ICMA Working Group to Develop Voluntary Code of Conduct for Hong Kong ESG Ratings
ICMA forms a working group with Bloomberg, Fidelity, and asset managers to create a voluntary code of conduct for Hong Kong ESG ratings and data providers, promoting best practices and transparency.
ICMA Working Group to Develop Voluntary Code of Conduct for Hong Kong ESG Ratings
On October 31, 2023, the International Capital Market Association (ICMA) announced the formation of a dedicated working group aimed at developing a voluntary code of conduct for ESG ratings and data providers based in Hong Kong. This initiative reflects growing market demand for transparency, consistency, and accountability in environmental, social, and governance (ESG) assessments.
Background and Objectives
Hong Kong has emerged as a key hub for ESG investment and sustainable finance in Asia. However, the ESG ratings landscape remains fragmented, with varying methodologies and standards. To address these challenges, ICMA's working group will collaborate with major stakeholders, including asset managers and leading ESG data providers such as Bloomberg and Fidelity International.
The primary goal is to establish best practices that enhance the reliability and comparability of ESG ratings, thereby supporting investors in making informed decisions and fostering market confidence.
Working Group Composition and Approach
- Participants: Representatives from asset management firms, ESG data providers, and other market participants.
- Scope: Development of principles covering transparency, methodology disclosure, conflict of interest management, and data quality.
- Engagement: Ongoing consultations with regulators, industry experts, and market users to ensure the code aligns with evolving regulatory expectations and market needs.
Implications for Market Participants
The voluntary code is expected to:
- Enhance the credibility and comparability of ESG ratings in Hong Kong.
- Encourage ESG rating providers to adopt transparent and consistent methodologies.
- Support asset managers and investors in integrating ESG factors more effectively into investment decisions.
- Complement regulatory initiatives aimed at improving ESG disclosures and standards.
Conclusion
ICMA's initiative represents a proactive step towards strengthening ESG market infrastructure in Hong Kong. By fostering collaboration among key stakeholders, the working group aims to build a robust framework that benefits investors, issuers, and the broader sustainable finance ecosystem.
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