The Stock Exchange of Hong Kong Limited (the “Exchange”) in July 2015 released a consultation paper to seek views on proposed amendments to its Environmental, Social and Governance (“ESG”) Reporting Guide (the “ESG Guide”).
The above proposals aim to strengthen ESG disclosure requirements, encourage more widespread and standardised ESG reporting amongst issuers, and help issuers meet greater demand and expectations for non-financial information from investors and other stakeholders.
The proposed amendments aim to upgrade the current ESG Guide in the light of the requirements of the new Companies Ordinance. Under the new Companies Ordinance, all Hong Kong incorporated companies (unless exempted) are required to include in the “business review” section of their annual directors’ reports a discussion of their ESG policies and performance, and their compliance with relevant laws and regulations that have a significant impact on them.
The above consultation was reviewed by the Council with the assistance of the Company Law Committee and the Investment Products and Financial Services Committee of The Law Society.
Among other things, the committees commented upon the proposal for the board to be held responsible for ensuring that appropriate and effective ESG risk management and internal control systems are in place, and also the suggestion that management should provide confirmation to the board on the effectiveness of those systems. Considering that the above proposals pose additional requirements, the committees suggested alternative drafting to the relevant paragraphs.
Comments on other aspects of the proposals were canvassed and have been put down in a submission which was sent to the Exchange. The submission of the Law Society can be viewed at http://www.hklawsoc.org.hk/pub_e/news/submissions/20150916.pdf.