Introduction

Since its launch of the Strategic Framework for Inexperienced Finance in September 2018 (“2018 Strategic Framework”), the Securities and Futures Fee (“SFC”) has been taking part in a big function in selling Hong Kong as a regional inexperienced finance centre. The SFC has since then developed insurance policies, designed regulatory framework and fashioned job drive to realize the varied objectives set out within the 2018 Strategic Framework. On 2 August 2022, the SFC revealed its Agenda for Inexperienced and Sustainable Finance (“Agenda”), setting out additional steps to be taken by SFC in help of Hong Kong’s inexperienced finance improvement and transition to a greener financial system.

The main focus space

Underneath the Agenda, the SFC set out three primary focus areas, particularly:

1. company disclosures;

2. monitoring the implementation of and enhancing present measures; and

3. a regulatory framework for carbon markets.

Company Disclosures

The SFC has endeavoured to align with the strategy adopted by the Worldwide Group of Securities Commissions (“IOSCO”) and has actively evaluated and gathered suggestions on how the disclosure necessities proposed by the Worldwide Sustainability Requirements Board (“ISSB”) may be utilized in Hong Kong.

With the intention to formulate a complete world baseline for local weather associated disclosures that can present decision-useful data for buyers, the SFC will proceed to help the work of the brand new ISSB and sustainability disclosures by means of:

1. persevering with to work with the Inventory Trade of Hong Kong Restricted (the “Inventory Trade”) on a proportionate strategy to company disclosure necessities which might be aligned with world baseline requirements;

2. contemplating how the necessities within the new ISSB local weather normal Publicity Drafts might be adopted as a part of Hong Kong’s home reporting framework;

3. partaking with the China Securities Regulatory Fee on the usage of the ISSB local weather normal to reinforce cross-border consistency; and

4. proceed to take part within the work of IOSCO on company sustainability disclosures.

The SFC and the Inventory Trade will collaborate to type a working group (the “Working Group”) to look at the readiness of listed firms to report below the proposed ISSB local weather normal and the challenges confronted by them, and to think about a framework aligned with the ISSB local weather normal for Hong Kong, similar to how issuers are phased in to make disclosures and the content material of such disclosures, in addition to assessing listed issuers’ readiness, capabilities, and information wants and gaps. Additional, the Working Group may even take into account sure long-term targets such because the digitalisation of local weather reporting data, capability constructing wants, and the event of an assurance framework in Hong Kong.

Monitoring the implementation of and enhancing present measures

The SFC has taken measures in areas together with asset administration, ESG funds, taxonomy, schooling and coaching and expertise and innovation. Going ahead, the SFC will proceed monitoring the implementation of the measures by:

1. persevering with to think about the problems regarding asset supervisor disclosures in climate-related dangers and sustaining common communication with the trade to observe the progress of licensed fund managers’ incorporation of recent climate-related dangers conduct and disclosure necessities, in addition to offering the required clarification and steering to fund managers;

2. persevering with to observe ESG funds’ compliance with the relevant necessities and fascinating with stakeholders to offer steering to buyers with a view to improve their consciousness of ESG funds;

3. persevering with to observe developments in adopting inexperienced and sustainable finance taxonomies, that means the systemic classification and definition of things that qualify as being sustainable or inexperienced and could also be used as a reference by authorities and market members in figuring out whether or not their actions or merchandise are really sustainable or inexperienced, and work with the Inexperienced and Sustainable Finance Cross-Company Steering Group (“CASG”) in growing such construction and core parts of a neighborhood inexperienced classification framework for session;

4. persevering with to work with the Investor and Monetary Training Council to help investor schooling by means of common updates, publicity campaigns, press occasions, public talks and stakeholder collaborations; and

5. Proceed to work with CASG members and stakeholders to facilitate the event of applied sciences to help inexperienced and sustainable finance initiatives domestically, regionally and internationally.

Regulatory framework for carbon markets

The SFC recognised the potential within the enlargement of China’s carbon markets and Hong Kong’s strategic function in including worth to such carbon market improvement. There are two key kinds of carbon markets, being (i) voluntary carbon markets comprising patrons that voluntarily buy carbon credit generated by tasks that keep away from or take away greenhouse fuel emissions to neutralise or compensate for his or her emissions; and (ii) compliance markets or emissions buying and selling schemes which give a regulated mechanism for market members to commerce allowances for carbon emissions. On this regard, the SFC will give attention to figuring out the suitable regulatory framework on carbon market alternatives in Hong Kong and proceed its work below the Carbon Market Work Stream arrange by the CASG to help Hong Kong’s improvement of a greener financial system.

Conclusion

Lately, the SFC has offered clearer roadmap to develop an efficient regulatory framework for inexperienced and sustainable finance and to make sure inexperienced finance initiatives are correctly regulated. Market gamers might anticipate extra complete insurance policies and regulatory framework to return in place in the midst of time.