Public consultation on the review of the Environmental, Social and Governance Reporting “ESG” Guide by HKEX

The Hong Kong Exchanges and Clearing Limited (“HKEX”) has recently issued a consultation paper on review of the Environmental, Social and Governance Reporting “ESG” Guide for public consultation.

This consultation paper aims to seek views and comments on proposed changes to the existing ESG Guide, so as to strengthen environmental, social and governance disclosure requirements and enable listing companies to formulate policies, measure relevant data, monitor progress and report to investors and other stakeholders on their non-financial performance aspect.

The proposed change as follow:

1.      Amend Listing Rule 13.91 to require the issuer to state in its annual report or ESG report whether it has complied with the “Comply or explain” provisions set out in the ESG Guide for the relevant financial year. If the Issuer deviates from such provision, it must give considered reasons in the ESG report;

2.      Provide more guidance on reporting and to be more in line with international standards;

3.      Re-arrange two Subject Areas: “Environmental” and “Social”;

4.      Upgrade the General Disclosures under each of aspects to “comply or explain” and revise certain wording to be consistent with directors’ requirements of the new Companies Ordinance (Cap 622) (see also paragraph 28 (2)(d) of Appendix 16 of Main Board Listing Rules”

5.      Upgrade the Key Performance Indicators under the subject area “Environmental” to “comply or explain”;

6.      Revise the wording of the voluntary provision of the guide and incorporate disclosure of gender diversity.

All issuers will be required to discuss their ESG policies, performance, and their compliance with relevant laws and regulations in the directors’ report, in adoption of the amendments to the Listing Rules following implementation of the new Company Ordinance, in year 2016.

The above proposed changes apply equally to the GEM Listing Rules. HKEX intend to implement the new ESG Guide, which incorporated the above proposed changes for the financial years commencing on or after 1 January 2016, whereupon issuers would need to start gathering the necessary information for the purpose of publishing their ESG reports in year 2017.

http://www.hkex.com.hk/eng/newsconsul/mktconsul/Documents/cp201507.pdf