Deadlines Looming For SFC ESG And Climate-Related Requirements

• Published date: 24 November 2022
• Subject Matter: Finance and Banking, Corporate/Commercial Law, Financial Services, Fund Management/ REITs, Securities
• Law Firm: Stephenson Harwood
• Author: Ms Penelope Shen and Tze-wei Ng

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...