18th November 2024
Spectacular growth in MPF ESG fund assets suggests MPF members are embracing Sustainable investing but education still needed says leading MPF commentator
Key points are as follows:
- November marks the 3rd anniversary of the MPFA’s landmark “Principles for Adopting Sustainable Investing in the Investment and Risk Management Processes of MPF Funds” (“Principles”) to assist MPF trustees integrate ESG factors into the investment and risk management of MPF funds.
- Climate change is a key ESG issue. The United Nations Climate Change Conference, more commonly known as COP29, is currently underway and serves as a strong reminder that the investment community plays a critical role in addressing climate change and creating a more sustainable future.
- Through the incorporation of ESG considerations, the MPF system has seen ESG net inflows of $1.275bn in the first 10 months of 2024.
- MPF offers 5 ESG funds but one fund, Sun Life’s MPF Global Low Carbon Index Fund, has been dominant in the space this year. The fund manages against explicit sustainable investing measurables1 and has focused on climate change as a key ESG investment theme. The fund has also attracted 98% of MPF ESG funds’ total net inflows in the first 10 months of 2024.
- Sun Life’s MPF Global Low Carbon Index Fund has seen a remarkable 330% surge in assets in just 1 year, almost 7x the asset growth of the 2nd most popular MPF ESG fund.
- Key commentator says education still needed but interest is growing with almost 720% assets growth over the past 5 years to 31 October 2024.
Francis Chung (叢川普), Chairman of MPF Ratings Ltd, Hong Kong’s independent provider of MPF research, views and education today gave an update on MPF’s role in Sustainable investing to mark the 3rd year anniversary of the MPFA’s landmark “Principles for Adopting Sustainable Investing in the Investment and Risk Management Processes of MPF Funds” (Principles), an anniversary which also coincides the United Nations Climate Change Conference, more commonly known as COP29, and in doing so serves as a strong reminder of the investment community plays a critical role to affect climate change and create a more sustainable future.
According to Mr Chung, the MPF system has seen ESG fund assets grow from $3.554bn in November 2021 to $17.329bn today, a 388% growth. 2024 alone has seen a net inflow of $1.275bn into sustainable investing, with one clear fund winning the major share of assets, Sun Life MPF Global Low Carbon Index Fund.
Quotes:
3 year anniversary of the MPFA’s “Principles for Adopting Sustainable Investing in the Investment and Risk Management Processes of MPF Funds” (Principles)
“The 3rd anniversary of MPFA’s Principles coincides with the United Nations Climate Change Conference, more commonly known as COP29, and in doing so serves as a strong reminder that the investment community plays a critical role to affect climate change and create a more sustainable future.”
Has the MPF system played its role in Sustainable investing?
“The MPF system is playing its role in Sustainable investing. Since November 2021, MPF’s Sustainable investing assets have grown 388% and currently total $17.329bn. In 2024 alone, we’ve seen $1.275bn invested in the space with one fund clearly dominating MPF’s ESG space and that is the Sun Life MPF Global Low Carbon Index Fund which has attracted 98% of total MPF net inflows into the segment.”
Why has the Sun Life MPF Global Low Carbon Index Fund been so dominant?
“The Sun Life MPF Global Low Carbon Index Fund manages against explicit Sustainable investing measurables, and in doing so fulfills one of the key criteria of the MPFA’s Sustainable investing Principles. A second reason why it has been so dominant is because it has outperformed. This year the fund has returned 12.57% to outperform the MPFR All Performance Index of 9.56% by over 30%. Lastly, Sun Life has undertaken a rigorous ESG education programme for its members and its staff which has resulted in strong net inflows into developing but very important asset class.”
1 The Sun Life MPF Global Low Carbon Index Fund invests against an index which explicitly targets 50% reductions in carbon emissions and fossil fuel reserve intensities and 20% uplift in ESG ratings, while excluding companies in sensitive business areas
