2022 Analysis of ESG Practice Disclosure
November 2022

CONTENTS 
 
EXECUTIVE SUMMARY ................................................................................................ 1 
CHAPTER 1: BOARD GOVERNANCE OF ESG ISSUES ............................................. 5 
CHAPTER 2: CLIMATE CHANGE ................................................................................. 8 
CHAPTER 3: SOCIAL ISSUES .................................................................................... 14 
CHAPTER 4: REPORTING PRACTICES ..................................................................... 17 
APPENDIX: METHODOLOGY AND OVERALL STATISTICS ..................................... 21

1 
 
EXECUTIVE SUMMARY 
1. The Stock Exchange of Hong Kong Limited (“Exchange”) is committed to creating a 
sustainable regulatory framework by advocating for and introducing robust ESG standards 
and regulations. Since the introduction of the ESG Reporting Guide (“ESG Rules”)1 in 2013, 
enhancements have been made to our ESG Rules over the years to ensure our requirements 
remain fit for purpose and reflect stakeholders’ expectation.  
2. In July 2020, we introduced new requirements to our ESG Rules2 with a focus on board 
governance and oversight of ESG issues, as well as consideration and mitigation of significant 
climate change risks (“2020 Enhancements”). The 2020 Enhancements incorporated certain 
key recommendations of the Taskforce on Climate-related Financial Disclosures (“TCFD”)3.  
3. This report sets out the findings of our review of issuers’ compliance with our ESG Rules 
(“Review”)4. As part of our continuing effort to maintain high ESG standards amongst our 
issuers, we hope that our recommendations, through identifying improvement areas and 
providing guidance, will assist and lead to enhancements in issuers’ ESG reporting practices.  
Scope of Review  
4. The Review focuses on the following areas of issuers’ ESG practices under the 2020 
Enhancements:  
(i) 
board governance of ESG issues; 
(ii) 
climate change;  
(iii) 
social issues; and  
(iv) 
reporting practices. 
5. We analysed ESG reports for the financial year ended 30 June 2021, 31 December 2021 and 
31 March 2022 published by a sample of 400 issuers (“Sample Issuers”)5.  
                                                           
1 Appendix 27 of Main Board Listing Rules / Appendix 20 of GEM Listing Rules.  
2 HKEX news release dated 18 December 2019.  
3 In June 2017, the TCFD developed a framework to help companies consistently measure and communicate their 
climate-related exposures, which was widely adopted by investors and governments globally. For details, please refer 
to: https://www.fsb-tcfd.org.  
4 From 2016, all issuers are required to produce an ESG report annually under the Listing Rules. Since then, the 
Exchange conducts periodic review of issuers’ ESG practice disclosures. This is the Exchange’s third ESG practices 
review, and past reports are available here.  
5 See the Appendix for the distribution of Sample Issuers.

2 
 
Our observations and recommendations  
Board governance of ESG issues (see Chapter 1)  
6. The emphasis of the 2020 Enhancements is elevating ESG issues to the boardroom. We are 
delighted to see that our mandatory Rules have driven behavioral changes amongst our 
issuers, where a vast majority of Sample Issuers disclosed their boards’ oversight and 
management approach on ESG issues. Monitoring the progress against ESG goals and 
targets is key to the board’s evaluation of the effectiveness and efficiency of the measures 
taken against particular ESG risks. Issuers are reminded that disclosure of the process or 
approach adopted for the board’s progress review, and the results of the review, is mandatory 
under the ESG Rules. 
Climate change (see Chapter 2) 
7. Sample Issuers generally acknowledged the importance of climate-related risks, with over 85% 
of Sample Issuers chose to make disclosures of all new climate-related requirements6. This 
reflected issuers’ commitment and effort in managing climate risks. The Exchange supports 
the establishment of the International Sustainability Standards Board (“ISSB”) for developing 
globally accepted sustainability reporting standards that build on the TCFD framework. Our 
findings reinforce the direction towards further enhancing climate-related disclosures in line 
with the TCFD framework and the new ISSB climate standards. 
8. Around a third of Sample Issuers have gone further to start reporting on scope 3 GHG 
emissions, and around 5% of Sample Issuers adopted climate-related scenario analysis for 
climate resilience assessment. Recognising the challenges faced by issuers around data 
collection and availability of technical knowledge or expertise for reporting certain items7, we 
will take these into account when formulating our climate disclosure enhancement proposals. 
Issuers are strongly encouraged to get familiar with the new ISSB climate standards for 
planning and building the necessary infrastructure and system in preparation of the enhanced 
climate reporting requirements.  
Social issues (see Chapter 3)  
9. The Hong Kong Government has announced the carbon neutrality target by 2050 and Hong 
Kong’s Climate Action Plan 2050 8. Supply chain plays an important role to operating a 
                                                           
6  These include consideration of significant climate-related risks and mitigation measures; setting of certain 
environmental targets; and reporting on scope 1 and scope 2 GHG emissions.   
7  For example, scope 3 GHG emissions, climate-related scenario analysis and transition plan to low carbon economy.  
8 https://www.climateready.gov.hk/.

3 
 
“sustainable business” and ensuring a smooth transition to low carbon economy. Issuers 
should include in their ESG reports information on practices to identify environmental and 
social risks along the supply chain, and practices to promote green procurement.   
Reporting practices (see Chapter 4)  
10. Issuers should apply the Reporting Principles9 when preparing their ESG reports for delivery 
of meaningful and decision-useful ESG information. Where quantitative disclosures are made, 
issuers should also include information on the methodologies, standards and assumptions 
adopted in arriving at the figures.  
11. Issuers are reminded that effective from the financial year commencing on or after 1 January 
2022, ESG reports should be published at the same time as the annual reports (“New 
Publication Requirement”) 10. Issuers who are yet to align the publication of the ESG reports 
with the annual reports should pay particular attention to their new deadlines.   
Way forward  
12. We are committed to promoting high standards of responsible corporate governance and ESG 
practices by advocating for and introducing robust standards and regulations. We are 
currently reviewing our ESG framework with a focus to enhance climate disclosures amongst 
our issuers, taking into account the market readiness and the challenges issuers face.  
13. Recognizing that issuers are at different stages on their sustainability journey, we have 
published a wide range of guidance and training materials covering different topics to guide 
issuers through their journey.  Our “Guidance on Climate Disclosures” provides practical tips 
to assist issuers in preparing TCFD-aligned climate change reporting. We have also organised 
climate disclosures training sessions to help issuers better understand how they can 
incorporate TCFD recommendations into their business strategy and disclosures11.  
14. To facilitate issuers and stakeholders’ understanding on the evolving ESG requirements and 
improve accessibility to our guidance materials, we have launched a centralized ESG 
resources platform “ESG Academy”. The Exchange will continue to provide guidance and 
                                                           
9 They are (i) Materiality; (ii) Quantitative; (iii) Balance; and (iv) Consistency. 
10 In December 2021, the Exchange published Conclusions on Review of the Corporate Governance Code to require 
issuers to, among other things, publish ESG reports at the same time as publication of annual reports. 
11 Organised in collaboration with the United Nations Sustainable Stock Exchanges Initiative, International Finance 
Corporation, 
CDP 
and 
SynTao 
Green 
Finance: 
https://www.hkex.com.hk/Listing/Sustainability/ESG-
Academy/Publications-and-Training/Webinar-Series/Climate-Disclosures-Training?sc_lang=en.

4 
 
training and enrich our platform to help our issuers building a more sustainable business and 
put their ESG principles into practice.

5 
 
CHAPTER 1: BOARD GOVERNANCE OF ESG ISSUES 
15. The board has a collective responsibility to oversee the company’s ESG strategy and reporting. 
A culture from the top-down can ensure ESG considerations being embedded in the business 
decision-making process.  
16. The 2020 Enhancements require all issuers to disclose a board statement12 covering: 
(i) 
the board’s oversight of ESG issues; 
(ii) 
the board’s ESG management approach and strategy, including the process used to 
evaluate, prioritise and manage material ESG-related issues (including risks to the 
issuer’s businesses); and 
(iii) 
how the board reviews progress made against ESG-related goals and targets with an 
explanation of how they relate to the issuer’s businesses. 
17. The aim of introducing this mandatory disclosure requirement (“MDR”) is to urge the board to 
take a leadership role in overseeing ESG issues. This facilitates the board’s understanding 
and management of ESG risks and promotes accountability in this area. Governance is also 
one of the four core pillars of the TCFD recommendations.  
Observation 
18. Following the introduction of mandatory ESG governance disclosures, we are delighted to 
note a significant improvement in board’s governance over ESG matters as compared to our 
last review13:   
                                                           
12 Paragraph 13 of the ESG Rules (MDR). 
13 In December 2019, the Exchange published findings of the review of listed issuers’ ESG disclosure in Analysis of 
Environmental, Social and Governance Practice Disclosure in 2018 (“2018 Review”). Disclosure of board governance 
and management approach over ESG matters was not mandatory under the then prevailing ESG Rules.

6 
 
 
19. A vast majority of Sample Issuers disclosed how the board oversees and manages ESG 
issues. Sample Issuers provided information on (i) the ESG governance structure; and (ii) 
where there is a designated working group or committee for ESG matters, the roles and duties 
of such working group or committee. Some Sample Issuers made use of flowcharts or 
diagrams to illustrate the governance structure (including the different reporting line(s) and 
division of responsibilities).  
20. While a majority of Sample Issuers had disclosed ESG-related goals and targets (including 
specific targets under certain environmental KPIs14), only around 40% of them disclosed the 
process and results of the progress review.  
Recommendations  
21. Shareholders, investors and other stakeholders have increasingly demanded for information 
on the board’s role in overseeing ESG risks and opportunities. Such information can support 
evaluations of whether significant ESG risks and opportunities receive appropriate attention 
from the board and the management.  
                                                           
14 KPIs A1.5 (emission target), A1.6 (waste reduction target), A2.3 (energy use efficiency) and A2.4 (water efficiency) 
of the ESG Rules. 
95.50%
97.50%
14%
31%
0%
20%
40%
60%
80%
100%
Board's ESG
management
approach and
strategy
Board's
oversight of ESG
issues
Chart 1: Disclosure on board's governance over ESG matters
2018 Review
2022 Review

7 
 
22. Apart from stating the board’s responsibility on governance of ESG matters, issuers should 
also disclose information that enables readers to understand the relevant processes, controls 
and procedures used to monitor and manage ESG matters. This may involve elaboration on:  
(i) 
relevant expertise or skills of the board, or the designated committee or management-
level positions, for effective oversight on ESG matters;  
(ii) 
interaction between the board and the designated committee or the management-level 
positions, including the frequency and form of reporting to the board;  
(iii) 
frequency of the board’s discussion on ESG issues; 
(iv) 
internal and external resources and expertise available for the ESG management 
process; and  
(v) 
alignment of ESG governance with an issuer’s business strategy. 
23. Monitoring the progress against ESG-related goals and targets facilitates the board’s 
evaluation of the effectiveness and efficiency of the relevant adaption or mitigation measures 
taken against particular ESG risks. Information on the process or approach adopted for the 
review is key to readers’ understanding and appraisal of the company’s ESG commitment. 
The discussion may include:  
(i) 
measurement system or industry benchmark adopted for progress assessment;  
(ii) 
process for data collection and verification; and  
(iii) 
comparison with the historical data and how the baseline is selected. 
Issuers are required to disclose how the board monitors the progress of ESG-related goals 
and targets set. Issuers are reminded that failure to comply with this requirement would 
constitute a breach of the Listing Rules. 
24. Issuers should also provide information on the results of the review, especially for targets or 
goals set for different timeframes. Where targets are not achieved, issuers should disclose 
the reasons, and the board’s discussion or assessment on what can be done to achieve the 
targets or whether any adjustments should be made to the targets. Where the progress is 
satisfactory, issuers may include further information on whether the trend can be maintained 
or will be affected in the future (if so, why and what can be done).

8 
 
CHAPTER 2: CLIMATE CHANGE 
25. Climate change poses substantial transition risks and physical risks on issuers across many, 
if not all sectors.  Not only would climate-related risks affect issuers’ long term sustainability 
and profit, how such risks are managed would also affect investors’ perception and evaluation 
of the issuers. 
26. In December 2020, the Hong Kong Green and Sustainable Finance Cross Agency-Steering 
Group15 (“Steering Group”) announced its intention to make TCFD-aligned climate-related 
disclosures mandatory across relevant sectors no later than 202516.  
27. In November 2021, the International Financial Reporting Standards (“IFRS”) Foundation 
announced the formation of the new ISSB for the development of global sustainability 
reporting standards, adopting the “climate-first” approach17. Building on the TCFD framework, 
the IFRS Foundation in March 2022 published the climate disclosure standard exposure draft 
and general sustainability disclosure requirements exposure draft, which form the basis for 
the ISSB standards18.  
28. The ISSB standards are expected to be finalised as early as possible in 202319, and the 
International Organization of Securities Commissions has indicated its intention to endorse 
the new ISSB standards. The Steering Group has also expressed its support towards adopting 
the ISSB standards. 
29. The Exchange has been promoting transparent and reliable climate disclosures in recent 
years. The 2020 Enhancements align with the TCFD recommendations by requiring issuers 
to: 
                                                           
15 Established in May 2020, the Steering Group is co-chaired by the Hong Kong Monetary Authority and the Securities 
and Futures Commission. Members include the Environment Bureau, Financial Services and the Treasury Bureau, 
HKEX, Insurance Authority and the Mandatory Provident Fund Schemes Authority. The Steering Group aims to 
coordinate the management of climate and environmental risks to the financial sector, accelerate the growth of green 
and sustainable finance in Hong Kong and support the Government’s climate strategies. 
16 https://www.hkma.gov.hk/eng/news-and-media/press-releases/2020/12/20201217-4/.  
17 https://www.ifrs.org/news-and-events/news/2021/11/ifrs-foundation-announces-issb-consolidation-with-cdsb-vrf-
publication-of-prototypes/.  
18 https://www.ifrs.org/news-and-events/news/2022/03/issb-delivers-proposals-that-create-comprehensive-global-
baseline-of-sustainability-disclosures/. 
19 https://www.ifrs.org/news-and-events/news/2022/10/issb-unanimously-confirms-scope-3-ghg-emissions-disclosure-
requirements-with-strong-application-support-among-key-decisions/.

9 
 
(i) 
consider significant climate-related issues which have impacted, or may impact, the 
issuers and how issuers mitigate such issues20; 
(ii) 
develop targets and plans in respect of reduction of emission and waste, and 
improving efficiency in energy and water use21; and 
(iii) 
disclose scope 1 and scope 2 greenhouse gas (“GHG”) emissions22. 
30. In November 2021, we further published a “Guidance on Climate Disclosures” to provide 
practical tips to assist issuers in preparing TCFD-aligned climate change reporting. We have 
also organised climate disclosures training sessions to help issuers better understand how 
they can incorporate TCFD recommendations into their business strategy and disclosures23.  
31. The Exchange, as a member of the Steering Group, supports the establishment of ISSB for 
developing globally accepted sustainability reporting standards that build on the TCFD 
framework. We will collaborate with other regulators in Hong Kong to work on a roadmap to 
evaluate and potentially adopt the new ISSB standards. 
Observation 
32. We are delighted to see that a vast majority of Sample Issuers acknowledged the importance 
of climate-related risks, and chose to make disclosures of all new climate-related 
requirements24. This reflected issuers’ commitment and effort in managing climate-related 
risks, and reinforced our direction towards further enhancing climate-related disclosures in 
line with the TCFD framework and the new ISSB climate standards. 
33. Chart 2 summarises the findings on climate-related disclosures:   
                                                           
20 Aspect A4 of the ESG Rules. 
21 See footnote 14. 
22 KPI A1.2 of the ESG Rules. 
23 Organised in collaboration with the United Nations Sustainable Stock Exchanges Initiative, International Finance 
Corporation, 
CDP 
and 
SynTao 
Green 
Finance: 
https://www.hkex.com.hk/Listing/Sustainability/ESG-
Academy/Publications-and-Training/Webinar-Series/Climate-Disclosures-Training?sc_lang=en.   
24 Over 85% of Sample Issuers made disclosures under the new climate requirements.

10 
 
 
 
34. Among those Sample Issuers who reported on targets pursuant to the relevant environment 
key performance indicators (“KPIs”) 25, more than two-thirds gave qualitative targets (i.e. 
directional, forward-looking statements). Some of them merely stated generic measures for 
achieving such targets, without discussing the impact of the relevant risks on the business or 
operations. A few Sample Issuers provided generic explanations where the targets were 
deemed irrelevant or immaterial to their business. 
35. Over one-fifth of Sample Issuers considered or referred to the TCFD recommendations when 
making climate disclosures. Most of them structured the disclosures under the four pillars of 
the TCFD recommendations26, but only a few of them reported on every single line item listed 
in the TCFD recommendations.  
36. Premised on the TCFD recommendations, the ISSB climate standards contemplate 
disclosures on scope 3 GHG emissions and climate-related scenario analysis, which are 
currently not required under our ESG Rules. In the Review, we also looked into issuers’ 
readiness for reporting on these matters: 
                                                           
25 See footnote 14. 
26 Namely, governance, strategy, risk management, and metrics and targets.  
93.40%
93%
93.80%
Chart 2: Reporting rate of climate-related matters
Climate change (average) 
Scope 1 and scope 2 emissions 
Environmental targets (average)

11 
 
(i) 
Scope 3 GHG emissions: over a third of Sample Issuers have gone further to start 
considering scope 3 emissions, and made voluntary disclosures on limited type(s) of 
activities along the value chain27.  
(ii) 
Climate-related scenario analysis: less than 5% of Sample Issuers adopted climate-
related scenario analysis, who are usually in a highly regulated business (e.g. utilities; 
banks) and have demonstrated a greater awareness of climate risks. They are 
generally at a more advanced stage in terms of the climate reporting journey than the 
average Sample Issuers. 
Recommendations 
Environmental targets  
37. While targets can be numerical figures or directional, forward looking statements, we 
encourage issuers to start setting quantitative targets where feasible. Quantitative targets are 
widely requested by climate reporting frameworks, financiers and investors for evaluating the 
company’s management of climate risks and estimating the financial effects of climate risks 
on the company.  
38. Directional statements may be relevant when new climate-related initiatives are being 
launched, or in the absence of a baseline from past performance. Issuers should however 
start collecting and disclosing numerical data as soon as possible. 
39. Where some metrics are considered irrelevant or immaterial, issuers should provide a detailed 
explanation on the analysis and make reference to the materiality assessment where relevant.  
GHG emissions  
40. Some issuers disclosed a total figure for both scope 1 and scope 2 GHG emissions. The ESG 
Rules envisage issuers to separately disclose scope 1 and scope 2 GHG emissions so that 
readers can have an appreciation of the issuers’ different categories of GHG emissions. This 
is also in line with the TCFD recommendations.  
41. Scope 3 GHG emissions are the indirect emissions outside of scope 2 emissions that occur 
in the value chain of the company. Its coverage includes emissions from upstream activities 
                                                           
27 As scope 3 emissions concern all the indirect emissions that occur in the company’s value chain, the GHG Protocol 
categorizes such activities into 15 reporting categories to facilitate measuring and managing such emissions. The most 
common category being reported on is “Business Travel”, which is relatively easier as the data may be available 
internally.

12 
 
such as capital goods and transportation and downstream activities such as end-of-life 
treatment and investment. 
42. Information on scope 3 GHG emissions can provide investors and stakeholders with a more 
comprehensive picture of issuers’ carbon footprint, especially for issuers with carbon 
emissions induced along their value chain.  
43. Reporting on scope 3 GHG emission is contemplated under the new ISSB climate standards, 
and issuers should start considering reporting as soon as practicable. Given that the 
computation of scope 3 GHG emission is more complex than that of scope 1 and scope 2 
GHG emissions, we suggest issuers develop a systematic approach to calculate and report 
their data by: 
(i) 
identifying the scope and types of emissions in, and the categories of significant 
upstream or downstream activities along, the value chain to be included in the 
reporting based on a materiality assessment; 
(ii) 
determining a feasible and effective method to collect and verify emission data; 
(iii) 
applying appropriate calculation methodologies to quantify emissions from different 
activities; and  
(iv) 
consistently disclosing emission figures with reference to reporting frameworks.  
44. The Greenhouse Gas Protocol published a “Technical Guidance” to facilitate measuring and 
managing scope 3 GHG emissions, which classified scope 3 GHG emissions into 15 
categories, each with suggested calculation methodologies 28. The Exchange also issued 
guidance to provide practical tips to assist issuers in reporting scope 3 GHG emissions29. 
Climate-related scenario analysis 
45. The likelihood, magnitude and timing of climate risks affecting a company are complex and 
uncertain. Factoring in such uncertainties is important in understanding the resilience of a 
company’s strategy (including its business operations) to climate change.  
                                                           
28 The Greenhouse Gas Protocol, Technical Guidance for Calculating Scope 3 Emissions, 2013.  
29 The Exchange, Guidance on Climate Disclosures, November 2021; and The Exchange, How to Prepare an ESG 
Report - Appendix 2: Reporting guidance on Environmental KPIs, last updated in March 2022.

13 
 
46. A company’s analysis of the resilience of its strategy to climate change can be conducted 
using different methods, and climate-related scenario analysis is one of the established tool 
that is recommended by climate reporting frameworks.    
47. Issuers need to set the scope and boundaries to confirm the scenarios, which are hypothetical 
pathways, to be adopted. It is crucial that the scope and boundaries represent issuers’ 
material business operations.  
48. Issuers may refer to publicly available scenarios30 and make the necessary adaptions to 
reflect their own circumstances. To facilitate discussions and analyses on the potential 
impacts of climate-related issues under different conditions, issuers are recommended to 
develop at least two scenarios for comparison.  
49. Issuers should then identify physical and transition risks parameters that are material to their 
operations, and collect relevant data to evaluate their impacts under different scenarios.  
50. The Exchange’s Guidance on Climate Disclosures contains practical tips on how to perform 
a climate-related scenario analysis, and can be used as a reference.  
Climate disclosure enhancements   
51. To further align our regulatory requirements with the TCFD recommendations and reflect the 
development of the ISSB standards, the Exchange is reviewing our ESG Rules with a focus 
on enhancing climate disclosures. When formulating our proposals, we will take into account 
our findings in this Review, in particular, the challenges faced by issuers around data 
collection and availability of technical knowledge or expertise for reporting certain items.  
52. Issuers should get familiar with the climate disclosure requirements under the ISSB climate 
standards and identify gaps in internal policies and practices. This will help planning upgrades 
or enhancements to existing infrastructures or systems in preparation of reporting under the 
new requirements.  
                                                           
30 International Panel on Climate Change, International Energy Agency, and Network for Greening the Financial System 
are common sources of publicly available scenarios.

14 
 
CHAPTER 3: SOCIAL ISSUES 
53. The impact resulting from social issues is of no less importance than environmental risks, and 
should be carefully considered as part of an effective governance structure. This is 
emphasized in the 2020 Enhancements by:  
(i) 
upgrading the disclosure obligation of all Social KPIs from voluntary to “comply or 
explain”; 
(ii) 
introducing new KPIs31 in respect of supply chain management (practices to identify 
environmental and social risks along the supply chain, and practices to promote 
environmentally preferable products and services when selecting suppliers); and  
(iii) 
introducing a new KPI32 regarding anti-corruption training provided to directors and 
staff (together with (ii), “New Social KPIs”). 
Observation  
54. The reporting level of the New Social KPIs is lower than the average of other Social KPIs, 
most likely because the individual Sample Issuers overlooked these newly introduced KPIs.  
                                                           
31 KPI B5.3 and KPI B5.4.  
32 KPI B7.3.

15 
 
 
55. Some Sample Issuers disclosed generic practices to identify environmental and social risks 
along the supply chain that are not specific to their businesses. Regarding practices to 
promote green procurement, while some Sample Issuers discussed the factors considered in 
the process, some merely stated the support for green procurement without providing further 
details.  
56. While a majority of Sample Issuers provided anti-corruption training to directors and staff, the 
disclosures generally lacked details about the training activities.   
Recommendations 
57. Supply chain plays an important role to operating a “sustainable business”. To facilitate 
stakeholders’ understanding of the company’s supply chain risk management and green 
procurement practices, issuers may consider including the following in the ESG reports:  
(i) 
personnel or team that are responsible for managing supply chain sustainability and 
their duties; 
(ii) 
process for identifying significant environmental and social risks along the supply chain, 
and how to assess the impact of such risks on the issuer’s business operations; 
84.8%
67.8%
84.5%
91.1%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
B5.3: Practice to
identify environmental
and social risks along
the supply chain
B5.4 Green
procurement
B7.3: Anti-corruption
training
Other Social KPIs
(average)
Chart 3: Reporting rate of social KPIs

16 
 
(iii) 
actions taken or to be taken to mitigate or address the environmental and social risks 
along the supply chain;  
(iv) 
criteria for selection of suppliers, and how such factors promote green procurement; 
and 
(v) 
measures for monitoring supply chain risks and green procurement practices. 
58. Anti-corruption training is crucial to promote high ethical standards and boost investors’ 
confidence33. Issuers should include information on the scope and method of the training, the 
audience as well as the frequency of the training provided.  
 
 
                                                           
33 To enhance the awareness of ethical standards in listed companies of Hong Kong, the Independent Commission 
Against Corruption has developed guides and trainings on anti-corruption practice and disclosures, including Anti-
Corruption Programme - A Guide for Listed Companies and Ethics Promotion Programme for Listed Companies.

17 
 
CHAPTER 4: REPORTING PRACTICES 
59. Our ESG Rules lay out four Reporting Principles34 that underpin the preparation of meaningful 
and decision-useful ESG information. Usefulness is further enhanced if the information is 
relevant, credible and timely.  The 2020 Enhancements reflect our commitment to 
continuously improve the quality of ESG information by: 
(i) 
requiring an explanation on the application of “Materiality”, “Quantitative” and 
“Consistency” Reporting Principles35; 
(ii) 
requiring an explanation of the reporting boundary and identification process for 
including specific entities or operations in ESG reports36; 
(iii) 
shortening the publication timeframe of ESG reports to within five months after the 
financial year end37; and 
(iv) 
encouraging independent assurance, and enhancing disclosures where independent 
assurance of ESG reports is obtained38. 
Observation 
Application of Reporting Principles and reporting boundary 
60. Chart 4 shows the compliance rate regarding the application of Reporting Principles in 
comparison to the findings in the last review39:  
  
                                                           
34 They are (i) Materiality; (ii) Quantitative; (iii) Balance; and (iv) Consistency.  
35 Paragraph 14 of the ESG Rules (MDR). 
36 Paragraph 15 of the ESG Rules (MDR). 
37 See footnote 10. The New Publication Requirement applies to ESG reports covering financial year commencing from 
1 January 2022, and therefore the ESG reports covered in this Review are not subject to the Amendment. 
38 Paragraph 9 of the ESG Rules. 
39 Disclosure of the application of Reporting Principles was not mandatory under the then prevailing ESG Rules.

18 
 
 
61. We are pleased to note a significant improvement in the compliance level as well the quality 
of disclosure for materiality assessment. Diagrams or materiality matrix was commonly 
adopted to illustrate issuers’ materiality assessment.  
62. Regarding the application of “Quantitative” Reporting Principle, where Sample Issuers 
disclosed numerical figures in the ESG reports, some omitted to provide information on the 
standards, calculation methodologies, assumptions or conversion factors used for reporting.  
63. Around 98% of Sample Issuers stated the reporting boundary of their ESG reports. Apart from 
following the scope of the annual report, some Sample Issuers applied a financial threshold 
(e.g. inclusion of subsidiaries contributing to a certain percentage of the group’s revenue) or 
geological location of businesses in determining the scope of their ESG reports.  
Publication timeline of ESG reports 
64. Almost all40 Sample Issuers complied with the requirements to publish ESG reports within five 
months after the financial year end.  
                                                           
40 Two Sample Issuers published their ESG reports after 5 months of the financial year end. 
66.0%
29.8%
26.8%
93.0%
84.3%
95.0%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Materiality
Quantitative
Consistency
Chart 4: Application of Reporting Principles 
2018 Review
2022 Review

19 
 
65. 58%41 of Sample Issuers managed to publish their ESG reports on the same day as their 
annual reports, in advance of the New Publication Requirement becoming effective.  
 
 
 
 
 
 
 
Independent assurance  
66. 6.7% of Sample Issuers obtained independent assurance, with description of the level, scope 
and processes adopted for assurance. A majority of them also attached the assurance reports 
to the ESG reports. 
Recommendations 
Application of Reporting Principles 
67. Issuers should provide details on how they applied the Reporting Principles. Merely re-stating 
the Reporting Principles would not be considered as compliance with the requirement. 
68. Disclosure of numerical figures alone is not sufficient for investors to make an informed 
assessment of the company’s ESG performance. The “Quantitative” Reporting Principle also 
entails information on the methodologies, standards and assumptions adopted in deriving 
quantitative metrics and targets. Issuers may refer to our step-by-step guide for more practical 
tips in this regard42. 
69. Issuers should use consistent methodologies to allow for meaningful comparisons of ESG 
information over time. If there is no change to the methods or KPIs used, issuers should state 
so in the ESG reports for transparency. Issuers should provide details of any changes to the 
methods or KPIs used and the rationale behind, or any other factors which may affect a 
meaningful comparison. 
                                                           
41 6.5% of Sample Issuers published ESG reports before publication of the annual reports. 
42 See “How to Prepare an ESG Report: A Step-by-Step Guide to ESG Reporting”. 
  
 58% already aligned with annual report publication 
Financial 
year end 
4 months (Main Board) / 
3 months (GEM) after 
financial year end 
5 months 
after financial 
year end  
Chart 5: Publication of ESG Reports 
99.5% complied with 2020 Enhancements

20 
 
Explanation of reporting boundary  
70. Depending on their business and circumstances, issuers should have their own criteria for 
determining the coverage of their ESG reports. In addition to stating the coverage of the ESG 
reports, issuers should also describe how they arrive at such determination. Setting an overall 
reporting boundary for the ESG report does not prevent issuers from adopting different 
boundaries for certain Aspects or KPIs, so long as such is clearly stated in the ESG reports.  
71. ESG reporting evolves over time along with issuers’ business and operations. If there are any 
changes in the reporting boundary, such as acquisition or disposal of subsidiaries, issuers 
should specify the changes in the ESG reports.  
Publication timeline of ESG reports 
72. Issuers are reminded that ESG reports for the financial year commencing on or after 1 January 
2022 should be published at the same time as the annual report. Issuers who are yet to align 
the publication of the ESG reports with the annual reports should pay particular attention to 
the new deadlines.   
Independent assurance 
73. Independent assurance helps enhance the credibility of ESG information and the quality of 
ESG reporting, and provide investors with more reliable data for analysis.  
74. We understand that some issuers may be concerned about the cost or compliance burden 
associated with independent assurance. Issuers may choose to obtain assurance for part(s) 
of the ESG reports or for certain data (e.g. GHG emissions), so long as the scope of assurance 
is clearly set out in the ESG reports.  
75. While the development of a set of globally-accepted assurance standards specifically for ESG 
reports is still underway, issuers may refer to ISAE 300043, which is the standard for assurance 
over non-financial information issued by the International Auditing and Assurance Standards 
Board, or guidance issued by the Hong Kong Institute of Certified Public Accountants relating 
to assurance of ESG information44. 
 
                                                           
43 The International Auditing and Assurance Standards Board, International Standard on Assurance Engagements 
3000, December 2013. 
44 For example: AATB 5 – ESG Assurance Reporting; AATB 6 – Non-Authoritative Guidance on Applying HKSAE 3000 
(Revised) to Extended External Reporting Assurance Engagements.

21 
 
APPENDIX: METHODOLOGY AND OVERALL STATISTICS   
Background 
76. The ESG Rules require reporting of certain MDRs, and 12 Aspects under the “Environmental” 
Subject Area and “Social” Subject Area on a “comply or explain” basis. 
77. Each Aspect contains two distinct types of provisions: (a) general disclosures, including an 
issuer’s policies and, in some Aspects, compliance with laws and regulations; and (b) KPIs, 
including targets set and steps taken in certain specific matters. 
78. For a “comply or explain” provision, an issuer should report the requested information, or give 
considered reasons for the non-disclosure. 
Methodology 
79. A sample was selected comprising 400 Sample Issuers45 with financial year-end mainly on 30 
June 2021, 31 December 2021 and 31 March 202246. The selections were a random sample 
for a weighting to achieve an industry distribution reflective of all listed issuers in Hong Kong.  
80. The distribution of the Sample Issuers across different industries is set out in the table below.  
Industry47 
Number of issuers 
% of Sample Issuers 
Conglomerates 
6 
1.50% 
Consumer Discretionary 
106 
26.50% 
Consumer Staples 
21 
5.25% 
Energy 
11 
2.75% 
Financials 
43 
10.75% 
Healthcare 
27 
6.75% 
Industrials 
54 
13.50% 
Information Technology 
30 
7.50% 
Materials 
24 
6.00% 
Properties & Construction 
58 
14.50% 
Telecommunications 
3 
0.75% 
Utilities 
17 
4.25% 
Total 
400 
100.00% 
 
                                                           
45 Among the Sample Issuers, 353 (88%) are Main Board issuers and 47 (12%) are GEM issuers. 
46 10 Sample Issuers have other financial year ends. 
47 The industry categories adopt the Hang Seng Industry Classification System.

22 
 
81. Chart 6 presents the distribution of Sample Issuers by market capitalization as of 31 
December 2021. 
 
82. For the purposes of this Review, readers should note that:  
(i) 
A “comply or explain” provision is described as “reported” if it was either “complied” or 
“explained”;  
(ii) 
A MDR is described as “reported” if an issuer provided the required disclosure 
regarding each paragraph of that MDR; and  
(iii) 
“Average reporting rate” means the average value of the reporting rates across (a) all 
“comply or explain” provisions under an Aspect; or (b) all required disclosure under a 
MDR.   
Overall statistics  
83. Chart 7 below shows the average reporting rates of each MDR and Aspect. Apart from the 
MDR on board statement and “labour standards” Aspect, all the other MDRs and Aspects 
have a reporting rate of at least 89%.  
 
 
46.5%
17.5%
7.3%
28.8%
Chart 6: Distribution of Sample Issuers by Market Capitalisation 
(in HK$ million)
<1,000
≥1,000 and <3,000
≥3,000 and <5,000
≥5,000

23 
 
 
 
 
76.8%
90.8%
97.8%
93.3%
96.8%
99.0%
93.4%
95.3%
94.8%
95.8%
78.9%
88.8%
90.8%
90.8%
94.4%
0%
20%
40%
60%
80%
100%
Board Statement
Reporting Principles
Reporting Boundary
A1: Emissions
A2: Use of Resources
A3: The Environment
and Natural Resources
A4: Climate Change
B1: Employment
B2: Health and Safety
B3: Development and Training
B4: Labour Standards
B5: Supply Chain Management
B6: Product Responsibility
B7: Anti-corruption
B8: Community Investment
Chart 7: Average reporting rates of all MDRs and Aspects
MDR
Environmental
Social

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