Letters | How Hong Kong can help SMEs raise their ESG game and access more funding
- Readers discuss a solution to small companies’ ESG problem, and what to do as the world gets hotter
While the Hong Kong Trade Development Council has introduced a support programme to alleviate SMEs’ concerns, more proactive approaches have been taken in other economies. To facilitate cross-border regulatory cooperation, particularly for e-commerce and sustainable finance for SMEs, Legal Entity Identifiers (LEIs) are increasingly being adopted elsewhere.
In the era of digital finance, LEIs – 20-character alphanumeric codes that are unique to each market participant – are an important component of Hong Kong’s financial infrastructure. They have strengthened Hong Kong’s regulatory regime and boosted financial stability. In 2019, the Hong Kong Monetary Authority made it mandatory to use LEIs in over-the-counter derivatives transactions reporting.
LEIs present a significant opportunity for Hong Kong SMEs to embrace ESG and open more doors for themselves in the post-pandemic era. In the global marketplace, there are 2.25 million active LEIs, with 63,000 of them issued in the first quarter of this year alone.
With regard to small companies in Hong Kong, LEIs would be helpful in creating a unified and standardised system of ESG compliance. Specifically, LEIs would help SMEs collect and analyse valid and reliable data to assess ESG risks, and streamline risk assessment processes.