Introduction to ESG, Sustainable Investing and Career Opportunities

Have you noticed that your newsfeed often refers to Environmental, Social and Corporate Governance ("ESG")? 

Given its topical nature, Annie Tang, Star Anise’s co-Managing Director, hosted a webinar with Grace Hui and Felix Lin from the Green and Sustainable Finance Department of Hong Kong Exchanges and Clearing Limited (“HKEX”), to discuss the opportunities and challenges surrounding ESG. Below is a brief re-cap of our discussion. 

Funding the Transition to a Sustainable Future

The panelists mentioned that the financial market could help mobilise capital to address climate change, fund green projects or projects that will aid in creating a sustainable future e.g., those aligned with United Nations Sustainable Development Goals.

Hong Kong, being an international finance centre and a super connector to China and the rest of the world, is well placed to drive the growth of green and sustainable finance development in the region. It has already been designated by the Central Government as the green finance hub in the Greater Bay Area.

Challenges

From the discussion, we learned that the prerequisite for raising green funding is for issuers to adopt recognized green bond principles (e.g., those issued by International Capital Market Association) and be transparent about their use of proceeds and the potential environmental impact resulting from the green projects. This is to help alleviate any investors’ concern on “greenwashing”. To this end, HKEX launched the Sustainable & Green Exchange (STAGE) in December 2020 to facilitate such transparency and market education on green finance and sustainable investing: https://www.hkex.com.hk/Join-Our-Market/Sustainable-Finance/HKEX-STAGE?sc_lang=en.

Whilst, Hong Kong is yet to establish laws governing or monitoring ESG, HKEX has introduced ESG disclosure requirements since 2013 which were enhanced roughly every two years. The latest amendments in 2020 included mandatory disclosures by company boards on how they consider ESG matters, amongst other updates. 

HKEX launched the Sustainable & Green Exchange (STAGE) in December 2020, which offers critical data for sustainable investing and helps issuers increase visibility in the ESG space: https://www.hkex.com.hk/Join-Our-Market/Sustainable-Finance/HKEX-STAGE?sc_lang=en.

HKEX is also working closely with other finance regulators and government agencies to collaborate and strengthen Hong Kong’s financial ecosystem to support a greener and more sustainable future. The steering group is known as the Green and Sustainable Finance Cross-Agency Steering Group and was initiated by HKMA and SFC in Hong Kong. The steering group unveiled its strategic plan last December which included mandatory TCFD-aligned disclosure across the relevant sectors by 2025. This is an important step towards standardizing climate disclosure using international standards.

Careers Outlook

From the webinar, we deduced that there is a notable shortage of skills and understanding of how the finance sector and ESG intersect. To ensure companies are compliant with regulations and reporting standards, we anticipate that there will be a rise in the demand for ESG compliance/governance roles across many industries. To familiarise oneself with sustainable investment products and increase employability, practical tips for professionals in Hong Kong would be to enhance their understanding of ESG by reading widely about it and by enrolling on courses such as Foundation Courses by HKU Space, CFA, SFA UK Level 4 for ESG and EFFAS Exam.

We would like to thank Grace and Felix for taking the time to help the general public know more about this important growth area.

Disclaimer: This article is of a general nature only. It is not legal, financial or any other form of professional advice. If you have any questions for your specific situation, please consult a licensed professional