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Board and governance Materiality assessment Climate change Social issues Review of ESG progress Adoption of International ESG reporting framework

Board and governance
Integrating material ESG issues into a company's strategy can contribute to better risk management, leading to long-term resilience and sustainability of the business. Strong board oversight and management of ESG issues boosts investors' confidence in the company and improve the company's access to capital. Investors have increasing demand on information about the systems, governance structure and company culture that lies beneath how the company manages material ESG issues.

The ESG Reporting Code requires issuers to disclose the issuer's ESG governance, including the board's oversight of ESG issues; its ESG management approach and strategy; and how the board reviews progress made against ESG-related goals and targets. A good disclosure of ESG governance should include, amongst others, a clear reporting line and division of responsibilities, and a description of how the board evaluates ESG issues, and integrate material ESG issues into the issuer's corporate strategy and risk management processes.

Board and governance:
ESG governance

Commentary

CLP Holdings Limited (00002), 2023 Sustainability Report
 
(p.20)
 
Sustainability governance
 
The CLP Board has overall responsibility for CLP’s sustainability reporting and performance. Sustainability governance has been embedded in the corporate governance structure throughout the Group, from Board-level committees to management-level Group functions and business units.
 
Two of the Board Committees, the Sustainability Committee and the Audit & Risk Committee, have separate but complementary roles in ESG management. These two committees are supported by the Sustainability Executive Committee and coordinated by the Group Sustainability Department.

 

  

…

Sustainability Committee

 
The primary role of the CLP Board-level Sustainability Committee is to oversee the management of the Group’s sustainability issues. 

Ensuring that the Committee maintains a balanced view and is updated on the sustainability issues, the Committee was briefed by a leading external expert on the Path to Net Zero and also by management on the reflections and key takeaways from COP28.

 

...

(p.21)


...

Sustainability Executive Committee

The Sustainability Executive Committee (SEC) has the strategic responsibility of assessing and managing sustainability issues.

…

The SEC steers the sustainability strategy of the Group and approves relevant deliverables. The CEO and CFO also hold management responsibilities for the assurance of ESG data, and jointly sign off the General Representation Letter connected with the assurance process.
 

...

(p.22)
 
Key actions in 2023 are summarised below:
 
  • Provided direction to CLP's Climate Vision 2050 review, including the revision of Group-wide targets, in light of the latest developments of the business plan;

…

Commentary

The issuer has integrated the governance of sustainability / ESG issues under its overall corporate governance structure, not only at the board level, but also at the lower layers of the organizational structure, including “management oversight”, “coordinators”, and “implementation of sustainability-related strategies, policies and goals”. This helps ensure consistency in the implementation of their ESG initiatives/ policies within the group.

A graphical illustration of the governance structure facilitates stakeholders' understanding of the reporting line and board's oversight of ESG issues affecting the company. 

There is disclosure on the responsibilities of each layer of the organisational structure, with hyperlinks to the terms of reference of the relevant committees. There is also information on the work conducted by the board-level Sustainability Committee and key actions taken by the management-level Sustainability Executive Committee during the reporting year. This allows stakeholders to understand the board’s and the management’s distinct roles in the monitoring, management and oversight of ESG issues. 

Board and governance:
ESG governance

Commentary

Kerry Properties Limited (00683), Sustainability Report 2023

(p.20-21)

 

Kerry_1_800 

Kerry_2_800

 

 

Commentary

The issuer has established a dedicated Sustainability Council, a Sustainability Steering Committee and Sustainability Sub-committees and Taskforce Teams with clearly defined responsibilities. 

It also described the allocation of responsibilities amongst the board and different management teams regarding the issuer's sustainability matters.

The description shows how the board sets the tone at the top through its oversight, and how the board's direction is being understood and implemented down the reporting line.

 

Board and governance:
ESG integration

Commentary

China Overseas Land & Investment Limited (00688), 2023 Environmental, Social and Governance Report 

(p.95)

COLI fully recognises that building an ecological city is the most important prerequisite for achieving green and low-carbon development. Adhering to the concept of green development, we have adopted green design, promoted green and low-carbon technologies...
…

COLI promotes the green development concept throughout the entire life cycle from site selection and design to construction, striving to be the forerunner in the R&D and practice of creating green buildings.
…

In the site selection phase of a project, we start with investigating the local environment and adjacent ecosystems… we will comprehensively assess physical variables and their impact on building functions, with a view to creating a home experience combining technology with nature.
…

In the process of project development, we adopt green design to provide ideal soil for the growth of various animals and plants, so as to protect the biodiversity of the project.
…

(p. 97)

We proactively put the green and healthy building concept into practice and obtain relevant certifications for appropriate existing and new projects…
…
 

 

(p. 100)
 
At the same time, we focus on researching and piloting innovative technologies such as high-efficiency air conditioning refrigerating station, temperature and humidity independent control, distributed photovoltaic, PEDF and carbon management system… 
 

…

 

Commentary

The issuer has achieved ESG integration by incorporating sustainability considerations in the entire life cycle from site selection, building design to construction. This is a good example of how issuers may take into account sustainability factors in the lifecycle of their business operations. 

Board and governance:
ESG integration

Commentary

The Hong Kong and China Gas Co. Limited (00003), Environmental, Social and Governance Report 2023

 

(p.36)
 
At Towngas, we are committed to achieving carbon neutrality by 2050. In line with the principles of the Just Transition, however, we are not only working towards carbon neutrality but also considering the social aspects of this transition. In pursuit of this goal, Towngas began to incorporate ESG Due Diligence and Internal Carbon Pricing into its investment decision-making processes during the year to seize low-carbon opportunities and investments. 
…
 
(p.41) 

 

 

Commentary

With a clear commitment to achieving carbon neutrality by 2050, the issuer incorporated ESG factors into the investment decision-making process so as to mitigate ESG risks and seize low-carbon opportunities and investments.

Board and governance:
Board's skill matrix (ESG)

Commentary

Swire Pacific Limited (00019), 2023 Sustainability Report
 
(p.13)
 
Members are selected based on their qualifications, skills and experience, knowledge of our businesses, and how they impact Board-level diversity. All Board members have relevant industry experience in either Real Estate, Aviation, Food and Beverage, or Trading and Industrial sectors. Four out of five of our Executive Directors have had executive or board experience with one or more of our subsidiaries. Having the right blend of skills and experience ensures the Board can effectively deal with current and emerging risks and opportunities.
 
The board receives training materials or direct training annually. In 2023, the Board received external training on ESG including risk. Further information on our board diversity, processes, and training is available in the Corporate Governance section of the Swire Pacific Annual Report 2023.

 

 
 

Commentary

A diverse board comprising members from a wider range of professional backgrounds and expertise enables more informed and prudent decisions to be made. 12 out of 13 directors of the issuer has related ESG industry experience. This enables the board to effectively oversee ESG risks and opportunities

The issuer confirmed directors’ participation in ESG training with cross-reference to the detailed information in its annual report. Given rapid ESG developments in both global and local context, continuous training in this area is important to ensure the board’s decision-making align with latest trends and developments.


Board and governance:
Board's skill matrix (ESG)

Commentary

Manulife Financial Corporation (00945), Sustainability Report 2023
 
(p.11)
 
Experience in and an understanding of ESG matters are considered essential characteristics for directors because of the importance of ESG to Manulife and the Board's role in overseeing Manulife's ESG framework. In 2023, environmental, climate and social experience was added as a key experience to our skills matrix to denote those directors who have a significant knowledge and understanding of relevant issues based on their respective experiences in their professional careers or as corporate directors. 

Board members gain ESG experience through ongoing education sessions and reports on ESG strategy, trends, risks, and opportunities and are encouraged to attend sessions on ESG matters at meetings of the CGNC. In addition to these regular internal sessions, members of the CGNC participate in at least one externally facilitated ESG-related education session every two years. The sessions may be external courses or externally facilitated sessions tailored to cover issues relevant to Manulife and open to all Board members.

Commentary

A board should have a balance of skills, experience and diversity of perspectives relevant to the issuer's business. The issuer stressed the importance of ESG to the issuer’s business strategy, and therefore included ESG experience to its skills matrix. This ensures the nomination and appointment of directors with necessary skills and competencies needed to evaluate ESG/sustainability-related risks and opportunities, and oversee strategies designed to respond to ESG/sustainability-related issues. 

The issuer also arranges ongoing education sessions to enhanced directors’ understanding of ESG trends, risks and opportunities, which is crucial given the rapid ESG developments in global and local contexts.
 

ESG governance
ESG integration
Board’s skill matrix (ESG)