Why the HKMA is Taking ESG Investing Seriously

The head of risk for the de-facto central bank’s investment portfolio explains why it is implementing ESG principles into its investing practices.

Hong Kong has not been known as the biggest advocate of environmental, social and governance (ESG) principles. The city is notorious for the pollution that often leaves its skyline a haze, while its energy is largely dependent on coal-fired power plants based in China.

But the Hong Kong Monetary Authority (HKMA) is trying to change all that.

The de-facto bank of the special administrative region of China is spearheading efforts to promote ESG and green finance, both in its investment activities under its Exchange Fund and via its ability to influence banks as a regulator.

Kim Chong, head of risk management and compliance for the Exchange Fund Investment Office at the HKMA, told AsianInvestor this is a deliberate effort as part of the HKD 4.16 trillion (USD 530 billion) portfolio’s recognition of the encompassing impact of climate change.

There is broad scientific consensus that extreme climate events such as typhoons and forest fires will rise with the global temperature, and all signs indicate that efforts of the Paris Climate Agreement of 2015 to prevent the global temperature from rising by more than 2 degrees Celsius appears increasingly unlikely to be met.

That is set to have a big impact on asset owners’ investment portfolios… [read more]

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