Page 54 - 2023 White Paper on the Business Environment in China
P. 54
3 White Paper on the Business Environment in China
Fund managers are also subject to higher ESG Investors demand ESG enhance-
disclosure standards. In 2021, the SFC released ments and comprehensive disclosure
a new circular that provided further guidance on
enhanced disclosure for ESG funds and additional Calling for greater transparency and data
guidance for funds with a climate-related focus. accountability from businesses, investors and the
The SFC also introduced new requirements for capital market are another driving force behind
climate risk management for all fund managers4. the push for ESG enhancements and disclosure.
In August 2022, the SFC published its Agenda for A survey conducted by EY in 2021 found that 74%
Green and Sustainable Finance5, which outlined of investors said the Covid-19 pandemic made
further steps to support Hong Kong's position as a them more likely to divest based on poor ESG
regional green finance center. performance8. The EY Global Corporate Reporting
and Institutional Investor Survey in 2022 showed
The Agenda focuses on corporate disclosures, that 99% of investors surveyed use companies'
asset management and ESG funds and carbon ESG disclosures as part of their investment
markets. Key points include the possibility of decision-making process, with 74% using a
adopting the International Sustainability Standards rigorous and structured approach. By comparison,
Board (ISSB) climate standards as part of the the 2018 EY Global Institutional Investor Survey
reporting framework, and aligning Hong Kong's found that only 32% of investors surveyed were
disclosure with the TCFD with it. At the 2022 using a rigorous approach. These results show a
United Nations Climate Change Conference, or significant shift in investor attitudes. Sustainability
COP27, the ISSB made key announcements about disclosures are now considered an important
the implementation of climate-related disclosure insight for investors looking to understand the
standards in 20236. impact of an issue on a business's performance,
risks and long-term growth prospects9.
To stay compliant with regulatory requirements, Companies in the GBA are also receiving more
companies in the GBA must keep abreast of ESG-related inquiries from investors. According to
regulatory developments and aim for a more an investor relation survey by the SZSE10, half of
comprehensive ESG disclosure. the surveyed companies said they had answered
ESG-related questions and disclosed ESG-related
Although the Shenzhen Stock Exchange (SZSE) information in 2020. Listed companies under the
currently has no mandatory ESG disclosure SZSE are beginning to develop ESG awareness
requirements for listed companies, it released and are willing to exchange ESG information
an ESG Ratings Methodology and ESG Indices7 in with investors. With growing expectations
July 2022 to meet the growing demand for ESG and demands from investors, companies will
investments and to advance the development of ultimately need to place greater emphasis on ESG
a green and low-carbon economy in support of management and disclosure.
China's carbon peak and carbon neutrality goals.
Carbon market takes off in the GBA
4 SFC, https://apps.sfc.hk/edistributionWeb/
gateway/EN/circular/products/product-authorization/ The development of a carbon market has
doc?refNo=21EC27 been a key focus for the HKSAR Government
5 SFC, https://www.sfc.hk/en/Sustainable-fi- and regulatory bodies in the GBA. The SFC is
nance committed to supporting Hong Kong as a regional
6 International Financial Reporting Standards green finance center, with a particular focus on
Foundation, https://www.ifrs.org/news-and-events/
news/2022/11/issb-cop27-progress-implementa- 8 Y, https://assets.ey.com/content/dam/ey-sites/
tion-climate-related-disclosure-standards-in-2023/ ey-com/en_gl/topics/assurance/assurance-pdfs/ey-in-
7 Shenzhen Stock Exchange, http://www.szse. stitutional-investor-survey.pdf
cn/English/about/news/szse/t20220727_595057.html 9 EY, https://www.ey.com/en_gl/assurance/how-
can-corporate-reporting-bridge-the-esg-trust-gap
10 Shenzhen Stock Exchange, https://www.szse.
cn/aboutus/trends/news/t20210409_585489.html
54
Fund managers are also subject to higher ESG Investors demand ESG enhance-
disclosure standards. In 2021, the SFC released ments and comprehensive disclosure
a new circular that provided further guidance on
enhanced disclosure for ESG funds and additional Calling for greater transparency and data
guidance for funds with a climate-related focus. accountability from businesses, investors and the
The SFC also introduced new requirements for capital market are another driving force behind
climate risk management for all fund managers4. the push for ESG enhancements and disclosure.
In August 2022, the SFC published its Agenda for A survey conducted by EY in 2021 found that 74%
Green and Sustainable Finance5, which outlined of investors said the Covid-19 pandemic made
further steps to support Hong Kong's position as a them more likely to divest based on poor ESG
regional green finance center. performance8. The EY Global Corporate Reporting
and Institutional Investor Survey in 2022 showed
The Agenda focuses on corporate disclosures, that 99% of investors surveyed use companies'
asset management and ESG funds and carbon ESG disclosures as part of their investment
markets. Key points include the possibility of decision-making process, with 74% using a
adopting the International Sustainability Standards rigorous and structured approach. By comparison,
Board (ISSB) climate standards as part of the the 2018 EY Global Institutional Investor Survey
reporting framework, and aligning Hong Kong's found that only 32% of investors surveyed were
disclosure with the TCFD with it. At the 2022 using a rigorous approach. These results show a
United Nations Climate Change Conference, or significant shift in investor attitudes. Sustainability
COP27, the ISSB made key announcements about disclosures are now considered an important
the implementation of climate-related disclosure insight for investors looking to understand the
standards in 20236. impact of an issue on a business's performance,
risks and long-term growth prospects9.
To stay compliant with regulatory requirements, Companies in the GBA are also receiving more
companies in the GBA must keep abreast of ESG-related inquiries from investors. According to
regulatory developments and aim for a more an investor relation survey by the SZSE10, half of
comprehensive ESG disclosure. the surveyed companies said they had answered
ESG-related questions and disclosed ESG-related
Although the Shenzhen Stock Exchange (SZSE) information in 2020. Listed companies under the
currently has no mandatory ESG disclosure SZSE are beginning to develop ESG awareness
requirements for listed companies, it released and are willing to exchange ESG information
an ESG Ratings Methodology and ESG Indices7 in with investors. With growing expectations
July 2022 to meet the growing demand for ESG and demands from investors, companies will
investments and to advance the development of ultimately need to place greater emphasis on ESG
a green and low-carbon economy in support of management and disclosure.
China's carbon peak and carbon neutrality goals.
Carbon market takes off in the GBA
4 SFC, https://apps.sfc.hk/edistributionWeb/
gateway/EN/circular/products/product-authorization/ The development of a carbon market has
doc?refNo=21EC27 been a key focus for the HKSAR Government
5 SFC, https://www.sfc.hk/en/Sustainable-fi- and regulatory bodies in the GBA. The SFC is
nance committed to supporting Hong Kong as a regional
6 International Financial Reporting Standards green finance center, with a particular focus on
Foundation, https://www.ifrs.org/news-and-events/
news/2022/11/issb-cop27-progress-implementa- 8 Y, https://assets.ey.com/content/dam/ey-sites/
tion-climate-related-disclosure-standards-in-2023/ ey-com/en_gl/topics/assurance/assurance-pdfs/ey-in-
7 Shenzhen Stock Exchange, http://www.szse. stitutional-investor-survey.pdf
cn/English/about/news/szse/t20220727_595057.html 9 EY, https://www.ey.com/en_gl/assurance/how-
can-corporate-reporting-bridge-the-esg-trust-gap
10 Shenzhen Stock Exchange, https://www.szse.
cn/aboutus/trends/news/t20210409_585489.html
54
