SFC Circular for management companies of SFC-authorized unit trusts and ESG funds takes effect.

Scope

SFC-authorized funds which incorporate ESG factors as their key investment focus and reflect such in the investment objective and/or strategy.

Name of Fund

A products name must not be misleading, this extends to ESG funds, whose name must reflect the ESG fund’s primary investments and/or strategy particular ESG focus.

Disclosure in Offer Documents

Offering documents must provide information necessary for investors to be able to make an informed judgement of the investment. Guidelines have been provided on such disclosures.

Periodic assessment and reporting

An ESG fund should conduct periodic assessment, at least annually, to assess how the fund has attained its ESG focus.

Application to UCITS Funds

UCITS funds will be ESG funds in Hong Kong if they incorporate ESG factors as their key investment focus and reflect such in the investment objective and/or strategy (“UCITS ESG funds”).

UCITS ESG funds which meet the disclosure and reporting requirements for Article 8 or Article 9 funds under the SFDR will be deemed to have generally complied in substance with the disclosure requirements set out in the SFC circular

Ongoing monitoring

1. Fund managers of ESG funds should regularly monitor and evaluate the underlying investments to ensure the ESG funds continue to meet the stated ESG focus and requirements set out in this circular.
   
   
2. Where an ESG fund no longer wishes to pursue its stated ESG focus, the fund manager is expected to inform investors and the SFC as soon as reasonably practicable. An ESG fund which is no longer able to meet the requirements in this circular will be removed from the list of ESG funds on the SFC’s dedicated ESG funds webpage.