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.
“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,” said Ms Julia Leung, the SFC’s Chief Executive Officer. “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.”
“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,” said Mr Bryan Pascoe, Chief Executive of ICMA.
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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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