Representatives of the Hong Kong government, asset managers, and insurers are pushing for a more coordinated approach to develop the environmental, social, and governance (ESG) framework. On July 8, the Financial Services Development Council issued a report titled Hong Kong – Developing into the Global ESG Investment Hub of Asia

While various ESG-related regulatory initiatives are moving in parallel paths, at present, there is no umbrella entity or program to permit for a coordinated approach to these initiatives. As a result, the report sets out five policy recommendations:

Regulators should work to strengthen oversight of non-financial reporting;
The Insurance Authority should encourage insurers’ disclosure of their ESG policies;
An information-sharing platform should be devised to promote best practices;
The government should provide subsidies to offset ESG training courses; and most importantly
A more coordinated policy environment should be promoted with the development of an ESG policy map.

If Hong Kong is to succeed in creating a viable ESG program across the region, governance, culture, conduct and other operational risks must be prioritized. The Hong Kong Monetary Authority (HKMA) is giving more attention to such non-financial risks in the last year, and shows an increasing interest in regulatory technologies (“regtech”). Moving forward, it will be interesting to see how HKMA priorities are factored into ESG related ambitions.

For more on related themes, please see the HKMA’s contribution to Starling’s 2020 Compendium.

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