It's time to disclose information regarding Environment, Society and Governance (ESG) for HKEx listed companies

Hong Kong Stock Exchange ("HKEx ") issued the consultation conclusions of its ESG Reporting Guide (the "ESG Guide") on 21th December 2015. According to the ESG Guide, listed companies should publish ESG reports annually, and the disclosures on ESG-related policies and environmental key performance indicators ("KPIs") become "comply or explain" obligations from financial years commencing on or after 1 January 2016 and 2017 respectively. It is about the time for listed companies to prepare and issue their first ESG reports, and expected greater challenges will be faced by listed companies to develop an effective reporting system for the reporting of environmental KPIs next year.

Besides, the sustainability reporting guidelines issued by Global Reporting Initiative ("GRI") has been most widely used ESG reporting framework globally for over 15 years. The latest version of GRI Standard was announced in Oct 2016, introducing the enhanced reporting framework and structure based on the current GRI G4 guidelines. From 1st July 2018 onwards, the new GRI Standard will replace the current GRI G4.

The changes mentioned above indicate that the capital market has increased the awareness of sustainable development for listed companies in addition to their operation and financial performances. Also, the disclosures of ESG information not only could provide investors more comprehensive information for evaluating listed companies, but also acting as a platform to help listed companies develop image and trust among their stakeholders such as investors, clients, staff and communities.

Deloitte has a dedicated professional services team for sustainability related services with strong track records. Currently, Deloitte is providing ESG services for a large number of listed companies, helping them to formulate ESG strategies, manage ESG risks, establish ESG management systems, prepare ESG reports, and provide independent assurance services for ESG report. Besides, helping listed companies to satisfy the ESG requirements of HKEx, Deloitte aims to improve the ESG performance and disclosure of listed companies in the long-run.

Deloitte Beijing will organize an ESG forum soon, in which we will share our ESG services experiences, explain the values that ESG report will bring to listed companies and common challenges for listed companies on ESG disclosure. Stay tuned!

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