In a significant move to bolster transparency, Hong Kong’s pension regulator has mandated enhanced disclosure standards for ESG funds managed within the city’s MPF schemes.
According to South China Morning Post, this directive, issued by the Mandatory Provident Fund Schemes Authority (MPFA), aims to provide scheme members with a clearer understanding of the funds’ ESG strategies and risk management processes.
The new guidelines stipulate that the 12 trustees managing these funds, which include prominent financial institutions like HSBC and Manulife, must provide detailed descriptions of their ESG strategies in their scheme brochures. Moreover, these trustees are required to demonstrate how they monitor and measure ESG factors and disclose their findings in annual governance reports to investors.
Cheng Yan-chee, Managing Director of MPFA, emphasized the initiative’s goal to align the funds’ ESG performance with the expectations of scheme members, thereby aiding them in making more informed investment decisions. “This approach enables scheme members to evaluate whether the funds’ ESG performance aligns with their expectations,” Cheng noted. “It is also intended to help deepen their understanding of ESG funds and make better investment decisions.”
The enforcement of these new standards will affect a total of 47 ESG-related funds, encompassing HK$36.6bn (US$4.71bn) in assets. Kenneth Chan, an executive director at MPFA, highlighted that any new ESG-themed funds introduced must also adhere to these elevated standards.
While the requirement is effective immediately, fund managers have been given a grace period until September 30 to ensure their ESG disclosures meet the updated criteria. The MPF scheme, a compulsory government-run retirement plan initiated in 2000, currently includes approximately 4.75 million salaried workers and had HK$1.326 trillion in total assets as of the last reported period.
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