Information Centre

Tackling climate change has become a top priority on the agenda for governments around the world. Environmental, Social and Governance (ESG) policies play an important role in the business model and industrial structure of enterprises, among other things. They may also affect business performance in the long run. 

The investment horizon of the MPF System spans 30 to 40 years, making it vulnerable to long-term investment risks. ESG risks are among these evolving long-term investment risks. If these risks are neglected in investment and risk management strategies, MPF scheme members’ benefits will inevitably be affected. As sustainable investing becomes a more popular investment trend, scheme members’ awareness of ESG is rising, and they hope to have ESG-themed MPF fund choices. 

Recognizing that sustainable investing has become part of the new normal, the MPFA issued the Principles for Adopting Sustainable Investing in the Investment and Risk Management Processes of MPF Funds in November 2021, laying down a high-level framework to help MPF trustees integrate ESG factors into the investment and risk management of MPF funds from a financial risk-management perspective. In November 2022, the Authority issued a circular relating to approval criteria for constituent funds in MPF schemes, stating that ESG constituent funds must incorporate ESG factors as their key investment focus and reflect this in their investment objective or strategy. 

To further enhance understanding of the relationship between ESG and MPF investment among the working population, the MPFA recently launched a dedicated page “Sustainable Investing” on its official website, providing an overview about sustainable investing and a list of MPFA-approved ESG constituent funds, along with their key features, investment strategies, and so forth. MPF trustees must disclose their ESG strategies and regularly report on their implementation progress in their governance reports provided to scheme members. The related governance reports have been upload to the website, enabling scheme members to learn about the features of individual ESG constituent funds before choosing an MPF scheme and evaluate whether the ESG features are aligned with their personal retirement needs.