According to the TCFD, disclosures should be: consistent (complete, and comparable across time and issuers); ‘decision useful’ (relevant to investment decisions, specific, reliable, verifiable); and forward looking (showing not just where you have been, but where you are going, and how).19  14  The Greenhouse Gas Protocol Corporate Standard classifies a company’s emissions into: Scope 1 (direct emissions from owned or controlled sources); Scope 2 (indirect emissions from generation of purchased energy); and Scope 3 (all other indirect emissions in the upstream and downstream value chain of the reporting company). 15 https://www.inrate.com/cm_data/ESG_Rating_Disagreement_and_Stock_Returns.pdf 16 According to https://citigatedewerogerson.com/wp-content/uploads/2020/10/IR-SURVEY-2020.pdf, 79% of firms report a rise in ESG investor queries in 2020; and https://shareaction.org/fossil-fuels/resolutions-tracker/ suggests a pickup in shareholder resolutions on climate change. 17 https://www.fca.org.uk/news/press-releases/fca-announces-proposals-improve-climate-related-disclosures-listed-companies 18 https://www.bankofengland.co.uk/-/media/boe/files/speech/2020/leading-the-change-climate-action-in-the-financial-sector-speech-bysarah-breeden.pdf?la=en&hash=A76529EC3930769B0D6FA8FECBFF0507BE6DBBA3 19 https://www.tcfdhub.org/recommendations/ 7  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  7  Consistency – the first of those criteria – has been a challenge. The TCFD is widely recognised as the right overarching framework: nearly half of large companies globally were already disclosing TCFD-aligned metrics at the time of the last comprehensive survey in 2019 (Chart 3), and support for the TCFD had grown to over 1,440 organisations by September this year, with a market capitalisation of over $ trillion.

As such, there remains enormous scope for Mainland’s OPI to increase. 10. Japan’s experience in opening up its capital account in the mid-80s may also shed some light on the future path of Mainland’s OPI. Japan’s outward portfolio investment started off with 5% of GDP, then rose to 18% in 10 years’ time, and then further to over 40% in another 10 years. If we assume that Mainland’s OPI follows a path similar to that of Japan, it is possible that their OPI could reach 18% of GDP in 10 years’ time. It is not difficult to get an idea of the potential scale of such flows by simply punching the calculator: this will give a good sense of why we say the potential is huge. 11. So, given the huge potential outward portfolio investments from Mainland China, how will they be allocated across different financial markets? Our internal research shows that, despite the advances in telecommunications and technology, home bias is still very much there, and people do like investing in markets closer to their home countries. As such, Hong Kong is likely to be one of the key destinations of Mainland’s OPI. Apart from being the final destination for these investments, Hong Kong can also act as an ideal launch platform for these investment flows to reach other major global markets. 12. Since the introduction of the QDII scheme, $ billion worth of investment quotas have been granted up to June this year.