Get Prepared for the Strengthened HKEX ESG Reporting Requirements

Dec 1 / Matters Academy
Amid the rising awareness of ESG issues, the investors are not just focused on the financial performances of the corporations but also environmental, social and governance risks and how they are going to manage them.
A way that companies can communicate their ESG activities, strategy, and performance more transparently with their stakeholders is through ESG reporting. Companies that are starting their ESG journey can take that first step by collecting ESG data, which can help develop ESG practices and mindsets in the corporate culture. When company ESG practices and data collection for reporting are integrated into companies’ daily business operations, companies can more transparently disclose their performance and ambitions, leading to more resilient risk management processes and sustainable value creation.
In Hong Kong, listed companies are obligated to fulfil the requirements of the ESG reporting guide prepared by Hong Kong Stock Exchange (HKEX). These requirements can be found in Appendix 27 of their main board listing rules. This is a designated specification on ESG assessment and reporting for listed companies in Hong Kong, containing mandatory ESG disclosure requirements as well as recommended disclosures annually. The disclosure requirements are based on key reporting principles including materiality, quantitative, and consistency.
HKEX’s listing rules require companies listed on the exchange to reveal ESG data under a ‘Comply or Explain’ principle. The ESG reporting guide was first introduced by the HKEX in 2013 and since then, the disclosure guidelines have been continuously updated to align with international best practices. 
With the new ESG reporting requirements of HKEx coming into effect for financial years commencing on (or after) 1 July 2020, there are some important changes:
1. Mandatory disclosures to include:
  • A board statement setting out the board’s consideration of the company's ESG strategy and planning;
  • Application of reporting principles - Materiality, Quantitative and Consistency;
  • The reporting boundaries of ESG Report.

2. All social KPI upgraded to "comply or explain."
3. Disclosure of significant climate-related issues which have impacted and may impact the business.
4. Disclosure of relevant targets set for Environmental KPIs.
5. Shortening the deadline of ESG Report publication to within 5 months after financial year ended.
To fulfil these strengthened requirements, a user-friendly data management platform is needed to help organise, compile, and analyse data and information to determine progress. From ESG data collection tools to management and visualisation tools, there are many different technologies that can be very useful for ESG talents and teams to be more efficient and make the process easier to manage and track. 
If you are interested in knowing more about how to prepare an ESG report, you can find the step-by-step guide published by the HKEX by clicking the "Learn more" button below.
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