The ACCA Hong Kong virtual annual conference, held in September, brought together finance and accounting professionals to explore how businesses and organisations can approach sustainability. The theme was ‘the resilient profession – towards a new era of sustainability’, with the conference focusing on how to reposition Hong Kong in its post-Covid rebound, the role of the Greater Bay Area (GBA), and the quest for growth in the digital age.
In his opening speech, Tim Lui, chairman of the Hong Kong Securities and Futures Commission (SFC), warned: ‘The risk of climate change might significantly impact the economy as well as the whole financial system. It has become the priority to address climate change for government and regulators in Hong Kong and the rest of the world.’
Climate focus
The Hong Kong government has highlighted its aim of achieving carbon neutrality by 2050, and plans to strengthen efforts to work together with other GBA cities to build low-carbon communities, develop carbon reduction technologies and promote low-carbon products.
Lui described how the SFC, along with the Hong Kong Monetary Authority, had launched a cross-agency steering group for green and sustainable finance. The steering group released its strategy last December, with five key action points to strengthen the financial ecosystem and support the development of a greener and more sustainable future.
‘We have launched several measures, including strengthening climate-related financial risk management and promoting the flow of climate-related information to facilitate risk management, capital allocation and investor protection,’ Lui said. ‘We also encourage innovation and are exploring initiatives to facilitate capital flows towards green and sustainable causes.’
‘It has become the priority to address climate change for government and regulators in Hong Kong and the rest of the world’
At the same time, he explained, the steering group is encouraging more regional and international collaborations to develop Hong Kong as a green finance centre within the GBA.
Lui also noted that Hong Kong is exploring ways to become a regional carbon trading centre, as part of collaborative efforts within the GBA. Hong Kong, he said, is in a unique position to play a strategic role as a gateway to facilitate the national carbon-neutrality goal, as mainland China and key global markets transition to a green, low-emission and climate-resilient economy.
Risk management
As part of these efforts, the SFC requires fund managers to integrate climate risk management into their investment processes and make appropriate disclosures.
In June 2021, the SFC issued a circular to provide guidance to managers on enhanced disclosures for environmental, social and governance (ESG) funds. When it come into effect on 1 January 2022, it will require managers to disclose the key features of ESG funds, as well as how those funds’ ESG focus is measured and monitored throughout their lifecycle, due diligence conducted and engagement policies.
Meanwhile, the SFC has worked with the Hong Kong Stock Exchange to release listing rules requiring environmental, social and governance (ESG) disclosures, including significant climate-related issues that have impacted and may impact issuers, and a statement setting out the board’s consideration of ESG matters. It also requires amending environmental key performance indicators to mandate the disclosure of relevant targets.
‘Investors should keep cautious when making investments,’ said Lui. ‘We will support the stock exchange to educate investors, as well as cooperate with organisations to help investors understand green and sustainable finance, with the Investor and Financial Education Council’s help.
‘As an international financial centre, Hong Kong has both a stable financial system and well-established regulatory system. The central government will also support Hong Kong to become the green finance centre of the GBA, according to the outline development plan for the GBA.’
Repositioning Hong Kong
In his keynote speech, Ronnie Chan, chairman of Hang Lung Properties, spoke of how to reposition Hong Kong as it emerges from the pandemic. In particular, he noted the huge impact of Covid-19 on the way Hong Kong does business, noting that the enforced move to digital saves time and could drive growth. ‘Technology helps increase economic efficiency,’ he said.
He pointed out that, in global economic terms, currency supremacy may be the most important consideration, while competition in the capital market for natural resources and in trade must also be watched carefully by Hong Kong.
‘Hong Kong cannot be economically self-sufficient, as the market is too small; it has to keep a good relationship with mainland China, as well as global markets,’ he said.
Chan emphasised the importance of equipping employees with better language skills. This is important, he stressed, because Hong Kong is small and needs to be ready to work with partners from both mainland China and further afield to ensure it builds on its reputation as an international finance centre and global hub.
‘The Chinese government is giving weight to the GBA; it is wise to pursue opportunities there. But Hong Kong people need to publish their Putonghua to have a chance,’ he said.
Chan ended by calling for more support from key professions to help Hong Kong in its efforts to reposition itself. ‘Hong Kong is at a turning point, it needs profession talents and strong leadership to help figure out the future.’
