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Overview of the ESG Survey and the requirements mandated
by the SFC and the MAS in relation to the establishment of ESG
funds in Hong Kong and Singapore.
The Securities and Futures Commission of Hong Kong (SFC) first
broached the topic of environmental, social and governance (ESG)
issues in September 2018 when it published its Strategic Framework
for Green Finance (Framework). In the Framework, the SFC mentioned
that it had been monitoring developments since the 2015 Paris
Agreement. The Framework identified two key areas of interest: (i)
Disclosure requirements and regulation of mutual fund costs are powerful tools for regulators.
Grant Kennaway, Morningstar Australasia Pty Ltd., and Christina West, Morningstar Research Services LLC
Feb 18, 2020
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Regulation is one of the key drivers of increasingly low mutual fund fees around the world, as identified in the Fees and Expenses chapter of Morningstar’s latest Global Investor Experience Study, or GIE. While other drivers of lower fees include investor awareness, competition, and the growth of passive products, regulation is the most powerful top-down driver that can lead to rapid and material investor benefits.
Regulators employ two main tactics to ensure that fees are competitive and proportionate to the value that investors derive. The most prevalent, which we explore below, are disclosure requirements and specifications around what and how mutual fund costs can be charged.