Advanced Consultation Services on Climate-related Risks complying Securities and Futures Commission's " Fund Manager Code of Conduct"

To meet the growing demand of investors for climate risk and management information, and to combat "greenwashing" behaviour, Hong Kong's Securities and Futures Commission (SFC) published "Consultation Conclusions on the Management and Disclosure of Climate-related Risks by Fund Managers" on August 20, 2021, and published revisions to the “Fund Manager Code of Conduct” to clarify the climate risk management and disclosure responsibilities of fund managers in the investment and risk management process.

In line with the amendments, large fund managers* are also required to comply with the following criteria where climate-related risks are assessed to be relevant and material to the investment strategy or fund they manage:

(i) Assess the relevance and utility of scenario analysis in evaluating the resilience of investment strategies to climate-related risks under different pathways. If the assessment result is deemed to be relevant and useful, fund managers are required to develop a plan to implement scenario analysis within a reasonable timeframe; and

(ii) If climate-related risks are assessed to be material, take reasonable steps to identify the weighted average carbon intensity of Scope 1 and Scope 2 GHG emissions associated with the funds’ underlying investments, where data is available or can be reasonably estimated, and define its calculation methodology and underlying assumptions.

* Large fund managers refer to licensed corporations whose collective investment schemes coordinate monthly fund assets equal to or more than 8 billion yuan in any three months in the previous reporting year.

CECEPEC has abundant climate risk consulting experience and can provide fund managers with professional consulting services following relevant requirements of "advanced standards - tools and indicators":

  • Identify the relevance and level of climate-related risks to investment strategies or funds; Assist companies in formulating major climate risk management and risk control systems based on climate risk assessment results
  • Evaluate the relevance and practicability of climate-related risk scenario analysis for investment strategies; Assist in scenario analysis under the TCFD framework, and clarify the setting of different scenarios and how the scenario affects the investment portfolio
  • Assist in identifying, calculating, analysing and disclosing the carbon footprint of fun-related investment portfolios referring to PCAF and other relevant guidelines
  • Provide suggestions to improve the investment management process and incorporate material climate-related risks into the investment management process

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