Further Frequently Asked Questions on Sale and Distribution of Green and Sustainable Investment Products

55th Floor, Two International Finance Centre, 香 港 中 環 金 融 街 8 號 國 際 金 融 中 心 2 期 55 樓 8 Finance Street, Central, Hong Kong 網 址：www.hkma.gov.hk Website: www.hkma.gov.hk Our Ref: B1/15C G16/1C 29 December 2025 The Chief Executive All Registered Institutions Dear Sir / Madam, Further Frequently Asked Questions on Sale and Distribution of Green and Sustainable Investment Products Following the circular issued by the Hong Kong Monetary Authority (“HKMA”) in respect of the Sale and Distribution of Green and Sustainable Investment Products (“2023 G&S Circular”) on 29 November 2023 and the continued interest in green and sustainable investment products observed in the markets, the HKMA has conducted a round of thematic review (“Review”) on registered institutions (“RIs”) on their implementation of expected standards outlined in the 2023 G&S Circular. From the Review, the HKMA observes that RIs have generally implemented the expected standards, including putting in place the policies, procedures and controls to manage greenwashing risks. The HKMA also notes from the Review an increase in number of RIs participating in bookbuilding activities, and that these RIs have implemented the expected standards in the 2023 G&S circular for these activities. Certain areas for improvement have been identified in the Review. Some RIs have yet to establish proper policies and procedures governing the classification framework for green and sustainable investment products. As part of follow-up actions, these RIs have committed to enhance their policies and procedures to strengthen the governance and oversight of these products.

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  In light of industry enquiries and to enhance customer experience while ensuring investor protection, the HKMA is providing additional guidance and further practices noted from RIs in the form of Frequently Asked Questions (“FAQs”). In particular, the further FAQs clarify the inapplicability of the expected standards (except on bookbuilding) set out in the 2023 G&S Circular to transactions where the RIs do not market or classify the investment product as green and sustainable. Separately, RIs may continue to follow existing regulatory guidance on streamlining product disclosure to meet the expected standards on “Disclosure” in the 2023 G&S Circular. The FAQs are set out in the Appendix. If there are any questions on this circular, please contact Mr Andrew Ng at 2878- 8813 or Ms Ian Au at 2878-1757. Yours faithfully, Alan Au Executive Director (Banking Conduct) Encl. c.c. Securities and Futures Commission (Attn: Dr Eric Yip, Executive Director, Intermediaries)

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Further Frequently Asked Questions on
Sale and Distribution of Green and Sustainable Investment Products Applicability of the 2023 G&S Circular 1

1. Are registered institutions (“RIs”) required to provide information
   about green and sustainability characteristics and associated risks specific to the green and sustainable investment products to the customers in execution-only trades of non-complex green and sustainable investment products? As far as the 2023 G&S Circular is concerned, the expected standards (except those on bookbuilding) set out therein are not applicable to transactions where the RIs do not market or classify the investment products as green and sustainable. As long as the RI does not market or classify the investment product as green and sustainable, the expected standards (except those on bookbuilding) set out in the 2023 G&S Circular do not apply even if the name or other information of the investment product may contain elements suggesting it as green and sustainable. RIs are reminded to ensure that adequate information is provided to customers for making informed decisions, such as the key characteristics and associated risks of the investment products, regardless of whether a green and sustainable classification framework is in place. Disclosure
2. Can RIs exercise flexibility in streamlining disclosure of the green and
   sustainability characteristics and associated risks specific to the green and sustainable investment product for a non-retail banking customer? RIs may apply existing regulatory guidance on streamlining product disclosure to meet the expected standards under “Disclosure” in the 2023 1 HKMA’s circular “Sale and Distribution of Green and Sustainable Investment Products” dated 29 November 2023.
   Appendix

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G&S Circular. In this connection, RIs may 2 , having regard to the non-retail banking customer’s level of financial sophistication (e.g. investment knowledge or investment experience with the RI or other financial institutions), streamline disclosure of the green and sustainability characteristics and associated risks specific to the green and sustainable investment product for a non-retail banking customer, provided that the RI assures itself and maintains a record to evidence that the customer understands the green or sustainability characteristics and associated risks specific to the product and does not need a full disclosure in the circumstances, before entering into a transaction.
3. What are the HKMA’s expectations for RIs in providing information
about the green and sustainability characteristics specific to the green and sustainable investment products to customers? The HKMA does not intend to prescribe specific operational arrangements for RIs regarding the disclosure pertaining to green and sustainable investment products. RIs may establish their own operational arrangements in this regard. The overarching objective of the disclosure requirement is to ensure that customers possess a comprehensive understanding of the product prior to entering into a transaction. Where RIs market or classify investment products as green or sustainable, RIs are expected to provide information about the green and sustainability characteristics and associated risks specific to the green and sustainable investment products, based on the information provided in the prospectuses, offering circulars, and other relevant documents related to the investments. Other practices noted from RIs
4. Is there any other experience of RIs that could be shared, apart from
those mentioned in the 2023 G&S Circular?
Disclosure
 Some RIs have developed a disclosure document for customers, outlining 2 Q8 in Appendix to HKMA’s circular “Frequently Asked Questions on Investor Protection Measures” dated 23 December 2020 applies.

3 the key characteristics and risk factors of green and sustainable investment products, to help the customers understand the products and make informed decisions.  An RI provided customers with sustainability scores on product issuers, which were derived from an in-house scoring methodology, along with explanations of the scores’ meanings, for information. Governance and controls  Review and approval of methodologies to assess whether investment products are green and sustainable was included as one of the responsibilities of the committees of RIs responsible for overseeing issues and risks arising from sale and distribution of green and sustainable investment products. Staff training  An RI hosted an environmental, social and governance (“ESG”) thematic conference highlighting the latest ESG trends and recent developments in the industry for customers. Staff were also invited to attend to deepen their understanding of ESG-related topics.  An RI established an ESG training programme to help staff obtain a professional ESG qualification.