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 Principles 

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. Where appropriate, we adopt the following RI principles in our investment process that underpins our beliefs as a responsible long-term investor:


We incorporate ESG factors into our investment analysis processes 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.

Active ownership

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.


We seek to join hands with like-minded investors and regulators to promote good practices for managing investments for the long term.

Our Implementation

We have been weaving ESG factors into our investment process for both public and private market investments:

Public market investments:

  • 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 included ESG factors in the selection, appointment and monitoring of our external managers.
  • We have incorporated ESG factors in our credit risk analysis of our bond portfolio.
  • We have been investing in green, social and sustainability bonds since 2015, amongst the early investors in this market. We will continue to grow the ESG bond portfolio by (i) direct investment or (ii) investing in ESG bond funds.
  • We have invested in the Managed Co-Lending Portfolio Programme, which is run by the International Finance Corporation with a focus on sustainable projects in emerging markets.
  • We have invested in ESG-themed equity mandates by adopting ESG equities index as benchmark for passive portfolios.
  • We will continue to explore ESG-themed investment opportunities, such as active ESG mandates and low-carbon investment themes.


Private market investments:

  • We have examined ESG policies and practices of our general partners as part of our due diligence. 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, as we have done in the past. For instance, we have started investing in renewables since 2013 for direct/co-investments in energy sector.
  • For our real estate portfolio, we have invested in (i) green buildings and (ii) warehouses with green and sustainable features. Green accreditation is included as a predominant factor for real estate investments.


We also seek to collaborate with like-minded investors and international organisations to promote ESG standards in investment process. In particular:

  • We are a signatory of the United Nations-supported Principles for Responsible Investment (PRI), which is the world’s leading proponent of RI. We expect to participate in formulating ESG best practices and to encourage other investors to adopt RI.
  • We are a member of Focusing Capital on the Long Term (FCLTGlobal), which is 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 Task Force on Climate-related Financial Disclosures (TCFD), which has developed four recommendations on climate-related financial disclosures relating to governance, strategy, risk management and metrics and targets. We have stepped up efforts in adopting TCFD recommendations:
    • Governance: Our guiding principle and overall framework for RI have been endorsed by the Exchange Fund Advisory Committee, which has delegated the responsibilities for the oversight of ESG-related risks and review of the RI framework implementation to its Investment Sub-Committee.
    • Strategy: We have been evaluating different tools and approaches, including the use of climate scenario analysis, to identify short-to-long term climate-related risks and opportunities for investments of the Exchange Fund.
    • Risk management: We have assessed climate-related risks and opportunities in our investment processes. A work-level, multidisciplinary forum covering the HKMA’s major policy areas has regular discussions on ESG-related risks and opportunities facilitating a coordinated approach in managing ESG-related issues.
    • Metrics and targets: We have been identifying suitable metrics and data to assess and manage the relevant climate risk exposures of the Exchange Fund.
  • We are a member of the Central Banks and Supervisors Network for Greening the Financial System (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.

Last revision date : 20 October 2021