Market Turnover


Exchange Publishes ESG Guide Consultation Conclusions and its ESG Disclosure Review Findings

18 Dec 2019
  • ESG Guide and related Listing Rules to be amended to improve ESG governance and disclosure
  • ESG Guide and Listing Rules amendments to take effect on 1 July 2020
  • ESG Disclosure Review findings provide guidance on improving ESG reporting


The Stock Exchange of Hong Kong Limited (the Exchange), a wholly-owned subsidiary of Hong Kong Exchanges and Clearing Limited (HKEX), today (Wednesday) published conclusions to its consultation on the ‘Review of the Environmental, Social and Governance (ESG) Reporting Guide (ESG Guide) and Related Listing Rules’ (ESG Consultation Conclusions)1; and the findings of its latest review of listed issuers’ ESG disclosures (ESG Disclosure Review).

“We had a very broad and strongly supportive response to this consultation, and we are pleased to be announcing significant improvements to the ESG governance and disclosure framework for Hong Kong-listed companies.  The changes reflect the Exchange’s commitment to enhancing Hong Kong’s ESG regulatory framework and to meeting investor and stakeholder expectations in accordance with international best practices.  We would like to thank all those who made submissions to the consultation,” said David Graham, HKEX’s Head of Listing.

ESG Consultation Conclusions

The Exchange received 153 responses from a broad range of respondents.  The feedback indicated strong support for the consultation proposals to enhance the ESG reporting framework.  The Exchange will implement the consultation proposals, with modifications, reflecting comments received.  The changes will be effective for financial years commencing on or after 1 July 2020.

Key changes to the ESG Guide and related Listing Rules include:

  • Introducing mandatory disclosure requirements to include:
    • a board statement setting out the board’s consideration of ESG matters;
    • application of Reporting Principles “materiality”, “quantitative” and “consistency”; and
    • explanation of reporting boundaries of ESG reports;
  • Requiring disclosure of significant climate-related issues which have impacted and may impact the issuer;
  • Amending the “Environmental” key performance indicators (KPIs) to require disclosure of relevant targets;
  • Upgrading the disclosure obligation of all “Social” KPIs to “comply or explain”; and
  • Shortening the deadline for publication of ESG reports to within five months after the financial year-end.

The ESG Consultation Conclusions, respondents’ submissions, amendments to the Main Board Listing Rules and amendments to the GEM Listing Rules are available on the HKEX website.

ESG Disclosure Review

The Exchange reviewed ESG reports for the financial year ended on 31 March, 30 June or 31 December 2018 from 400 randomly selected issuers (Sample Issuers).  The review provides insight and guidance to issuers on the possible improvement areas on which to focus in their approach to assessing ESG-related risks, and when preparing ESG reports.

“Our ESG Disclosure Review is part of the Exchange’s ongoing commitment to promote quality ESG reporting.  Our findings and recommendations are in line with the key areas which we seek to improve through the changes set out in the ESG Consultation Conclusions,” said Mr Graham.

Key findings and recommendations of the ESG Disclosure Review include:

  • All Sample Issuers published an ESG report within the timeframe set out in the Listing Rules. A majority published their ESG reports on the same day as their annual report (63 per cent).
  • Two-thirds of Sample Issuers disclosed that a materiality assessment had been undertaken, some described the assessment in a more detailed manner than others. The Exchange emphasises the importance of materiality since it is a fundamental element for a company to assess ESG-related risks it faces.
  • ESG reports from a majority of Sample Issuers contained little or no description of board involvement.It is important for boards to be meaningfully involved in assessing and addressing ESG-related risks.
  • When an issuer is required to “comply or explain”, only 3 per cent of such provisions were “explained”. The high percentage of reports adopting the “comply” option may suggest that issuers have not properly determined what is material to them, or that the “explain” option is believed to be a less-preferable option. Issuers are reminded that if a “comply or explain” provision is immaterial to them, then an explanation to that effect may well be appropriate. “Explanation” is not a less preferred or secondary option.

For more details of the findings and our recommendations, please see the report entitled “Analysis of Environmental, Social and Governance Practice Disclosure In 2018” available on the HKEX website.


Note 1: The consultation paper was published on 17 May 2019.  The consultation period ended on 19 July 2019.



About HKEX

Hong Kong Exchanges and Clearing Limited (HKEX) is one of the world’s major exchange groups, and operates a range of equity, commodity, fixed income and currency markets.  HKEX is the world’s leading IPO market and as Hong Kong’s only securities and derivatives exchange and sole operator of its clearing houses, it is uniquely placed to offer regional and international investors access to Asia’s most vibrant markets.

HKEX is also the global leader in metals trading, through its wholly owned subsidiaries, The London Metal Exchange (LME) and LME Clear Limited.  This commodity franchise was further enhanced with the launch of Qianhai Mercantile Exchange, in China, in 2018.

HKEX launched the pioneering Shanghai-Hong Kong Stock Connect programme in 2014, further expanded with the launch of Shenzhen Connect in 2016, and the launch of Bond Connect in 2017.





Updated 22 May 2020