Environmental Social and Governance (ESG) Requirements

ESG Graphic 2

Please register for Hazardous Waste ESG Reporting 2016 onAug 25th,, 2016  at:

http://event.on24.com/wcc/r/1237149/F2D3D64A3506A5F6FF4AB4A8D57EDB05

This webinar will explain reporting changes and provide a sample ESG report example using the new HKex reporting guidelines. It will cover 2016 changes and the expected 2017 “comply or explain” expectations around hazardous waste reporting for Used Lead Acid Batteries (ULAB).

After registering, you will receive a confirmation email containing information about joining the webinar.

Environmental, social and governance (ESG) refers to the three main areas of concern that have developed as central factors in measuring the sustainability and ethical impact of an investment in a company or business. These areas cover a broad set of concerns included in the non-financial factors that figure in the valuation of equity, real-estate, corporate, and fixed-income investments. ESG is the catch-all term for the criteria used in what has become known as socially-responsible investing. Socially responsible investing is among several related concepts and approaches that influence and, in some cases govern, how asset managers invest portfolios.

Information required to be in compliance with Stock Exchange of Hong Kong (HKEx) Appendix 27 – Environmental, Social and Governance Reporting on hazardous waste is found under section KPI B1.3.   Corporations disclosure can include total hazardous waste produced (in Tonnes) and intensity. In addition, under KPI B1.6, guidance  to describe the handling methods, reduction initiatives and the results achieved by undertaking the recycling process.

hkex_logo for ESG

Summary (….Rule amendments and the upgrade of the General Disclosures in the Guide from recommended to “comply or explain”, as well as the revised recommended disclosures, will be effective for issuers’ financial years commencing on or after 1 January 2016…)

HKEx News Release Updated: 21/12/2015

Exchange to Strengthen ESG Guide in its Listing Rules

The Stock Exchange of Hong Kong Limited (the Exchange), a wholly-owned subsidiary of Hong Kong Exchanges and Clearing Limited (HKEx), has decided to strengthen the Environmental, Social and Governance Reporting Guide (the ESG Guide or Guide)1 in its Listing Rules (Rules) after its consultation on proposed changes to upgrade the disclosure obligation of the ESG Guide met with strong support from a broad range of respondents.

“We are encouraged by the overwhelming support for our proposals to strengthen issuers’ environmental, social and governance disclosure obligations,” said David Graham, HKEx’s Chief Regulatory Officer and Head of Listing. “Issuers starting to report on their ESG performance may reap the benefits of better risk management, improved access to capital, greater capacity to meet supply chain demands and lower operational costs, to name but a few of the advantages that ESG reporting could bring to issuers’ businesses.”

In summary, the main changes to the Guide and related Rules include:

  • amending the Rules to require issuers to state in their annual reports or ESG reports whether they have complied with the “comply or explain” provisions set out in the ESG Guide for the relevant financial year; and if they have not, to give considered reasons in their ESG reports;
  • revising the introductory section of the Guide to provide more guidance on reporting and to bring it more in line with international standards;
  • re-arranging the Guide into two Subject Areas: A. Environmental and B. Social;
  • upgrading the General Disclosures under each Aspect of the Guide to “comply or explain”;
  • revising the wording of the General Disclosures (where relevant) to be consistent with the directors’ report requirements under the Companies Ordinance (Cap. 622 of the Laws of Hong Kong)2;
  • upgrading the Key Performance Indicators, or KPIs, in the “Environmental” Subject Area to “comply or explain”; and
  • revising the wording of the voluntary provisions of the Guide (ie, the recommended disclosures) to bring it more in line with international standards of ESG reporting by incorporating disclosure of gender diversity.

The amendments to the Guide and related Rules will come into effect in two phases:

  1. the Rule amendments and the upgrade of the General Disclosures in the Guide from recommended to “comply or explain”, as well as the revised recommended disclosures, will be effective for issuers’ financial years commencing on or after 1 January 2016. So, for issuers with a financial year commencing 1 January, these amendments will first affect their financial year ending on 31 December 2016;
  2. and the upgrade of the KPIs in the “Environmental” Subject Area of the Guide from recommended to “comply or explain” will be effective for issuers’ financial years commencing on or after 1 January 2017. So, for issuers with a financial year commencing 1 January, this amendment will first affect their financial year ending on 31 December 2017.