Hong Kong regulator urged to push insurers on ESG disclosure: report

The regulator has yet to require the sector to do so.

Hong Kong's Financial Services Development Council has urged the Insurance Authority (IA) to require insurers to disclose their ESG policies in the short term, according to a report.

Insurers’ attitude towards ESG initiatives will be guided by the IA, the FSDC determined. In addition, the IA must push the sector to provide their boards with information regarding their exposure to financial risks brought about by climate change.

As far as the FSDC is concerned, the IA has published guidelines on Corporate Governance of Authorised Insurers and Enterprise Risk Management, but there is not yet a dedicated set of regulation that will require insurers to publish and explain their policies on ESG risks in their asset allocation process, the report said.

“Given the current infrastructure and datasets, imposing a mandatory requirement of such in the form of regulations, at this stage, may be an aggressive step forward that could cause unmanageable compliance burden to insurance firms,” the FSDC explained.

Releasing some forms of guidance or non-binding guidelines would also be helpful to insurers building or planning to amp up their efforts. The insurance regulator may set up a centralised ESG database that enables open access to historical and future climate information, FSDC said, with Canada’s Climate Data Portal cited as an example.

It also recognises the hurdles in generating a variety of climate-related data such as the technical resources required and the feasibility that lies within. As this would likely require further in-depth study, this suggestion may be something that Hong Kong can consider in the long term, the report said.