trustee should have a governance framework to monitor management of ESG risks by investment managers
- MPF trustee should formulate an ESG integration strategy at the MPF scheme level
- Risk Management
- MPF trustee should ensure consideration of ESG factors in investment and risk management of MPF funds
- MPF trustee should disclose ESG integration strategies and report implementation progress regularly
Green and Sustainable Finance Cross-Agency Steering Group
MPFA also participates in the Green and Sustainable Finance Cross-Agency Steering Group (CASG) which co-ordinates the management of climate and environmental risks to the financial sector, accelerates the growth of green and sustainable finance in Hong Kong and supports the Government’s climate strategies. CASG was established in May 2020 and is co-chaired by the Hong Kong Monetary Authority and the Securities and Futures Commission. Other members include the MPFA, the Accounting and Financial Reporting Council, the Environment and Ecology Bureau, Financial Services and the Treasury Bureau, Hong Kong Exchanges and Clearing Limited and Insurance Authority.
Circular Letters and Press Releases Issued by MPFA/CASG