As the investment manager of the Exchange Fund, we believe that the concept of responsible investment (RI) is highly relevant to our investment work.
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 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.
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.
We have been weaving ESG factors into our investment process for both public and private market investments:
Public market investments:
Private market investments:
We also seek to collaborate with like-minded investors and international organisations to promote ESG standards in investment process. In particular: