The Securities and Futures Commission’s (SFC) enhanced disclosure guidelines for SFC-authorised unit and trusts and mutual funds that identify themselves as ESG funds – i.e. incorporate ESG factors as their key investment focus and reflect such in the investment objective and/or strategy came into effect 1 January 2022.
Superseding its 2019 equivalent, the rules apply to management companies of SFC-authorized unit trusts and mutual funds. Read here for further details: The SFC adopts a firmer approach to ESG funds (shlegal.com)
Further, deadlines relevant to SFC’s climate-specific requirements are fast closing. These come under the separate SFC Circular on Management and Disclosure of Climate-related Risks by Fund Managers, and the underlying Consultation Conclusions on the Management and Disclosure of Climate-related Risks by Fund Managers (SFC Climate Requirements).
The SFC Climate Requirements, issued 20 August 2021, distinguish two types of fund managers –large entities with at least HK$8 billion (approximately US$1 billion) in assets under management (AUMs) across any three months in the past reporting year (Large Fund Managers), and the rest. While all fund managers with discretions are subject to baseline criteria, Large Fund Managers also need to comply with enhanced requirements.
Deadlines for compliance
Baseline requirements
Enhanced requirements
Large Fund Managers
20 August 2022
20 November 2022
Other Fund Managers
20 November 2022
NA
Large Fund Managers Other Fund Managers Baseline requirements 20 August 2022 20 November 2022 Enhanced requirements 20 November 2022 NA For more information on the SFC Climate Requirements, click here for our partner Penelope Shen’s take on how the new policy impacts Hong Kong fund managers and thrusts the city into the forefront of sustainable finance.
Why Stephenson Harwood?
We are familiar with global guidelines and best practices
• We monitor closely global and local ESG development; we are also in Hong Kong Green Finance Association’s working group for policy research
• We cultivate a wide network in the ESG space and are able to connect clients to relevant experts for solid ESG integration
• We conduct frequent discussions with fund managers; the bottom line remains that we understand your needs and concerns
Contact us for a tailored proposal on how Stephenson Harwood can help meet your regulatory obligations and more importantly, support your ESG integration in the longer term.
