The Securities and Futures Commission (SFC) welcomes the launch of a public consultation today by an industry-led working group on a voluntary code of conduct (VCoC) for environmental, social and governance (ESG) ratings and data products providers providing products and services in Hong Kong.
The initiative to develop the proposed VCoC is supported and sponsored by the SFC (Note 1). Led by the International Capital Market Association (ICMA), the Hong Kong ESG Ratings and Data Products Providers VCoC Working Group (VCWG) modelled the draft VCoC on international best practices recommended by the International Organization of Securities Commissions (IOSCO) (Note 2).
The draft VCoC is interoperable as it is consistent with the expectations introduced in other major jurisdictions. It is available in both English and Chinese to encourage wider adoption by providers.
The draft VCoC also includes a self-attestation document to provide information on adherence to the code by the providers in a structured format. This will facilitate end users, such as SFC-licensed intermediaries, to compare the conduct of ESG ratings and data products providers during their due diligence and ongoing assessment processes.
“We are deeply encouraged by the progress made by the industry-led working group under the leadership of ICMA. The code, together with the self-attestation document, will be vital in fostering greater transparency, quality and reliability of ESG information, as well as comparability of products,” said Ms Julia Leung, the SFC’s Chief Executive Officer.
“ESG ratings and data products are essential resources for the sustainable finance market. We are pleased to coordinate this important working group sponsored by the SFC to develop and promote a voluntary code of conduct. We will continue to contribute our considerable experience in bringing about industry-led standards and our global expertise in sustainable finance,” said Mr Bryan Pascoe, Chief Executive of ICMA.
The one-month public consultation will end on 17 June 2024.
Notes:
- A self-regulatory organisation and trade association in the capital markets, the ICMA has been acting as the Secretariat to convene and lead the VCWG. The working group comprises representatives from local, Mainland and other international ESG ratings and data products providers as well as key users from the local financial industry. The SFC, the Hong Kong Monetary Authority, the Insurance Authority and the Mandatory Provident Fund Schemes Authority are involved as observers to the VCWG. Please see the SFC’s press release dated 31 October 2023 for details.
- The recommendations are derived from the IOSCO final report titled Environmental, Social and Governance (ESG) Ratings and Data Products Providers dated November 2021. Subsequent to the report, IOSCO also published a document in November 2022 which calls on financial markets voluntary standard setting bodies and industry associations to promote the adoption and implementation of the good practices stemming from the IOSCO recommendations amongst their members.
