ESG Fund Information Disclosure Requirements
The Hong Kong Mandatory Provident Fund Schemes Authority (MPFA) releases a document aimed at requiring Mandatory Provident Fund trustees to strengthen ESG fund information disclosure requirements.
The Hong Kong MPFA believes that Mandatory Provident Fund trustees typically disclose information based on the Code on Disclosure for MPF Investment Funds. This document will strengthen the disclosure requirements for ESG funds in the Code.
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Introduction to ESG Fund Information Disclosure Requirements
The Hong Kong MPFA plans to strengthen the disclosure requirements for ESG fund information from the following aspects:
ESG Fund Name
ESG fund names need to accurately display their investment strategies and reflect ESG characteristics correctly. ESG fund names should not be misleading and should not expand or emphasize ESG characteristics. Non ESG funds cannot be named, displayed, or marketed as ESG funds.
Disclosure of MPF Scheme Brochures
ESG funds need to disclose their investment priorities (such as climate change, green, low-carbon, or sustainable) and ESG evaluation criteria (indicators, ratings, or third-party labels) in the prospectus of the Mandatory Provident Fund plan. ESG funds need to disclose their investment strategies and how they consistently implement this strategy in their investment decisions. ESG funds also need to disclose asset allocation ratios, reference benchmarks, and risks or limitations in ESG investments.
More Information Disclosures
ESG funds need to provide supplementary explanations of the above information, as well as ESG measurement and monitoring methods, ESG feature implementation, ESG asset due diligence, and data sources and assumptions, in the prospectus of the Mandatory Provident Fund plan or on the website. ESG funds that focus on climate themes need to disclose methods for measuring climate indicators.
Regular Review and Disclosure
The trustee of the Mandatory Provident Fund shall conduct an evaluation of ESG funds at least once a year and disclose information on ESG fund investment ratios, performance comparisons, participation in actions, etc. in the annual report. The trustee also needs to compare the information from the previous evaluations and provide relevant educational materials to assist investors in understanding ESG characteristics and risks.
Application of ESG Fund Information Disclosure Requirements
After the release of this document, Mandatory Provident Fund trustees are required to comply with information disclosure requirements. For existing ESG funds, trustees are required to disclose information as required before September 30th and in annual reports after November 30th. For new ESG funds, trustees need to provide self-compliance assessment documents or third-party certification documents to the MPFA to confirm their compliance with requirements. The Hong Kong MPFA plans to closely monitor regulatory policy developments and may provide further guidance on ESG funds in the future.
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