ABSTRACT
Companies issue ESG disclosures due to prevailing sustainable investing and related regulations. Many ESG reporting guidelines are released worldwide to help companies better deal with ESG issues. The Hong Kong Exchanges and Clearing Limited (HKEX) established its ESG reporting guide to improve local listed companies’ ESG performance. The ESG reporting guide of HKEX has undergone two major updates with sporadic changes since 2011. After the first update in 2016, the overall obligation level of the Environmental, Social and Governance Guide (the ESG Guide) was raised from voluntary to “comply or explain”. In December 2019, HKEX released a second update on the ESG Guide to add mandatory reporting requirements based on the “comply or explain” framework. To sum up, HKEX takes step-by-step actions to regulate local ESG reporting practice, gradually raising the overall compliance level of the Guide from voluntary to mandatory. HKEX tends to emphasize board governance, stakeholder engagement, and materiality assessment to help listed companies evaluate their ESG risks accurately and guarantee stakeholders’ interests. This chapter provides policymakers, practitioners, and other stakeholders with the development of the ESG Guide in Hong Kong, the current emphases of the Guide, the response of listed companies to the Guide, and potential improvements to make the Guide up-to-date and practical.
