Responsible Investment

As the investment manager of the Exchange Fund, we believe that the concept of responsible investment (RI) is highly relevant to our investment work.

Our Beliefs

The HKMA sees RI as an investment approach that takes into account the impact of various environmental, social and governance (ESG) factors on the long-term investment returns and their sustainability.

We believe that, by putting an appropriate emphasis on RI and sustainable long-term performance, we can better achieve the investment objectives of the Exchange Fund, and reduce risks associated with ESG-related matters of our underlying investments.

Our Responsible Investment Journey


1 Focusing Capital on the Long Term (FCLTGlobal)
2 Principles for Responsible Investment (PRI)
3 Central Banks and Supervisors Network for Greening the Financial System (NGFS)
4 Task Force on Climate-related Financial Disclosures (TCFD)

Our Guiding Principle and Framework for RI

The Exchange Fund Advisory Committee endorses the guiding principle and overall framework for RI of the Exchange Fund.

Our guiding principle is that priority will generally be given to ESG investments if the long-term risk-adjusted return is comparable to other investments.

We adopt as appropriate the following three-pronged approach in our investment processes that underpins our beliefs as a responsible long-term investor:

  • Integration
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    • We incorporate ESG factors into our investment analysis to identify risks and opportunities, as we believe that these factors can materially affect the long-term value of our investments. We select and appoint external managers that share our RI beliefs. We also communicate our RI beliefs to all our external managers and expect them to align in such a way that the overall sustainable long-term economic performance is attainable.

      Our implementation

      Public market investments:

      • We have included ESG factors in the selection, appointment and monitoring of our external managers.
      • We have invested in ESG-themed equity mandates by adopting ESG equities index as benchmark for passive portfolios, and explored active ESG mandates managed by external managers.
      • We have incorporated ESG factors in our credit risk analysis of our bond portfolio.
      • We have since 2015 invested and continuously expanded the holding of green, social and sustainability bonds.
      • We have invested in a green bond fund managed by an international organisation.
      • Further to investment in the Managed Co-Lending Portfolio Programme (MCPP) run by the International Finance Corporation on sustainable projects in emerging markets, we participated in the MCPP One Planet program focusing on climate-smart investment aligned with the Paris Agreement in emerging markets.

      Private market investments:

      • We have examined ESG policies and practices of our general partners. ESG evaluation is conducted as a mandatory part of due diligence of all Long-Term Growth Portfolio investments.
      • We continue to source projects with sustainable features. For instance, we have:
        • started investing in renewables since 2013 for direct/co-investments in energy sector;
        • invested in private equity funds that focus on energy transition and global decarbonisation, and
        • for our real estate portfolio, invested in (i) green buildings and (ii) warehouses with green and sustainable features. Green accreditation is a predominant factor for real estate investments.
  • Active Ownership
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    • We exercise shareholder rights in our public equity holdings in a manner that helps safeguard the long-term value of our investments. We believe that responsible corporate behaviour guided by ESG factors will help create shareholder value in the long term. We expect our asset managers to help us discharge our ownership responsibilities in the underlying investments by adopting active ownership through exercising voting rights and engaging with the corporates concerned.

      Our implementation

      • We have required our external managers of Hong Kong equities and China active equities portfolios to comply with the Principles of Responsible Ownership issued by the Securities and Futures Commission in 2016 on a “comply-or-explain” basis. Our external managers of developed market equities portfolios need to adhere to generally accepted international ESG standards.
      • We have required our external managers to exercise voting rights and engage with investee companies (see Sustainability Report in the 2021 Annual Report for the case study illustrating how the HKMA practises RI with external managers).
  • Collaboration
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    • We seek to join hands with like-minded investors, regulators and international organisations to promote good practices for managing investments for the long term.

      Our implementation

      • We are one of the earliest central bank signatories of the PRI , the world’s leading proponent of RI. We participate in formulating ESG best practices and encouraging other investors to adopt RI.
      • We are a member of FCLTGlobal, a not-for-profit organisation that works to foster a longer-term focus in business and investment decision-making through workshops and research studies. Being a member, we contribute to the workshops and discussion to promote long-termism.
      • We are a supporter of the TCFD, which has developed four recommendations on climate-related financial disclosures relating to governance, strategy, risk management and metrics and targets. Refer to Sustainability Report in the 2021 Annual Report for our disclosures based on TCFD recommendations.
      • We are a member of the NGFS, whose members contribute to the development of environment and climate risk management in the financial sector, as well as to mobilise mainstream finance to support the transition towards a sustainable economy.
HKMA’s Statement supporting the NGFS Glasgow Declaration
  • We, as the manager of the Exchange Fund, will continue to support responsible investment and adopt the above guiding principle.
  • Underpinned by the guiding principle, we will continue to incorporate ESG factors into investment processes for both public and private market investments, exercise active ownership via external managers, and collaborate with like-minded investors and international organisations to promote good ESG practices.
  • We will continue expanding ESG investments covering green, social and sustainability bonds, ESG-themed equity mandates and projects with green and sustainable features.
  • We will implement climate-related disclosure aligned with the TCFD recommendations no later than 2025.

Last revision date : 28 June 2022