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20 May 2019

Stock Exchange of Hong Kong Limited

Hong Kong Stock Exchange launches consultation on review of ESG reporting

“Exchange seeks views on strengthening ESG rules and publishes guidance materials on ESG and gender diversity”, 17 May 2019

The Stock Exchange of Hong Kong Limited (the Exchange) … announces the publication of: Consultation Paper “Review of the Environmental, Social and Governance Reporting Guide and related Listing Rules” (ESG Consultation), ESG guidance materials… and Updated Guidance Letter HKEX-GL86-16… setting out our expected disclosure on ESG matters and… requiring disclosures on gender diversity in the listing documents of new applicants.

The key focus of the Exchange’s latest ESG Consultation is to support and improve issuers’ governance and disclosure of ESG activities and metrics. 

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…

… the Exchange has revised Guidance Letter HKEX-GL86-16 to require additional disclosure on policy of board diversity (including gender) and how gender diversity of the board can be achieved in the case of a single gender board.  The revised Guidance Letter also sets out… [the Exchange’s] expected disclosure on ESG matters, including material information on applicants’ environmental policies, and details of the process used to identify, evaluate and manage significant ESG risks...