Hong Kong Fund Managers Climate-Related Investment Risks Disclosure Deadline in November 2022, Mandatory for Fund Managers with at Least $1 Billion AUM
20th October 2022 | Hong Kong
Hong Kong-based fund managers must meet the Climate-Related Investment Risks disclosure deadline in November 2022, which is mandatory for all fund managers with at least $1 billion AUM (HKD 8 billion, Assets under Management). For the last 6 months, Governance Solutions Group (GSG) data platform had been providing climate-related risk management and disclosure to over a dozen of top-tier Hong Kong asset managers including CSOP Asset Management, Bosera Asset Management (International), Dacheng International, ABCI Asset Management, and CISI Asset Management, with a combined AUM of more than HKD 300 billion (USD 38 billion). Governance Solutions Group (GSG) is China’s leading ESG investment and sustainability data provider. Carbon Discovery is GSG’s proprietary database for portfolio carbon accounting which was launched in 2021. The database aims to help fund managers assess climate-related risks at individual stock or bond level as well as portfolio level. Ultimately fund managers can achieve portfolio carbon emission accounting and management, optimize carbon-related investment strategies, and meet relevant disclosure requirements of regulators or investor clients. See below for more info.
“ Hong Kong Fund Managers Climate-Related Investment Risks Disclosure Deadline in November 2022, Mandatory for Fund Managers with at Least $1 Billion AUM “
Hong Kong Fund Managers Climate-Related Investment Risks Disclosure Deadline in November 2022
HK Fund Manager’s Carbon Disclosure Deadline Looming
Governance Solutions Group (GSG), China’s leading ESG investment and sustainability data provider, announcing its carbon emissions data offering, Carbon Discovery®, has reached critical mass.
This notice comes on the backdrop of SFC’s announcement that all Hong Kong-based fund managers are required to make substantive disclosures on their climate-related investment risks by the 20th of November. Specifically, fund managers with more than HKD 8 billion AUM would have already implemented measures two months ago (20th of August), but all fund managers must comply by the November deadline.
For the last six months, GSG’s data platform has been successfully providing climate-related risk management and disclosure to over a dozen of top-tier Hong Kong asset managers including CSOP Asset Management, Bosera Asset Management (International), Dacheng International, ABCI Asset Management, and CISI Asset Management, with a combined AUM of more than HKD 300 billion (USD 38 billion).
GSG’s Carbon Discovery® has provided reliable, comprehensive and effective data solutions to Hong Kong-based fund managers with a Collective Investment Scheme who are required to submit climate-related risk management and disclosure by no later than November 20 this year in accordance with last year’s substantial revision of the Fund Manager Code of Conduct (FMCC) by the Hong Kong Securities and Futures Commission (SFC). The data has filled a gap where only few listed companies and bond issuers in China have disclosed carbon data.
Carbon Discovery® is GSG’s proprietary database for portfolio carbon accounting which was launched in 2021. The database aims to help fund managers assess climate-related risks at individual stock or bond level as well as portfolio level. Ultimately fund managers can achieve portfolio carbon emission accounting and management, optimize carbon-related investment strategies, and meet relevant disclosure requirements of regulators or investor clients. Further, with data support from Carbon Discovery®, fund managers can better engage with portfolio companies on carbon data disclosures and net zero strategy development.
Carbon Discovery® is developed based on the PCAF (Partnership for Carbon Accounting Financials) methodology, which is widely adopted globally and also recognized by the SFC, so that it well fits fund managers’ compliance requirements. Also, the emission factors used in its model are established with the support and guidance from the National Center for International Cooperation on Climate Change Strategy Research (NCSC) of the Ministry of Ecology and Environment. This ensures that fund managers are provided with market specific and authoritative carbon accounting solutions.
Climate-related risks pose both micro and macro prudential concerns. While climate change awareness has grown, actual climate change has accelerated, with evermore severe impact. Considering the financial service industry’s heavily integrated role in society, it is particularly susceptible to risks caused by climate change. Managing climate-related risks and leveraging the ability of finance to empower low-carbon transition has become a global consensus.
Today, international alliances, initiatives, and regulations have increased their attention on portfolio carbon analysis. Quantitative carbon disclosure has become vital for stringent requirements. For the financial sector, future emission reduction commitments have also become the trend as well as the focus for asset owners.
Some lead fund managers including CSOP, Bosera international, Dacheng International, ABCI Asset Management, CISI Asset Management have proactively embarked on climate-related risk management actions. GSG is cooperating with these top fund managers by offering both asset level carbon emission data (via GSG’s Carbon Discovery®) and consulting services to improve climate resilience and seize climate opportunities. Further, GSG is supporting clients to meet the FMCC’s regulatory requirements for climate-related risks, including governance structure establishment, climate risks assessment, scenario analysis, portfolio carbon footprint calculation, and disclosure reporting.
With the enhanced data analytics platform, which uncovers climate risk exposure as well as carbon emissions of underlying assets, GSG can now provide the tools for portfolio managers to instantly calculate the carbon footprint of the portfolio, asses the climate risks at different scenario, and adjust product strategy accordingly.
Ms. Doris Lian, Chairperson, HKCAMA, CEO, Bosera Asset Management (International) Co., Limited
“As a PRI signatory and the TCFD supporter, we highly value sustainable investment and climate change issues. Leveraging GSG’s Carbon Discovery® database, we conducted carbon emission calculation to better understand our products’ carbon footprint. This further enabled us to optimize our investment strategy and lower exposure. We also appreciated GSG’s professional input in supporting us to build a comprehensive internal climate-related risks management framework, which we believe will reinforce our resilience against climate change risks.”
Ms. Chen DING, CEO, CSOP Asset Management Limited
“We believe a more balanced future will yield long-term opportunities and returns. Utilizing GSG’s data and analysis, we were able to make qualified climate related risks assessments, as such quantification was proved as highly valuable in facilitating our sustainable investing decision-making. This year, with GSG’s support, we established our climate-related risk management policy, serving as our framework and guidance to better manage climate-related risks and take efficient concrete actions. Looking forward to working with GSG again and exploring more possibilities.”
Dr. Dequan WANG, CEO, Governance Solutions Group, Vice Chair, ESG Committee, HKCAMA
“The access to quantifiable carbon emission data is crucial for asset managers to assess and manage the impact of climate-related risks. In the Chinese market where carbon disclosure is not yet mandatory for all listed companies and bond issuers, GSG Carbon Discovery®, our proprietary database for portfolio carbon accounting, provides a solution for investors with a solid methodology aligned with PCAF and TCFD, as well as local expertise which ensures the authority and timeliness of our model parameters. GSG is honored to have cooperated with many leading asset managers to promote the application of Carbon Discovery®. We will make every effort to continue to assist the development of climate risk management within the financial industry.”
Governance Solutions Group (GSG) is an ESG & Sustainable Investment Advisor focusing on China’s capital markets. GSG is a signatory to the PRI, as well as an OECD Corporate Governance Roundtable and ICGN member. We are GRI certified trainers, a SASB Alliance Member, and a TCFD Supporter. With offices in Shenzhen, Beijing, Shanghai and Hong Kong, GSG provides ESG research and rating, ESG data on Chinese issuers, active ownership assistance and proxy advice for institutional investors.
GSG Founder and CEO Dr. Wang is also an invited expert on China’s ESG30 Forum, Vice Chair of the ESG Committee of Hong Kong Chinese Asset Managers Association, a committee member on the Sustainable Investment Committee of China Assets Management Association(AMAC), an Advisor on the Insurance Asset Management Association of China (IAMAC). He is also a Fellow of the Hong Kong Institute of Directors. For more information please visit: www.governance-solutions.com
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