NEW REGULATION IS COMING: EXCHANGE SEEKS VIEWS ON STRENGTHENING ESG RULES AND PUBLISHES GUIDANCE MATERIALS ON ESG AND GENDER DIVERSITY
The Stock Exchange of Hong Kong Limited (the Exchange), a wholly-owned subsidiary of Hong Kong Exchanges and Clearing Limited (HKEX), today (Friday) announces the publication of:
- Consultation Paper “Review of the Environmental, Social and Governance Reporting Guide and related Listing Rules” (ESG Consultation)
- ESG guidance materials (including e-training and Frequently Asked Questions Series 17 and 18); and
- Updated Guidance Letter HKEX-GL86-16 (i) setting out our expected disclosure on ESG matters and (ii) requiring disclosures on gender diversity in the listing documents of new applicants.
ESG Consultation
The key focus of the Exchange’s latest ESG Consultation is to support and improve issuers’ governance and disclosure of ESG activities and metrics.
“Our proposals emphasise the board’s leadership role and accountability in ESG and the governance structure for ESG matters. The consultation also seeks to highlight that materiality in respect of ESG is key to meaningful and concise reporting. Our proposal to require disclosure on climate-related issues echoes the increasing international focus on climate change and its impact on businesses,” said David Graham, HKEX’s Head of Listing.
This consultation reflects the Exchange’s commitment to enhance ESG reporting and disclosure by listed companies, and builds upon its ongoing ESG-related efforts since the launch of the ESG Reporting Guide in 2013.
Key proposals:
- Introducing mandatory disclosure requirements in the ESG Reporting Guide to include:
- a board statement setting out the board’s consideration of ESG issues; and
- applications of relevant reporting principles and boundaries in the ESG report;
- Requiring disclosure of significant climate-related issues which have impacted and may impact the issuer;
- Amending the “Environmental” key performance indicators (KPIs) to require disclosure of relevant targets;
- Upgrading the disclosure obligation of “Social” KPIs to “comply or explain”; and
- Shortening the deadline for publication of ESG reports to align with the publication timeframe of the annual report (ie within four months (Main Board issuers) or three months (GEM issuers) after the year-end date).
The deadline for responding to the ESG Consultation is 19 July 2019.
Interested parties are encouraged to respond to the ESG Consultation by completing and submitting the questionnaire.
ESG Guidance Materials
E-training: To reinforce the focus of the ESG Consultation, the Exchange has launched an e-training course, “ESG Governance and Reporting”, which explains the board’s leadership role in ESG matters and covers the following six topics:
- What is ESG, and why is it important
- Board’s role in ESG governance
- Why report on ESG
- Essential elements in an ESG report
- Details on ESG reporting
- ESG disclosure by IPO applicants
The e-training takes approximately 45 minutes to complete.
