LCQ22: Formulating environmental, social and governance standards

Following is a question by the Hon Elizabeth Quat and a written reply by the Secretary for Financial Services and the Treasury, Mr Christopher Hui, in the Legislative Council today (July 12):

Question:

There are views that Hong Kong, as a leading financial centre in the world and a bridge between the East and the West, has the objective conditions to play a more active role in the international environmental, social and governance (ESG) field. In addition, Hong Kong's professional services sectors and their reputation have competitive edges in the certification field, so Hong Kong should not be content with the status quo, ceding the say in formulating ESG standards to the West. In this connection, will the Government inform this Council:

(1) as it has been reported that the Securities and Futures Commission has indicated that it will introduce a Hong Kong version of ESG standards in the future, and the International Sustainability Standards Board has already published the International Financial Reporting Standards Sustainability Disclosure Standards at the end of last month, of the authorities' specific plan and timetable for formulating such ESG standards;

(2) whether it will consider constructing a comprehensive ecosystem for ESG development, which will comprise regulatory bodies, industries, the academia, non-governmental organisations and even other stakeholders, so as to promote ESG standards and certification systems applicable to various trades and industries, and co-ordinate initiatives in various ESG aspects; if so, of the details; if not, the reasons for that;

(3) as it is learnt that the Government has set up different advisory committees on sustainable development or ESG in various bureaux at present, whether the Government will consider setting up a cross-bureau working group which will be responsible for co-ordinating and collaborating the promotion of Hong Kong's ESG initiatives, so as to strive for an international say for Hong Kong in the ESG field; if so, of the details; if not, the reasons for that; and

(4) whether it has plans to strengthen publicity and education on ESG concepts among the general public (particularly the young people), so that the promotion and practice of ESG will be more comprehensive and sustainable; if so, of the details; if not, the reasons for that?

Reply:

President,

In recent years, issues on environmental, social, and governance (ESG) and sustainable development have attracted global attention from various sectors. In Hong Kong, relevant Government Bureaux and financial regulators have implemented various policies and measures to promote sustainable economic and social developments.

In consultation with the Environment and Ecology Bureau (EEB), the Securities and Futures Commission (SFC), and Hong Kong Exchanges and Clearing Limited (HKEX), the reply to the four parts of the question is as follows:

(1) The International Sustainability Standards Board (ISSB) published the International Financial Reporting Standards (IFRS) - Sustainability Disclosure Standards in June 2023, which aim at becoming the global baseline for corporate disclosure of climate and sustainability-related information. Formed by the Financial Services and the Treasury Bureau, the EEB, the Hong Kong Monetary Authority (HKMA), the SFC, the Insurance Authority, the Mandatory Provident Fund Schemes Authority, and the HKEX, the Green and Sustainable Finance Cross-Agency Steering Group (Steering Group) is considering aligning the local requirements with this global baseline in a gradual approach.

For listed companies, the Stock Exchange of Hong Kong Limited (SEHK) released in April this year a public consultation document on the enhancement of climate-related reporting requirements for Hong Kong listed companies. The proposed new climate-related disclosure requirements take reference from the IFRS S2 Climate-related Disclosures Exposure Draft published by the ISSB in March 2022, as supplemented or modified by subsequent deliberations published by the ISSB. The consultation will close on July 14 this year. The SEHK's consultation conclusions will take into account market feedback and the final standards published by the ISSB.

(2) and (3) To achieve carbon neutrality in Hong Kong by 2050 and contribute to the country's Dual Carbon Goals, the Hong Kong Special Administrative Region (HKSAR) Government has set up the inter-departmental Steering Committee on Climate Change and Carbon Neutrality, which is chaired by the Chief Executive, to formulate the overall strategy and oversee the co-ordination of various actions. Apart from promoting local initiatives such as energy conservation, green transport and waste reduction, the Government has also strengthened regional co-operation on environmental protection. According to the Outline Development Plan for the Guangdong-Hong Kong-Macao Greater Bay Area (GBA), one of the Six Basic Principles for the GBA Development is "to pursue green development and ecological conservation". Through platforms such as the Hong Kong-Guangdong Joint Working Group on Environmental Protection and Combating Climate Change and the Hong Kong-Shenzhen Joint Working Group on Environmental Protection, the HKSAR Government has been working with the Guangdong Provincial Government and the Shenzhen Municipal Government on various environmental issues to strengthen exchanges and collaborations within the GBA in combating climate change as well as joint prevention and control of air pollution. Our aim is to expedite the green transformation of Hong Kong on various fronts, and to practise sustainable development for integration with the overall development of the country, thereby contributing to the national and global efforts in addressing climate change.

In addition, the Financial Secretary (FS) announced in the 2023-24 Budget that the development of Hong Kong into an international centre for green technology and finance will be accelerated, including the aspect of green certification and alignment with international standards. In June this year, the FS-chaired Green Technology and Finance Development Committee was established and convened the first meeting. The Committee gathers leaders from the finance, technology, academic, professional services sectors, etc, as well as representatives from the Government, financial regulators and public organisations to discuss how to promote the faster and greater development of green technology and green finance.

The Steering Group is committed to co-ordinating with the financial sector in addressing climate and environmental risks, accelerating the growth of green and sustainable finance in Hong Kong, as well as facilitating the implementation of the Hong Kong's Climate Action Plan 2050. One of the action items is to mandate climate-related disclosures aligned with the Task Force on Climate-related Financial Disclosures' recommendations across relevant sectors no later than 2025. In addition, the Steering Group has been making active efforts in respect of the establishment of a local green classification framework, capacity building, market opportunities, data and technology, etc, seeking to comprehensively develop green and sustainable finance.

(4) Through the Environment and Conservation Fund, the EEB provides funding support for eligible local non-profit-making organisations to implement environmental education and community engagement projects on topics such as climate change and sustainable development, and to promote green living habits (including green consumption) by different means and channels (including ESG information).

In addition, the Investor and Financial Education Council (IFEC) raises the awareness and knowledge of the general public (including youth) towards green and sustainable finance through various channels (including TV videos, online advertisements, talks, media interviews, byline articles, social media content, online education resources, etc). Taking account of young investors' interest in this subject, the IFEC will continue to organise talks and online seminars with young investors as the audience, and conduct publicity and promotion through social media.