Improving ESG disclosure by Hong Kong listed companies is helping address climate change and achieve sustainable development value

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Hong Kong, 12 October 2023 – PwC today launched the 2023 ESG Reporting Study for Hong Kong Listed Companies. The survey results show that regarding the degree of disclosure, the disclosure of all ESG Reporting Guide issues in ESG reports of sampled companies tends to be mature, and the level of disclosure completeness in listed companies' ESG reports has been increasing. The maturity of social issues disclosure has the highest proportion, reaching 90%.

Since the launch of the Environmental, Social and Governance Reporting Guide (the ESG Reporting Guide) in 2013, Hong Kong Exchanges and Clearing Limited (HKEX) has continuously reviewed its ESG reporting framework and rules, which facilitate high-quality ESG disclosure by issuers and promote ESG and sustainability commitments of listed companies. Entering the 10th year of the implementation of the ESG Reporting Guide, the ESG information disclosure of Hong Kong listed companies has entered a new phase, becoming more comprehensive and mature. The HKEX ESG rules and guidelines have also evolved to become increasingly stringent and robust.

Kanus Yue, PwC China Sustainability Disclosure and Consulting Lead Partner said, “Our study found that Hong Kong-listed companies are paying more attention to ESG management and disclosure. Notably, the structure and content of most ESG reports have improved under the current disclosure requirements of HKEX. The improvement of the quality of issue disclosure indicates that ESG disclosure by listed companies exceeded the basic requirements of compliance, moving towards higher-dimensional ESG management goals, more systematic ESG governance, more in-depth ESG management and better ESG performance. Following significantly upgraded regulatory requirements, Hong Kong listed companies can consider providing even more ESG information to investors and stakeholders, further enabling ESG reporting to help Hong Kong listed companies integrate ESG issues into their overall corporate goals and strategies to underpin corporate sustainability value.”

On 14 April 2023, HKEX published a consultation paper seeking feedback from the market. It proposed to mandate all listed issuers to include climate-related disclosures in their ESG reports and introduce new climate-related disclosure requirements aligned with the International Sustainability Standards Board (ISSB) Climate Standard in the new Part D of Appendix 27 to the Listing Rules. The climate-related disclosure requirements proposed by HKEX cover the four core pillars of governance, strategy, risk management as well as metrics and targets. They also provide a detailed list of climate-related disclosure requirements.

The study shows that most of the sample companies have already disclosed in their reports the climate-related metrics such as Scope 1 and Scope 2 greenhouse gas emissions documented in HKEX's current ESG reporting guide. For proposed new metrics such as Scope 3 emissions data and transition plans towards a low-carbon economy, the degree of disclosure by sample companies can be further optimised. Given the relatively large accounting work for the Scope 3 emissions and the relatively weak accounting foundation, as well as challenges in the integrity and quality of the data collected, listed companies are advised to start the preparation for disclosure as soon as possible. As ESG risks in the supply chain emerge, supply chain sustainability has been placed in the spotlight. HKEX’s ESG reporting guide requires listed companies to disclose their practices related to supply chain management, with emphasis placed on green procurement and identification of ESG risks impacting supply chains, to guide listed companies' supply chain ESG management practices. According to the study, more than 92% of sample companies have disclosed ESG management of their supply chains. Altogether, 79% of the sample companies have disclosed their general implementation and inspection practices, and 76% have disclosed considerations in the procurement process.

Cyrus Cheung, PwC Hong Kong Sustainability Disclosure and Consulting Partner, said that: “According to PwC’s 26th Annual Global CEO Survey China Report, 52% of CEOs from the Chinese Mainland and Hong Kong anticipate a significant impact on their supply chain due to climate risk in the next 12 months. As ESG risks in the supply chain begin to surge, enhancement of supply chain ESG risk identification mechanisms and management of ESG impacts on supply chains will contribute to listed companies' ESG compliance, while adding to their long-term sustainability and organisational resilience.”

The study also provides comprehensive recommendations for ESG management by Hong Kong listed companies, including deepening ESG management on core issues; taking prompt action in climate-related disclosures; building a more resilient and sustainable supply chain, and embracing ESG digital transformation.

Notes to editors:

PwC ESG Reporting Study for Hong Kong Listed Companies 2023

The study used data from the 2021 Environmental, Social and Governance Reporting Guide (the ESG Reporting Guide), the Guidance on Climate Disclosures, the latest consultation paper on climate disclosures and other ESG-related papers from Hong Kong Exchanges and Clearing Limited (HKEX). Based on these sources, PwC conducted a study on ESG reports published by Hong Kong listed companies in 2022 and selected a total of 300 Hong Kong listed companies from various industries according to the 12 industries of the Hang Seng Industry Classification System for this in-depth study. The study considered the dimensions of overall disclosure of ESG reporting, mandatory disclosure requirements, management and disclosure of environmental information, management and disclosure of social information, as well as disclosure maturity of each ESG issue. All with a view to providing references for ESG practices, management and disclosure of companies listed in Hong Kong or planning to list in Hong Kong.

Download PwC’s ESG Reporting Study for Hong Kong Listed Companies 2023 (English): https://www.pwccn.com/en/services/issues-based/esg/esg-report-2023.html