ESG Constituent Funds (CFs) within an MPF Scheme 強積金計劃內的 ESG 成分基金

Features 特點

To identify an ESG constituent fund, ask whether ESG is a key investment focus and whether that focus appears in its investment objectives and/or strategies. It may appear in either or both. Merely considering ESG factors in the investment process does not, by itself, establish that a fund is an ESG constituent fund.

The relevant MPF scheme brochure sets out each ESG constituent fund’s main investment theme, strategy and other features. Information is also available on the MPFA website. Members should examine the fund’s actual arrangements when deciding what its name represents. [MPFA information on ESG constituent funds](https://www.mpfa.org.hk/en/mpf-investment/sustainable-investing/list-of-mpf-esg-constituent-funds)

ESG Investment Strategies of ESG CFs ESG 成分基金的 ESG 投資策略

ESG constituent funds can differ in focus, style and implementation. Members should read the MPF scheme brochure to understand how ESG factors guide investment and whether the resulting features suit their retirement needs. Three common strategies differ in their basis for selecting investments.

Best-in-class/positive screening selects companies or sectors whose ESG performance is stronger than that of their peers. The relevant comparison concerns ESG performance, rather than higher share prices or investment returns.

Impact investing provides investment in companies or finance for businesses with the purpose of producing measurable positive ESG impact. Look for both the intended positive impact and its measurability; a good financial return alone does not establish that an investment is impact investing.

Thematic investing selects companies involved in a particular ESG or sustainability theme or economic activity, such as sustainable energy. Selection centres on what the companies do, whereas best-in-class/positive screening centres on their ESG performance relative to peers.

Enhanced Disclosure Requirements for ESG CFs 加強 ESG 成分基金的披露規定

The MPFA enhanced ESG constituent fund disclosure requirements from February 2025. A fund’s primary investments and/or strategy must support the ESG focus conveyed by its name. ESG wording in names and reference or marketing materials must be accurate and proportionate to the fund’s other features, without exaggeration or undue emphasis. A constituent fund outside the ESG category must not name, present or market itself as an ESG constituent fund. [MPFA ESG disclosure circular](https://www.mpfa.org.hk/en/-/media/20250224/circular-letter---enhancing-disclosure-requirements-for-esg-constituent-funds.pdf)

The MPF scheme brochure must address five areas: ESG focus and assessment criteria, ESG investment strategy, asset allocation, any reference benchmark, and associated risks. Strategy disclosure covers binding elements, importance in investment decisions, ongoing implementation, the process for considering ESG criteria, and any exclusion policy and types of exclusion. Asset allocation disclosure states the expected or minimum proportion of investments matching the ESG focus. Benchmark disclosure explains the characteristics and general composition of a tracked benchmark, or how a designated reference benchmark relates to the ESG focus. Risks may include limitations in methods and data, lack of standardised taxonomy, subjective investment judgements, reliance on third-party sources and investment concentration.

Additional information explains measurement and monitoring throughout the fund’s lifecycle, methods for measuring its ESG focus and achievement, ESG due diligence on underlying assets, any engagement policies including proxy voting, and ESG data sources and processing. Assumptions made when relevant data is unavailable must also be explained. This additional information may appear in the brochure, on the trustee’s, investment manager’s or index provider’s website, or through other means.

Trustees must assess achievement of the ESG focus at least annually and disclose the results in the scheme’s annual governance report. The account of achievement includes, where appropriate, actual proportions of aligned investments, proportions of the investment universe selected or eliminated through screening, ESG performance against any designated benchmark, and actions by the fund or its underlying funds, such as shareholder engagement and proxy voting records, together with other information the trustee considers necessary or appropriate. The report must explain the assessment basis, estimates and limitations, and compare results with at least the immediately preceding period where available. The MPFA also recommends hyperlinks to relevant reference or educational materials to help members understand the fund’s features and risks.