On 29 Dec 2025, the HKMA clarified that the 2023 G&S Circular’s standards apply only when RIs market or classify products as green/sustainable, not merely based on product naming. RIs may streamline disclosure for sophisticated non-retail customers with documented evidence of understanding, while maintaining core requirements for comprehensive customer disclosure. The HKMA also highlighted industry practices including dedicated disclosure documents, sustainability scoring, and ESG training as illustrative of compliance efforts.
This article was generated using SAMS, an AI technology by Timothy Loh LLP.
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Applicability of 2023 G&S Circular
On 29 Dec 2025, the HKMA clarified that the expected standards under its 2023 Green and Sustainable (G&S) Circular do not apply to execution-only trades of non-complex investment products where registered institutions (RIs) do not market or classify the products as green or sustainable, even if product names or descriptions contain suggestive elements. RIs remain obligated to provide adequate information on product characteristics and associated risks for informed customer decisions regardless of classification.
Disclosure Flexibility for Non-Retail Customers
The HKMA permits RIs to streamline disclosure of green and sustainability characteristics and associated risks for non-retail banking customers, provided RIs assess the customer's financial sophistication (e.g., investment knowledge/experience), ensure the customer understands the specific product risks, and maintain documented evidence of this assessment prior to transaction execution.
Disclosure Expectations and Industry Practices
HKMA does not prescribe specific operational disclosure arrangements for RIs but requires them to ensure customers comprehensively understand green/sustainable investment products prior to transaction. RIs must base disclosures on prospectuses, offering circulars, and related documents when marketing products as green/sustainable. Noted industry practices include RIs developing dedicated disclosure documents for product characteristics/risk factors, providing sustainability scores with explanatory context, incorporating product review into governance committees, and implementing ESG training programmes for staff.
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