What is the best process of ESG sustainability reporting for a company listed at HKEX?
Recently, Hong Kong Stock Exchange (HKEX) released the new guidelines for environmental, social, and governance (ESG) reporting. The aim of the guidelines is to ensure that Hong Kong remains the top investment destination for investors not just in Asia-Pacific but also the entire globe. The guidelines for ESG reporting are comprehensive and mandatory for all listed companies. So, if you already have your company listed in the exchange or planning to list, here is the process to follow:
A brief look at HKEX ESG requirements
Although the recently published guidelines for ESG reporting have caught the eyes of most investors and managers, HKEX focus on sustainability started way earlier. The guidelines were first introduced in 2012 and then revised in 2016 and 2019 before the latest rules that took effect in July 2020.
According to the ESG sustainability reporting guidelines, the major role is put on the board of management for companies. This implies that the actions that will stream down to different departments will have full authority of the company leadership. Therefore, it becomes an agenda for the top management so that ample resources are allocated for it. Other important considerations include:
- The focus of the report must be aligned to core principles, especially materiality, consistency, and quantitative.
- You have to explain the reporting boundaries for all the ESG reports.
- Every listed company must report on climate-related issues that impact its operations.
- While the ESG report targets the stakeholders, your company’s efforts should be focused on changing the structures to adopt the best practices and responsible operations.
The process of ESG sustainability reporting
When crafting a strategy for ESG sustainability reporting under the HKEX guidelines, make sure to focus on the long term. Here are some of the main steps to follow:
- Start with a comprehensive review of the company’s risks and opportunities: This is your moment to take a deeper look at the company’s operations. So, review the production, human resources, finance, and interaction with communities.
- Engage stakeholders to understand what they want: When targeting listings in stock markets, the focus is winning investors and convincing them to inject more capital. So, reach out to them to see what they want the company to do.
- Do a materiality assessment: This is a deeper review of the targeted areas of interest to identify the most important reporting topics. Some of the most important areas of interest are cutting down emissions, reducing pollution, and supporting labor regulations.
- Develop your ESG strategy: This is perhaps the most important part because it defines the stage for the report that you will finally create. Make sure to break down the process to include both short-term and long-term key performance indicators (KPI). Remember that the strategy should provide for the need for adjustments in line with possible policy changes, desire to deliver improved results, or call for better performance by stakeholders.
- Publish the report for stakeholders: Like other ESG sustainability reports, it is prudent to ensure the report is published in a way that makes it easy to read and verify the data. Also, the report you generate should provide for continuity so that every new achievement builds on what was achieved in the previous year.
In this post, we have demonstrated that HKEX is not just showing the way but carefully helping the globe to win over the war against global warming and other ills. This is commendable, and your company should be careful to ensure that all the requirements are adhered to. One way of getting it right is ensuring you have the best ESG sustainability reporting software. The app not only helps you to understand ESG reporting, but also in automating data gathering, analysis, and report generation. Visit Diginex.com to learn more about their high-rated applications and work with their experts for further assistance.