Policy Statement & Submission


Consultation Response for the Draft Hong Kong Code of Conduct for ESG Ratings and Data Products Providers

17 June 2024


The Hong Kong ESG Ratings and Data Products Providers Voluntary Code of Conduct Working Group
International Capital Market Association
Unit 3603, Tower 2, Lippo Centre
89 Queensway, Admiralty
Hong Kong


Dear Secretariat,


Re: ICMA Consultation on Draft Hong Kong Code of Conduct for ESG Ratings and Data Products Providers (the Code)


The Hong Kong General Chamber of Commerce welcomes the opportunity to respond to the captioned consultation.

We recognize the fact that the proposed Code aims to take Hong Kong a step closer in aligning with global efforts to foster a transparent and trusted market for ESG ratings and data products, on the back of increasing investor awareness on the importance of companies’ sustainability commitments. To this end, the proposed regulatory intervention in the form of a voluntary adherence to the Code is a proportionate one.

At the same time, we suggest that consideration be given to incorporating suitable flexibility and interoperability in the design of the Code to facilitate adoption by companies of all sectors and size, in the light of potential resource and real data provision challenges. Our specific comments on the design and implementation of the Code are also set out in the attached.

We hope you will give our comments your due consideration.


Yours sincerely,


Patrick Yeung





Draft Hong Kong Code of Conduct for ESG Ratings and Data Products Providers

Consultation by International Capital Markets Association

(May 2024)

Submission by The Hong Kong General Chamber of Commerce (HKGCC)


  1. HKGCC welcomes the opportunity to comment on this consultation paper (CP).
  2. Environmental, social and governance (“ESG”) reporting in Hong Kong is now an accepted, and even mandated, practice for companies, at least for those that are listed on stock exchanges and thereby open to public investment. Investors increasingly take companies’ commitment to ESG into account in making their investment decisions. This has led to a growth in demand for the services of businesses that provide ESG ratings and data products in respect of listed companies (hereafter for brevity referred to as ESG Data Providers), to assist investors in deciding the companies in which to invest.
  3. The CP proposes a Code of Conduct (“the Code”) to which ESG Data Providers would be invited to sign up and adhere. The rationale for such regulatory intervention appears to be that “concerns around the transparency, quality and reliability of ESG ratings and data products are emerging, calling for closer scrutiny of their providers”.[1] The CP does not elaborate on what these concerns are, or the factual basis for them, so it is difficult for us to express views on whether there is such a need. For the purpose of this response, however, we assume that regulatory intervention is needed to enhance the transparency, quality and reliability of ESG ratings and data products. The question is what type of, and how much, regulatory intervention is appropriate.
  4. We set out below our general comments on the CP’s proposals, followed by our specific answers to the three consultation questions set out in Annex 1 of the CP.

General Comments

  1. Assuming there is a demonstrable need for regulatory intervention (as noted in paragraph 3 above), we commend the proportionate approach that the CP takes in proposing a voluntary code of practice, as opposed to binding legislation, in implementing the desired standards of conduct. This saves a significant amount of both private and public resources in legal compliance and/or enforcement actions which may not be necessary.
  2. That said, it should be recognised that there will be considerable pressure on ESG Data Providers to comply with the proposed code of conduct, particularly given that it includes a proposal to include a self-attestation document which would be made public. It is therefore crucial that the standards of conduct set out in the proposed code are not unduly onerous, and capable of being complied with by companies in all sectors and of all size, particularly given the challenges of providing real data, and the potential need to engage third parties for this purpose. We set out in our responses to the Specific Questions below our recommendations as to how these objectives can be achieved. It is also important that the Code is periodically reviewed and updated, to remain relevant in a rapidly evolving ESG landscape.
  3. We look forward to further contributing our views on the design and implementation of the Code as such developments take shape.

Responses to Specific Consultation Questions

  1. Do you agree with the conclusion of the VCWG that the Code comprehensively addresses the aspects pertinent to the Hong Kong market (for providers, users, covered entities)?

We believe that the provisions of the proposed Code are sufficiently comprehensive, and take into account the industry dynamics and market landscape in Hong Kong. However, we believe that, in their current form, they are too prescriptive.

The CP states that the Code “does not, and is not intended to, prescribe a singular approach as to how the Principles should be embedded within a provider’s organisation. Rather, the Code of Conduct allows signatory organisations to meet the expectations set out in the Principles in a manner aligned to their own business model and structure”. [2] Similarly, it states that “The Code of Conduct is intended to be interpreted and applied in a proportionate manner, having regard to the nature, scale and complexity of the activities or business”.[3]

However, for each of the Principles identified in the CP, it sets out a series of specific actions which ESG Data Providers “should” undertake. Some of these actions may not be achievable or appropriate for some companies, especially smaller ones. For example, Principle 3 (Conflict of Interest) states that providers should “adopt written internal policies and procedures”,[4] and Principle 5 (on Confidentiality) also states that they should adopt and implement written policies and procedures. But written policies and procedures may not be necessary or even effective for some companies: one-to-one training (perhaps with a brief “Do’s and don’ts” sheet) may be more effective and efficient. To mandate written policies and procedures may result in extra cost and inefficiency, and lead to the “box-ticking” and “greenwashing” approach that the CP itself wishes to avoid. [5]

To avoid these problems, we recommend that the “actions” sections be re-cast in terms of actions that providers “may consider” doing (depending on the nature and scale of their businesses), not that they “should” do.

In addition, we would suggest that Hong Kong and non-Hong Kong regulated financial institutions (such as banks, investment firms and asset management companies etc.) be expressly included within the negative scope of the draft Code as, according to the International Organization of Securities Commission’s (IOSCO)[6] final report, the foregoing institutions are not a target market for this regime. We also note that the CP itself states that the Code “is not intended to overlay upon existing regulated activities for which formal rules and guidance already exist.”[7]

Furthermore, CP para 2.6 states that “The implementation period for ESG ratings providers is six months and the implementation period for ESG data products providers is twelve months.” Consideration may be given to aligning the implementation period for both groups of service providers to twelve months, taking into account the possibility that a company could engage in the provision of both ESG ratings and data products.

Looking ahead, other potential areas which the Code could take into account include the impact of innovative technologies such as artificial intelligence, the inclusion of a notification process, and a mechanism addressing changes to the original data source and maintaining the continuity of data services in the event of such changes.

  1. Is the Code sufficiently clear to ensure adherence? For the Hong Kong Code, we are providing an English and Chinese version. Do you find that helpful and is the Code sufficiently clear to you? If not, please specify.

We believe that the terms of the draft Code are generally clear. However, action point 4.3 on transparency [8] recommends that providers should “where applicable” take certain actions. It is not clear what “where applicable” means in this context.

In addition, considering that green/sustainable labelled securities (such as Green /Social/Sustainable and Sustainability-Linked Bonds) are typically based on underlying frameworks reviewed by Second Party Opinion (SPO) providers, creating increasing reliance on SPOs by issuers and investors, further clarity on how SPO providers fall within the scope of the Code would be welcome.

  1. Do you consider the attestation document useful? For the Hong Kong Code, we have added a self-attestation document. Do you find that useful (especially if you are a user of ESG ratings and/or data products)? If not, please specify.

Not in its current form. The attestation form should not be a checklist of whether the provider has undertaken all of the action points listed in the Code, as is currently the case as drafted. As the CP itself states, the Code should allow signatory organisations “to meet the expectations set out in the Principles and a manner aligned to their own business model and structure”.[9] To require all providers to attest to all of the action points may place smaller providers which have not had the resources or capacity to meet all of the action points, but have nonetheless complied with the Principles in a different way, at an unfair competitive disadvantage. The attestation form should instead invite providers to describe in their own terms how they have met the Principles.


HKGCC Secretariat

June 2024


[1] CP para 1.3.

[2] CP para 2.2.

[3] CP para 4.13.

[4] CP “Principles” para 3.5.

[5] CP para 1.3.

[7] CP para 4.10.

[8] CP “Principles” para 4.3.

[9] CP para 2.2.

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