ESG Reporting

A growing concern of sustainability has been emerging in the investment community over the past decade. It was an old thought that considering sustainability for society implied sacrificing financial returns of investment. The development of Environmental, Social, Governance (ESG) investing, however, has demonstrated a different story.
 
This publication introduces the engagement of PRI from investor community, various ESG assessments in capital market such as MSCI ESG Ratings, the shift in focus on ESG issues due to the preferences of younger generation’s investors and COVID-19, and also the prevalence of green investment in the global investment community.
 
Please <a href="../../../../../uploads/The_Emergence_of_Sustainability_Agenda_to_Investment_ESG_Investing_a014243ea9.pdf" target="_blank" rel="noopener">click here</a> to read the full publication.
 
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The Emergence of Sustainability Agenda to Investment—ESG Investing

The CFA Institute has previously published a consultation paper on its forthcoming "Environmental, Social and Governance (ESG) Disclosure Standards for Investment Products". In response to the growing market concerns with respect to the inconsistency and variation in ESG-related terms and disclosures between investors and asset managers, the CFA Institute has developed proposals for a voluntary, global and disclosure-based standard that would allow investors to understand the features offered by a particular investment product and to make comparisons among products across markets.
 
AVISTA has summarized the certain key aspects of the consultation paper. Click <a href="../../../../../uploads/CFA_Institute_Launches_Consultation_-__ESG_Disclosure_Standards_for_Investment_Products_744947c4b2.pdf" target="_blank" rel="noopener">here</a> to learn more now.
 
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CFA Institute Launches Consultation: ESG Disclosure Standards for Investment Products

The Stock Exchange of Hong Kong Limited (“HKEX”) has recently published an updated Guidance Letter HKEX-GL86-16 for IPO applicants (“Guidance Letter”) which emphasizes the board of directors of an IPO applicant should ensure necessary corporate governance (CG) and environmental, social and governance (ESG) mechanisms are built into the listing processes in order to promote sustainability, good corporate governance, and diversity. According to the 3.7(a) &amp; (b) under E. “Business” section of updated IPO Guidance, IPO applicants are required to :
 
<ol style="list-style-type: lower-roman;">
<li>put in place relevant mechanisms that enable them to meet the Exchange’s requirements on CG and ESG well in advance so that they are in compliance upon listing. The board of directors of an applicant is collectively responsible for its management and operations (including the establishment of such mechanisms); and </li>
<li>appoint directors (including independent non-executive directors) as early as possible so that directors can engage in the formulation of the necessary mechanisms and related policies on CG and ESG.</li>
</ol>
 
Further to the amendment to the Guidance Letter made in May 2019 to require additional disclosure on (i) ESG matters (including material information on applicants’ environmental policies, and details of the process used to identify, evaluate and manage significant ESG risks) and (ii) gender diversity of the board in the listing documents of new applicants, HKEX has taken this as an extra step to strengthen the disclosure obligation of ESG information by IPO applicants. It is a prerequisite for listing applicants to get braced for ESG mechanisms and relevant disclosure in spite of the fact HKEX does not make ESG report as a mandatory disclosure requirement in the listing document for the time being.
 
It is advisable for pre-IPO companies to establish good corporate governance and enhance board’s oversight of ESG matters including identification and control of material ESG risks in advance not only to cope with the potential queries raised by HKEX but also to echo with the call for ESG information by institutional investors upon their decision-making process.
 
 
Click <a href="https://en-rules.hkex.com.hk/node/5041" target="_blank" rel="noopener">here</a> to read the updated Guidance Letter HKEX-GL86-16 for IPO applicants.

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HKEX Requires Additional Disclosure on CG and ESG Matters by IPO Applicants

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Newly-Released ESG Guide Consultation Conclusions and ESG Disclosure Review by HKEX

The Hong Kong Stock Exchange (the “HKEx”) has issued a consultation paper on “Review of the Environmental, Social and Governance (“ESG”) Reporting Guide (the “Guide”) and Related Listing Rules” (“Listing Rules”) (“the consultation paper"). This is the second consultation on the revision of the Guide conducted by the HKEx since the launch of the Guide in 2013. The HKEx has proposed to implement the revised “Listing Rules” and the “Guide” for the fiscal year beginning on or after January 1, 2020. In other words, issuers are required to publish ESG Reports according to the revised Guide starting from 2021.
 
Based on our extensive experience ESG advisory, AVISTA Risk Advisory has summarized the major revisions in this consultation with comparisons of previous guides.
 
Please <a href="../../../../../uploads/ESG_Guidance_Update_98ad3951d1.pdf" target="_blank" rel="noopener">click here</a> to read the full summary.
 
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