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Environmental, Social and Governance (ESG) Report

December 14, 2019

In recent years, investors have attached an increasing importance to the performance of enterprises in the “environmental, social and governance” (ESG) aspects.  THE Hong Kong Exchange (HKEX) published a consultation paper in 2019 proposed to enhance the ESG Reporting Guide and related Listing Rules.  The new requirements for environmental, social, and governance (ESG) reporting for Hong Kong listed companies will apply to financial years commencing on or after 1st July 2020 and will require to be published within five months after the end of the financial year.  Key changes:-

  1. (1) Introducing mandatory disclosure requirements to include:
    •      – a board statement setting out the board’s consideration of ESG matters;
    •      – application of Reporting Principles “materiality”, “quantitative” and “consistency”; and
    •      – explanation of reporting boundaries of ESG reports;
  2. (2) Requiring disclosure of significant climate-related issues which have impacted and may impact the issuer;
  3. (3) Amending the “Environmental” key performance indicators (KPIs) to require disclosure of relevant targets; and
  4. (4) Upgrading the disclosure obligation of all “Social” KPIs to “comply or explain”