The MPFA held the MPF Symposium to discuss with the MPF industry the development of and strategies for sustainable investment and issued a circular letter providing guidance to MPF trustees on how to enhance the transparency of “Environmental, Social, and Governance” (ESG) funds in MPF schemes, with a view to enhancing scheme members’ understanding of ESG funds for making investment decisions.
Addressing the MPF Symposium, the Secretary for Financial Services and the Treasury, Mr Christopher Hui, said that MPFA has been embedding sustainable investing in its mission and guidance for the industry. It is also diversifying MPF portfolios by integrating sustainable instruments with a pioneering mechanism established to prioritise the allocation to MPF schemes of institutional green bonds issued by Government. These initiatives advanced the environmental agenda while bolstering the long-term sustainability of the MPF System.
Mr Hui anticipated that the Symposium would collect wisdom of industry leaders, professionals and stakeholders to help cement Hong Kong’s role as a global leader in green finance and retirement protection and at the same time explore how finance can serve not only as a cornerstone for retirement protection, but also as a transformative force for the future of the planet.
Recognising sustainable development as one of the most critical issues of our time, MPFA Chairman Mrs Ayesha Macpherson Lau emphasised in her opening address that the long-term impact of sustainability risks on MPF investments cannot be ignored. In this regard, the MPFA has developed principles for sustainable investing for the MPF industry.
“We are also working full steam ahead on our flagship sustainability project: the eMPF Platform,” said Mrs Lau. “By using technology, the eMPF Platform helps reduce both costs and paper consumption, making MPF operations more efficient and eco-friendly and benefiting all employers and scheme members. Our aim in the long run is to continue to move towards a greener operating environment, with the ultimate goal of being fully paperless and 100% digital!”
Highlighting the growing momentum of sustainable investments in MPF, which has seen an almost 50-fold increase over the past decade, Mrs Lau urged the MPF industry that there is still more to be done. “Notwithstanding the good progress, MPF trustees should set higher expectations for investment managers of MPF funds to drive change in investment and risk management and launch more thematic ESG funds,” she added.
In the circular letter issued by the MPFA, MPF trustees are required to improve disclosure by setting out in the MPF scheme brochures the ESG foci, investment strategies and mechanisms to monitor and measure attainment of the ESG foci of ESG funds. Additionally, trustees should regularly assess the extent to which the funds’ established ESG foci is attained and disclose this in the annual governance reports of their MPF schemes. This approach enables scheme members to evaluate whether the funds’ ESG performance aligns with their expectations, thereby enhancing overall transparency.
Concluding the Symposium, MPFA Managing Director Mr Cheng Yan-chee said, “Integrating sustainability factors into investment decision-making not only helps manage related risks and facilitate planning for retirement protection in the long run; it also contributes to a more sustainable future. The MPFA’s latest regulatory measure is intended to deepen MPF scheme members’ understanding of ESG funds and help them make investment decisions.”
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