Final Call for IOSCO Consultation Submission – Deadline is Today!!

Green Finance Advisor of Friends of the Earth (HK)

The International Organization of Securities Commissions (IOSCO) is hosting a consultation on regulations of Environmental, Social & Governance (“ESG”) rating and data providers. It is proposing a set of recommendations to mitigate risks around ESG ratings and data products providers, including encouraging financial market practitioners to take international ESG ratings into account in their investment decisions.

As a pioneer in promoting green finance development in the Asia-Pacific region, Friends of the Earth (HK) organized a two-session webinar last week in English and Chinese, attended by representatives from listed companies, financial institutions and rating agencies, providing an overview of the report and putting forward suggestions to further advance and improve the quality and transparency of ESG ratings and data in order to meet the tightening regulatory requirements.

The key speaker of the webinar, Mr. Anthony Cheung, Board Governor and Green Finance Convenor of Friends of the Earth (HK), said, “This report is one of the most important consultation on ESG issues in recent years, with the objective to establish global sustainability disclosure standards that will be crucial for national jurisdictions to build upon as part of their mandatory reporting requirements. Enhancing the reliability, comparability and interpretability of ESG ratings and data products will help improve the quality and transparency of ESG disclosures.”

The Hong Kong Exchanges and Clearing Limited (HKEX) proposed the “ESG Reporting Guide”, requesting listed companies in Hong Kong to disclose ESG-related data on an annual basis, and subsequently tightened the disclosure requirements last year. These actions demonstrated the growing importance of ESG factors in the capital market. Even though listed companies have gradually started to disclose environmental data under regulatory requirements, the compliance level and quality for most of them are still far from satisfactory. We believe that with the increased adoption of international ESG ratings, the completeness and comparability of ESG data will be improved, and companies with better performance will have an advantage in their borrowing capacity.

Current ESG Data Could Lead to Potential Investment Risks

Over the past few years, as investors become increasingly focused on the potential financial risks posed by climate change and ESG considerations, ESG rating and data have become more significant in investment decision-making. The market for ESG ratings and data has grown exponentially and encouraged the development of new ESG ratings and data products.

Mr. Anthony Cheung said, “As these ratings and products are not within the consideration of many regulators currently, they may create potential risks to investor protection, market transparency and efficiency, risk pricing, as well as capital allocation. The IOSCO report revealed that there is a lack of clarity about the methodologies behind the ratings or data products and an uneven coverage of products across industries and countries. The lack of data and standards presents a risk on ’greenwashing’ or misallocation of assets and could lead to a lack of trust in ESG ratings or in the robustness of relevant data products.”

Enhancing the Reliability of ESG Data and ESG Rating is Imperative

In view of this, IOSCO proposed a series of recommendations in its report; highlights as follows:

Recommendation for IOSCO members

• Regulating ESG ratings and data products providers to build confidence, improve take-up, and protect investors

• Considering the level of overlap in processes for determining ESG ratings and data products with the processes for determining credit ratings and mitigate potential conflicts of interest

Recommendations for ESG ratings and data products providers

• Issuing high quality products using publicly disclosed data sources with transparent and defined methodologies

• Ensuring decisions are made independently and free of conflicts of interest

• Making high levels of public disclosure and transparency an objective

• Maintaining all private information pertaining to ESG ratings and data products in confidence

Recommendation for ESG Ratings and Data Products Users

• Conducting due diligence on ESG ratings and data products to gain an understanding of the assessment methodologies and their limitations

Friends of the Earth (HK) encourages practitioners in the Asia-pacific region to submit their opinion by today to help regulators set policy directions for moving forward with a sustainable society and economy.

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國際證監會組織(IOSCO)近日就環境、社會和治理 (簡稱「ESG」) 數據及評級機構的監管發表報告並進行諮詢,針對各國監管機構、數據及評級機構、企業及投資者等數據使用者,提出一系列建議,包括鼓勵金融從業員應參考國際性的ESG評級,衡量企業是否具備可持續發展的條件再作投資決定。作為亞太地區推動綠色金融發展的先行者,香港地球之友於上星期舉辦一連兩場,分別中文及英文網上研討會,向不同上市公司、金融及評級機構代表,深入剖析諮詢報告內容,並提出香港企業可如何提升ESG評級及數據的完整性和透明度,以滿足日益完備的監管要求。









• 通過對ESG評級和數據公司進行監管,將有助提高市場對使用相關產品的信心,同時有助加強對投資者的保護

• 考慮在ESG評級與信用評級的評估過程中,兩者之間如何相互影響,以及是否存在潛在的利益衝突


• 盡量使用透明和清晰的方法及利用公開披露的信息去發行高品質的ESG數據產品

• 盡量確保評估的獨立性,不應受政治或經濟壓力,或受公司的業務或財務活動等影響,而產生利益衝突

• 考慮在衡量評級的方法和過程中,提供一定程度的透明度

• 在處理任何有關ESG評級和數據的非公開信息時, 恪守保密協議


• 在使用ESG評級和數據產品時,可考慮進行盡職調查,包括了解正被評級的產品或其評估的內容、評級或評估準則,以及產品的局限性和目的等等


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