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MPF intermediaries
MPFMPF Intermediaries ExaminationIIQE MPF · Topic 9
MPF exam chapter 9 (2% of the paper): what ESG means, why it matters for long-horizon MPF funds, the MPFA's 2021 sustainable investing principles, ESG constituent funds and their February 2025 disclosure rules, and the Green and Sustainable Finance Cross-Agency Steering Group.
5 min read4 sections
Checked against the MPF Study Notes, Tenth Edition (June 2026; for exams from 1 Oct 2026), chapter 9, and the MPFA's Sustainable Investing overview (last reviewed 30 Jan 2026). Reviewed 6 Nov 2026.. Independent prep, not endorsed by the MPFA or any examination provider.
Chapter 9 is 2% of the paper, one or two questions. They usually ask for the four elements of the MPFA's principles or the three ESG strategies.
| Factor | Examples of what it covers |
|---|---|
| Environmental | Climate change and its effect on business operations, carbon emissions and the cost of rules that restrict them |
| Social | Labour rights, gender equality, product safety, community relations |
| Governance | Corporate governance structure, risk management, business ethics, transparency |
MPF money is invested for decades, which leaves it exposed to slow-building risks such as climate change. If those risks are ignored, members can lose out. The notes treat taking ESG risks into account as both a stewardship obligation and a fiduciary duty of MPF trustees and investment managers.
In 2021 the MPFA issued its Principles for Adopting Sustainable Investing in the Investment and Risk Management Processes of MPF Funds, a high-level framework for building ESG into investment and risk management from a financial-risk angle and telling members about it.
| Element | What trustees should do |
|---|---|
| Governance | Have a framework to oversee how investment managers handle ESG risks |
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An MPF fund whose key investment focus is environmental, social and governance factors, reflected in its investment objectives or strategy. The MPFA publishes a list of them.
Issued in 2021, they ask MPF trustees to build ESG into investment and risk management under four elements: governance, strategy, risk management and disclosure.
| Strategy |
| Set an ESG integration strategy at scheme level |
| Risk management | Make sure ESG factors are considered when investing and managing risk |
| Disclosure | Disclose ESG strategies and report progress regularly, with the metrics and targets used |
Each scheme's annual governance report, due within six months after the scheme's financial year end and posted on the trustee's website, must cover its sustainable investing strategy and progress in plain language. The MPFA's website carries the latest reports for all schemes.
Trap: the principles are a financial-risk framework. They do not require every MPF fund to be an ESG fund.
Takeaway: 2021 principles, four elements: governance, strategy, risk management, disclosure. Progress goes in the annual governance report within six months.
An ESG constituent fund is one that makes ESG factors its key investment focus and says so in its investment objectives or strategy. Its theme and strategy appear in the scheme brochure and on the MPFA's list of ESG constituent funds.
| Strategy | How it works |
|---|---|
| Best-in-class or positive screening | Picks companies or sectors with better ESG performance than their peers |
| Impact investing | Invests in or finances businesses aiming at a measurable positive ESG impact |
| Thematic | Invests in companies working in a specific ESG or sustainability theme, such as sustainable energy |
Enhanced disclosure, from February 2025:
Trap: the annual assessment is published in the governance report, not in a separate filing. And the naming rule cuts both ways: ESG funds must live up to their name, and other funds must not borrow the label.
Takeaway: ESG fund = ESG as the key focus. Three strategies: screening, impact, thematic. From February 2025: honest names, fuller brochures, yearly assessment.