Call for all SFC-licensed firms to file ESG reports
All financial institutions licensed by the Securities and Futures Commission (SFC) to carry out regulated activities should be required to submit environmental, social and governance (ESG) reports that cover their overall greenhouse gas emissions for the development of a comprehensive ecosystem of sustainability disclosures in the city, City University of Hong Kong said.
The commission oversees 10 types of regulated activities, which include dealing in securities and asset management.
All of the about 2,600 firms listed in Hong Kong are required to publish annual sustainability reports on their ESG performance, alongside mandatory periodic financial reports. However, of the companies licensed by the SFC, only about 600 participate in exchanges in the city, while 2,544 do not.
“Given that many multinational and local financial institutions operating in Hong Kong are not listed, all licensed financial institutions should be required to submit ESG reports covering overall greenhouse gas emissions data,” a report released yesterday by CityU’s Research Centre for Sustainable Hong Kong said.
Disclosure of such data would facilitate the improved monitoring and assessment of the ecological footprint of financial activities, it added.
“Financial institutions can take a more active role in driving the low-carbon transition,” said Phyllis Mo, associate director of the research centre.
“Asset managers should provide by-sector financial activity information and develop a localised by-sector asset turnover ratio database to facilitate the estimation of financed emissions.”
Strengthening climate-related disclosure requirements is important for the development of Hong Kong as a regional hub for green finance and will contribute to decarbonisation efforts in the city, according to the report.
While emissions from companies’ operations were currently reported, financed emissions – those resulting from the investment and lending activities of banks, investment managers and insurers – were mostly unreported, it said.
“The SFC will continue to work with the government and relevant stakeholders to support sustainability disclosures in Hong Kong,” a spokesperson for the commission said yesterday.
The CityU report estimated Hong Kong’s financial institutions generated financed emissions totalling 380.27 million tonnes of carbon dioxide equivalents, around 11 times the Hong Kongwide emissions of 34.7 million tonnes in 2021, the year for which the most complete data is available.
The study used sector-wide data from the Hong Kong Monetary Authority and the SFC, and official annual reports from major financial institutions, to estimate financed emissions.
“Estimation of financed emissions is an important tangible step towards a full assessment of the impact of financial institutions’ financing and investment activities on climate change and the effectiveness of their climaterelated initiatives,” the report said.