400 Companies in HKEX ESG Review
The Stock Exchange of Hong Kong Limited (the Exchange), a wholly-owned subsidiary of Hong Kong Exchanges and Clearing Limited (HKEX), released the annual review results of ESG of listed companies in 2022. The Stock Exchange investigated the ESG reports issued by 400 listed companies from the four aspects of governance of the board of directors on ESG matters, climate change, social matters and reporting practices, and got the following conclusions:
- In terms of the control of the Board of Directors on ESG matters, Hong Kong Stock Exchange believes that the Board of Directors needs to play a role in ESG supervision, policy and strategy formulation and review progress. In this survey, 97.50% of the board of directors has started to supervise ESG related matters (31% in 2018), and 95.50% of the board of directors has started to disclose ESG governance policies and strategies (14% in 2018);
- In terms of climate change, the Stock Exchange has recognized the Global Sustainable Development Reporting Standard (ISSB) and required the Company to disclose the climate issues and solutions that may cause impacts, as well as the Company’s Scope 1 and Scope 2 greenhouse gas emissions. According to the survey results, 93.80% of the companies disclosed climate change related content, and 93% of the companies announced two types of greenhouse gas emissions;
- In terms of social matters, the Stock Exchange changed voluntary disclosure to “If the company does not comply, it needs to explain”, and established performance indicators for supply chain, green procurement, etc. At present, more than 80% of companies disclose this in ESG reports;
- In terms of reporting routines, the Stock Exchange requires companies to measure the importance, quantification and consistency of ESG information. Almost all companies can issue ESG reports at the specified time (five months before the end of the financial year, but this year began to require simultaneous release) (58% of companies release ESG reports and annual reports at the same time), of which 93% (66% in 2018) are important disclosures, Quantification accounted for 84.3% (29.8% in 2018), and consistency accounted for 95% (26.8% in 2018);
The Following Advice Given
At the same time, the Stock Exchange also mentioned some directions that can be further improved. For example, the Board of Directors can explain whether the ESG goals can be achieved, and discuss the follow-up development trend. At the same time, the new ISSB standard has required the disclosure of the greenhouse gas emissions of Scope 3, and the company needs to further calculate and disclose relevant information.
References:
Exchange Publishes Findings of its Latest Review of Issuers’ ESG Disclosures (hkex.com.hk)
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