Hong Kong Launches Voluntary Code of Conduct for ESG Ratings & Data Products Provider Attended by More than 200 Industry Participants, 5 ESG Ratings & Data Product Providers Intend to Sign Up for Voluntary Code of Conduct, Asset Managers Can Use as Tool to Facilitate Due Diligence & Ongoing Assessments
2nd December 2024 | Hong Kong
The Hong Kong Securities & Futures Commission (SFC) have officially launched the Voluntary Code of Conduct for ESG ratings & data products provider (Environmental, Social & Governance), with the event attended by more than 200 industry participants. 5 ESG ratings & data product providers intend to sign up for the Voluntary Code of Conduct, and asset managers can use as tool to facilitate due diligence & ongoing assessments. Hong Kong SFC (29/11/24): “The Securities and Futures Commission’s (SFC) senior executives joined more than 200 financial industry participants today to witness the launch of Hong Kong’s voluntary code of conduct (VCoC) for environmental, social and governance (ESG) ratings and data products providers (Note 1). The VCoC, published on 3 October to promote higher transparency and quality ESG information for Hong Kong’s financial market, has built traction among ESG ratings and data products providers as well as the broader financial industry. As of today, five ESG ratings and data product providers, both international and local, have indicated their intention to sign up for the VCoC (Note 2). In her keynote speech, the SFC’s Chief Executive Officer Ms Julia Leung encouraged ESG ratings and data products providers to sign up for the VCoC and asset managers to leverage it as a tool to facilitate their due diligence and ongoing assessments. Earlier this week, the SFC has also provided asset managers with regulatory guidance on conducting due diligence when engaging third-party ESG ratings and data products providers (Note 3) … … The Chairman of the Board of the International Organization of Securities Commissions Mr Jean-Paul Servais also addressed the participants at the Bloomberg-hosted launch event. Other key stakeholders, including representatives of the International Capital Market Association (ICMA), ESG providers and asset managers, were on hand to explore the VCoC’s benefits and practical applications.” In 2024 October, Hong Kong ESG Ratings & Data Providers VCoC Working Group (VCWG) published a voluntary code of conduct for ESG ratings & data providers in Hong Kong.
“ Hong Kong Launches Voluntary Code of Conduct for ESG Ratings & Data Products Provider Attended by More than 200 Industry Participants, 5 ESG Ratings & Data Product Providers Intend to Sign Up for Voluntary Code of Conduct, Asset Managers Can Use as Tool to Facilitate Due Diligence & Ongoing Assessments “
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Hong Kong SFC CEO Julia Leung: “The VCoC together with our related guidance to asset managers will bring us a step closer to making more creditable ESG information available in the financial market,” said Ms Leung. “This should boost Hong Kong’s efforts to steer capital towards investments that can drive our net zero and other sustainable development goals.”
Notes:
- The development of the VCoC is supported and sponsored by the SFC. Please refer to the SFC’s press release on 3 October 2024 for more details.
- Please refer to the VCoC website.
- Please refer to the SFC’s Circular to Intermediaries regarding Guidance to asset managers regarding due diligence expectations for third-party ESG ratings and data products providers dated 25 November 2024.
Hong Kong ESG Ratings & Data Providers VCoC Working Group (VCWG) Publishes Voluntary Code of Conduct for ESG Ratings & Data Providers in Hong Kong
4th October 2024 – Hong Kong ESG Ratings & Data Providers VCoC Working Group (VCWG) has published a voluntary code of conduct for ESG ratings & data providers in Hong Kong. Hong Kong (3/10/24): “The Securities and Futures Commission (SFC) welcomes the publication today of a voluntary code of conduct (VCoC) by an industry-led working group for environmental, social and governance (ESG) ratings and data products providers providing products and services in Hong Kong. The code, an initiative supported and sponsored by the SFC, was led by the Hong Kong ESG Ratings and Data Providers VCoC Working Group (VCWG) (Note 1). The International Capital Market Association (ICMA), which has acted as the Secretariat of the VCWG in the formulation of the VCoC, will host and maintain the code (Note 2). The VCoC was finalised after a one-month consultation which ended in June 2024, and was modelled on international best practices recommended by the International Organization of Securities Commissions (IOSCO) (Note 3). This approach ensures that the code is interoperable and consistent with the expectations introduced in other major jurisdictions. The VCoC is available in English and Chinese. ESG ratings and data products providers who signed up to the code will be expected to make available publicly a self-attestation document, which explains their approach and actions taken to adhere to the principles of the code (Note 4). The self-attestation documents will also be made available on the VCoC website. The information set out in the documents will facilitate the due diligence and on-going assessments of ESG products and providers used by end users, such as SFC-licensed asset managers, in their investment and risk management processes.”
Julia Leung, SFC’s Chief Executive Officer: “The voluntary code will establish a benchmark for the provision of high quality, reliable and transparent ESG information to combat greenwashing in Hong Kong’s growing green and sustainable finance ecosystem. When selecting ESG products or data providers, financial institutions including asset managers are encouraged to take into account the adherence of the ESG providers to the code or any similar or higher standards.”
Bryan Pascoe, Chief Executive of ICMA: “We are honoured to coordinate the voluntary code of conduct for Hong Kong, and grateful for the support of the SFC and the involvement of key stakeholders from the private and public sectors. We will continue to contribute to best practices in the market, as well as Hong Kong’s wider sustainable finance initiatives.”
Notes:
- The VCWG comprises representatives from local, Mainland and other international ESG ratings and data products providers as well as key users from the local financial industry. The SFC, Hong Kong Monetary Authority, Insurance Authority and the Mandatory Provident Fund Schemes Authority are involved as observers to the VCWG. Please see the SFC’s press releases dated 17 May 2024 and 31 October 2023 for details.
- ICMA is a self-regulatory organisation and trade association in the capital markets which acted as Secretariat to convene and lead the VCWG.
- The recommendations are derived from the IOSCO final report titled Environmental, Social and Governance (ESG) Ratings and Data Products Providers dated November 2021. Subsequent to the report, IOSCO also published a document in November 2022 which calls on financial markets voluntary standard setting bodies and industry associations to promote amongst their members the adoption and implementation of the good practices stemming from the IOSCO recommendations.
- Following the publication of the VCoC today, ESG ratings providers and ESG data products providers will have respective implementation periods of six months and 12 months.
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