ESG Disclosure Report of Listed Companies
The Institute of Management Accountants (IMA) released the ESG disclosure report of listed companies in China, taking 140 companies listed in the mainland China market and Hong Kong market as samples, to study their ESG information disclosure and climate related disclosure based on the TCFD framework.
The listed companies in this survey are subject to the ESG regulatory policies of the mainland of China and Hong Kong. For example, the China Securities Regulatory Commission (CSRC) made it clear in April 2022 that listed companies need to add ESG information in their communication with investors (this is the first time to introduce ESG in the investor relationship guidance). The 2021 Corporate Governance Guidelines of the Hong Kong Stock Exchange also requires that issuers should publish ESG report with the annual report.
Overall Disclosure of ESG
According to the survey results, 140 listed companies have published ESG reports, but the names of the reports are different. 49% are named with Social Responsibility Report, 32% are named with ESG Report, and the other titles are Sustainability Report, Social Responsibility and ESG Report. From the perspective of industry, the financial industry and industrial companies are willing to choose Social Responsibility Report, and energy industry companies are willing to choose ESG Report.
In terms of the report standards for report disclosure, the companies involved in the investigation are listed on the Hong Kong Stock Exchange, so they all comply with the ESG Reporting Guidelines issued by HKEX. In addition, 65% of the companies comply with GRI Sustainable Development Reporting Standards, and 64% of the companies comply with ESG Reporting Guidelines issued by the Shanghai Stock Exchange.
In the certification of ESG reports, 24% of companies choose third-party certification, and 62% are certified by accounting firms. Financial industry has the highest proportion of report certification (60%).
Environmental, Social and Governance Disclosure
Since all listed companies use the ESG Report Guidelines as the disclosure standard, IMA has continued to study the independent aspects of environmental, social and governance disclosure of these companies. At present, the disclosures of listed companies at the environmental and social levels are relatively complete, while the disclosure of corporate governance still needs to improve.
- At the environmental level, the ESG Report Guidelines require companies to disclose emissions, resource usage, environment, and climate change. At present, 92% of companies have disclosed the first three items, but only 76% of companies have disclosed about climate change, and the proportion of climate disclosure in real estate and public utilities industry is relatively low;
- At the social level, 85% of companies disclose their employees’ situation, career development, supply chain management and other aspects, basically meeting the requirements of the ESG Report Guidelines. Some companies have also disclosed the characteristic themes of common prosperity and rural revitalization, which may become the new direction of the subsequent disclosure of listed companies in China;
- At the governance level, the ESG Report Guidelines require mandatory disclosure of the statements of the Board of Directors, and other governance contents can be included in the company’s annual report. 54% of companies disclosed the board’s review of ESG objectives, 78% disclosed the board’s ESG strategy, and 83% disclosed the board’s supervision of ESG;
Climate Information Disclosure Based on TCFD Framework
In 2017, TCFD developed a framework for companies to comprehensively report climate-related financial risks and included 11 disclosures items in four aspects: governance, strategy, risk management and objectives. In 2021, HKEX issued the Guidelines for Climate Information Disclosure, which proposed that climate disclosure would be enforced in 2025.
According to the survey results, 33% of listed companies have referred to the TCFD framework for disclosure in the ESG report, and the financial industry’s climate information disclosure based on the TCFD framework accounts for the highest proportion, reaching 47%.