ISO 9001 Certified in ESG Reporting and Climate Policy Advisory
HKEx Analysis of Environment, Social and Governance Practice Disclosure on 400 listed companies in Hong Kong
HKEx Analysis of Environment, Social and Governance Practice Disclosure on 400 listed companies in Hong Kong
The ESG Review analysed the disclosures made by 400 randomly selected issuers (“Sample Issuers”) across the industries set out in the Hang Seng Industries Classification System. By evaluating the general disclosures of 11 aspects in environmenal and social subjects, the purpose of the ESG Review is primarily to give meaningful guidance to issuers on possible improvement areas to focus when preparing ESG reports so as to meet stakeholders’ expectations.
Based on the research of 400 listed companies’ ESG reports, besides some statistics, HKEx found that the vast majority of enterprises described more on corporate policies in general disclosure than the compliance with relevant regulations and laws. Specifically, apart from the incompleteness of disclosed information (e.g. where the Aspect of Product Responsibility calls for information onseveral areas, disclosure or reasons for non-disclosure in respect of Health and Safety, Advertising, Labelling and Privacy are expected, many enterprises, however, did not comply), the quality of disclosure also varies. For instance, some companies chose to use ‘The Group has complied with all Laws and Regulations’ for simple description. With regard to that, HKEx requires again that all listed companies should be strictly compliant with the guidle to disclosure specific regulations and laws they have abided by, and try their best to describe the process of achieving such success.
To further improve the quality of ESG reports, and for issuers to benefit from the process of ESG reporting, issuers should do well to cover the following key messages in their reports:
• State the issuer’s or the board’s commitment to ESG, management approach and explain how they relate to its business;
• The board’s evaluation and determination of ESG risks and how it ensures that appropriate and effective ESG risk management and internal control systems are in place; and
• The process of stakeholder engagement which is central to materiality assessment and is a channel for the company and its directors to engage and communicate with their stakeholders.
