26 November 2021
On 5 November 2021, the Stock Exchange of Hong Kong Limited (the “Exchange”) published guidance to listed issuers on climate disclosures, as well as an analysis of IPO applicants’ corporate governance and environmental, social and governance (ESG) practice disclosure in 2020/2021.
Guidance on Climate Disclosures (“Guide”)
The Guide helps companies assess their response to risks arising from climate change. It provides practical tips and step-by-step guidance to assist issuers in preparing Climate-Related Financial Disclosures (TCFD)-aligned climate change reporting.
The Guidance on Climate Disclosures is available on the HKEX website.
Analysis of IPO applicants’ corporate governance and ESG practice disclosure in 2020/2021 (Review)
The Review focuses on IPO applicants’ practices on corporate governance, diversity and ESG. The Exchange evaluated the prospectuses of new applicants seeking a primary listing on the Exchange between July 2020 and June 2021, and further tracked the diversity progress of newly-listed issuers by reviewing their corporate governance reports.
Key findings and recommendations of the Review include:
Compliance culture – IPO applicants should instil a strong corporate culture that fully adopts and prioritises compliance and governance measures of integrity, and embed the compliance culture into their everyday workflows.
Board diversity – Board gender diversity of new applicants has improved significantly, with the percentage of single gender board applicants dropping from 30% in 2019 to 21% in 2020, and down further to 12% in the first half of 2021. IPO applicants are expected to not have single gender boards and should prioritise on achieving board gender diversity.
ESG matters – Most applicants made disclosures on environmental and social issues at IPO. Nonetheless, IPO applicants should conduct a thorough analysis and assessment to identify material ESG risks, and consider making appropriate disclosure on climate-related issues and initiatives to reduce carbon emissions, to facilitate the transition to a low-carbon economy. ESG risk management starts before listing, and it is important for IPO applicants to plan ahead to implement the necessary measures to ensure future compliance.
