Widespread implementation of Task Force on Climate-Related Financial Disclosures (TCFD) recommendations will provide investors with consistent and relevant information to understand the economic risks and opportunities resulting from climate change, according to the South Korea-based firm.
“As responsible investors and corporate citizens, we understand the importance of consistent and transparent climate disclosures, and strive to work with our investee companies to achieve this common goal. Being a TCFD supporter is a natural step for the firm, and reinforces our commitment to tackling ESG issues,” said Rahul Chadha, Chief Investment Officer of Mirae Asset (Hong Kong).
The decision comes after Hong Kong’s Securities and Futures Commission said it will amend its Fund Manager Code of Conduct to require managers of collective investment schemes to take climate-related risks into consideration in their investment and risk management processes and make appropriate disclosures.
The Financial Stability Board set up the TCFD in 2017 to help companies provide better information to support capital allocations, and enable stakeholders to understand better the concentrations of carbon-related assets in the financial sector and the financial system’s exposures to climate-related risks. There are now around 1,800 organisations signed to the TCFD.
The disclosure recommendations are structured around four thematic areas that represent core elements of how organisations operate: governance, strategy, risk management, metrics and targets.
The idea is that better information will allow companies to incorporate climate-related risks and opportunities into their risk management and strategic planning processes. As this occurs, companies’ and investors’ understanding of the financial implications associated with climate change will grow, encouraging the markets to channel investment to sustainable business models.
Increased disclosures in line with the recommendations across sectors and geographies will help global markets make more efficient capital allocation decisions and adjust appropriately to the disruptive effects of global climate change, according to Chadha.
“Climate change has and will bring about significant risks as well as opportunities to global society. As stewards of capital, we play an active role in encouraging greater ESG commitments among companies that we invest in. Our proprietary scoring tools allow us to identify industry and company specific issues, and enable us to work with our investee companies to adopt industry leading standards,” he said.
Mirae Asset Global Investments has over $215bn in assets under management as of June 2021. The organisation offers a range of investment products, including ETFs under its Global X brand.