The new ESG requirements announced on 18 December 2019 as part of the HKEX’s consultation conclusions on review of the ESG reporting guide and related listing rules apply to HK-listed companies with financial years commencing on or after 1 July 2020. In other words, companies for the year ended 30 June 2020 should strictly conform to the new ESG requirements in its day-to-day sustainability management that lays foundation for the efficient preparation of ESG report next year.
The major challenges and potential opportunities brought by the new ESG requirements, which are mainly focussed on board participation, reporting principles application, setting reporting boundary, incorporation of climate-related analysis, disclosure against newly added environmental and social KPIs, upgrade of disclosure obligation under social subject, shortening the deadline for report publication and encouraging independent assurance, have been debunked by
GreenCo shortly after the announcement this year (https://greenco-esg.com/interpretation-of-the-esg-consultation-conclusion-of-hkex-2020/).
Considering the bewilderment of companies about how to comply with the Listing Rules, HKEX has updated its common questions relating to ESG reporting (Frequently Asked Questions Series 18) and made appropriate explanations. GreenCo, as a qualified professional body, has summarised the key takeaways of the latest update and in particular, concentrated on the ones that may significantly influence companies’ ESG reporting work.
CAN COMPANIES ADOPT OTHER GUIDELINES INSTEAD OF THE ESG REPORTING GUIDE (THE “GUIDE”)?
In addition to GRI Sustainability Reporting Standards, CDP’s Climate Change Questionnaire and Water Security Questionnaire, TCFD Recommendations, ISO26000 and Corporate Sustainability Assessment for inclusion in the Dow Jones Sustainability Indices, the HKEX added the Sustainability Accounting Standards Board’s SASB Materiality Map® in the package of its recommended international standards and guidelines in this update. SASB identifies financially material issues, which are the issues that are reasonably likely to impact the financial condition or operating performance of a company and therefore are most important to investors. The SASB Materiality Map® is an interactive tool that identifies sustainability topics from a set of 26 broadly relevant sustainability issues under five sustainability dimensions, namely environment, social capital, human capital, business model and innovation, and leadership and governance, across different industries and sectors.
For further information about frequently asked questions about the new ESG reporting requirements, please contact us for applying for the membership of our monthly ESG research and newsletter.
