“So it is no longer enough for asset managers to simply make the claim that they take ESG factors into account, without making clear to investors how they do this,” Alder said at a speech during the Bloomberg Buyside Summit.
In Hong Kong, the Securities and Futures Commission has had an increase in applications for funds with a green or sustainability focus, according to Alder. As a result, the SFC will now evaluate ESG disclosures more closely.
“We will continue our efforts in this area to minimize the possibility of greenwashing.”
The SFC will soon carry out a survey to find out more about how asset managers integrate ESG factors into their investment processes, he said.
A number of regulators globally have already taken steps to develop more consistent disclosure or labelling guidelines for ESG-focused products, with Europe at a more advanced stage, according to Alder.
“Much more needs to be done in relation to consistent, decision-useful corporate and asset management disclosures. And finally, how to embed climate change disclosures into enforceable rules when scenarios mainly describe long-term financial risks.
“In other words, what would a disclosure breach look like and what should the response of market regulators be to any breach?”