Hong Kong Tightens ESG Disclosure Standards for Pension Fund Managers

Hong Kong is tightening ESG disclosure rules for pension fund managers, aiming to improve transparency and help investors make more informed decisions. The MPFA's new guidelines focus on clear reporting of ESG strategies and risk management, while also pushing for a paperless digital transformation. This move sets Hong Kong on a path towards a more sustainable, future-ready financial market.

Hong Kong is intensifying its focus on sustainability with new regulations aimed at improving the transparency of Environmental, Social, and Governance (ESG) practices in pension fund management. As part of a broader effort to make the city’s financial markets more sustainable, the Mandatory Provident Fund Schemes Authority (MPFA) is requiring the largest pension fund managers to enhance the disclosure of their ESG strategies and risk management processes. This change includes some of the city’s largest pension funds, such as those managed by HSBC and Manulife.

New Standards to Improve ESG Transparency

The updated guidelines, effective by 30 September 2025, mandate that pension fund managers provide a detailed description of their ESG investment strategies and the processes they use to manage ESG risks. Fund managers must also report on how they measure and control ESG factors within their portfolios. This requirement aims to provide investors with more transparency regarding the sustainability of their investments, allowing for better-informed decision-making.

The initiative targets 47 ESG-focused funds, which collectively manage assets worth HK$36.6 billion (approximately US$4.71 billion). New ESG-related funds will also need to comply with the new rules. This shift will not only improve the reporting practices of existing funds but will also help ensure that newly launched funds are held to the same high standards.

A Wider Effort to Green Hong Kong's Financial Market

These updates are part of Hong Kong's broader strategy to transform its capital markets into a hub for sustainable finance. The MPFA’s push for better ESG disclosures is in line with the government’s vision for a greener financial landscape. By 2026, major listed companies will also be required to disclose emissions across their supply chains, further enhancing the region’s ESG reporting framework. These actions reflect Hong Kong’s commitment to becoming a leading global player in sustainable finance and aligning with international trends towards stricter environmental and social governance.

Supporting Investor Confidence and Informed Decision-Making

Kenneth Wong, the Director of ESG Initiatives at MPFA, stated that the new guidelines would enable fund participants to evaluate whether the ESG performance of their investments aligns with their expectations. He emphasised that the enhanced transparency would deepen investors’ understanding of the ESG risks within their portfolios, ultimately enabling them to make more informed and sustainable investment decisions. This approach will help investors navigate the complexities of ESG factors and assess the true impact of their investments on the environment and society.

Looking Ahead: Digital Transformation and Greener Operations

In addition to the new ESG disclosure rules, MPFA is also advancing its digital transformation. On 5 March, MPFA will launch the second phase of its eMPF platform, which aims to create a fully paperless, digital system for managing pension funds. This initiative is part of the authority’s broader effort to reduce operational costs and lessen environmental impact.

Henry Chan, Executive Director of MPFA, noted that the long-term goal is to fully eliminate paper documentation, with the ultimate aim of achieving 100% digitalisation. This move complements the green agenda, contributing to both financial and environmental sustainability.

Conclusion: Aligning with Global Standards for Sustainable Finance

The new ESG disclosure regulations and the ongoing digital transformation of Hong Kong’s pension fund management system are significant steps towards aligning the city’s financial markets with global sustainability standards. By enhancing ESG transparency and reducing reliance on paper-based processes, Hong Kong is positioning itself as a leader in sustainable finance, fostering a greener and more transparent investment environment for all market participants.