Hong Kong Exchanges & Clearing Ltd. · HKEX:388
Hong Kong Exchanges & Clearing — ESG Presentation (July 2023)
21 slides from Hong Kong Exchanges & Clearing's sustainability presentation, Jul 13, 2023
Slide 1: Proposed Climate-related Disclosures: Impact on Listed Companies
Recent climate Proposed reporting of Enhancements Climate-related–Disclosures developments what underwill HKEXbe the ESGimpact on listed Reporting Framework companies? Ms. Kelly Lee Senior Vice President, Policy and Secretariat Services, Listing Division July 2023
Slide 2: Disclaimer
Disclaimer The information contained in this document and presentation is for general information purposes only. It is not directed at, and is not intended for distribution to or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or re
Slide 3: Key Developments in Climate-related Disclosure Regulation
Key Developments in Climate-related Disclosure Regulation June: ISSB published final standards Establishment End of year: IOSCO’s TCFD’s recommendations of ISSB endorsement expected HK’s carbon neutrality target by 2050 and Hong Kong Climate Action Plan 2050 International Dec 2020 Oct 2021 Jun 2017
Slide 4: HKEX's ESG Journey
HKEX’s ESG Journey Green and Sustainable Finance Cross-Agency ESG Steering Group Policy concept introduced ESG reporting Focus on ESG Publish ESG reports Enhance to listed mandatory governance and in parallel with climate-related companies new climate issues annual reports disclosure (TCFD) Voluntar
Slide 5: Current Climate Reporting Practices
Current Climate Reporting Practices Climate Disclosures Compliance Voluntary Disclosures >> 30% > 20% < 5% 93% 93% 94% Scope 3 - TCFD - Scenario analysis - Voluntary Reference to or Issuers who adopted Climate change (average) disclosures on disclosures scenario analysis are Over 85% of issuers chos
Slide 6: Reasons for Enhancing Climate-related Disclosures
Reasons for Enhancing Climate- related Disclosures • To ensure that our ESG reporting framework continues to meet stakeholders’ expectations and reflect international best practices • To maintain Hong Kong’s competitiveness as an international financial centre • To achieve Steering Group’s target to
Slide 7: Factors Considered when Developing Our Proposals
Factors Considered when Developing Our Proposals • HKEX’s role: market regulator (not standard-setter) • Issuers’ familiarity with existing ESG reporting framework which has been in place for 10 years • Sustainability is a journey • Start early to build momentum for development of HK’s ecosystem Our
Slide 8: Consultation on Enhancing Climate-related Disclosures
Consultation on Enhancing Climate-related Disclosures Mandate climate-related disclosures Introduce new climate-related disclosures with reference to the ISSB Climate Standard (IFRS S2) Interim provisions for certain disclosures* during interim period (i.e. first two reporting periods after effectiv
Slide 9: Key Proposals
Key Proposals Governance Strategy Risk Management Metrics and Targets • Governance • Climate-related • Process to identify, • GHG emissions2 process, controls risks and assess and • Cross-industry and procedures opportunities manage climate- metrics1 used to monitor and related risks • Transition pl
Slide 10: Board's oversight of ESG issues and management's role
Governance Strategy Risk Management Metrics and Targets Information that allows evaluation of whether significant climate-related risks and opportunities have received appropriate board and management attention Current Requirements Proposed Additional Requirements Identity of governance body Board’s
Slide 11: Impact of material climate-related risks and opportunities on business and strategy
Governance Strategy Risk Management Metrics and Targets Impact of material climate-related risks and opportunities on issuer’s business operations, business model and strategy, and issuer’s responses Current Requirements Proposed Additional Requirements Board’s ESG management approach and Climate-re
Slide 12: Transition plans and targets
Governance Strategy Risk Management Metrics and Targets Transition plans Where no information re targets is provided: Actions Work plan Timetable Progress • Changes to issuer’s business model, strategy and resource allocation • Adaptation and mitigation efforts for setting and disclosing climate-rel
Slide 13: Climate resilience and scenario analysis
Governance Strategy Risk Management Metrics and Targets Climate resilience: Information that enables understanding of issuer’s capacity to adjust strategy, business model and operations to climate-related uncertainties Extent of assets and business activities Climate-related scenario analysis that i
Slide 14: Financial effect of climate-related risks and opportunities
Governance Strategy Risk Management Metrics and Targets Financial effect: Impact on issuer’s financial position, financial performance and cash flows Financial Disclosure Interim Provisions Effects Current Qualitative, but Allow qualitative disclosures quantitative Mandatory where material Anticipat
Slide 15: Risk Management: identify, assess and manage climate-related risks
Governance Strategy Risk Management Metrics and Targets Process that issuer uses to identify, assess and manage climate-related risks and opportunities Current Requirements Proposed Additional Requirements Impact of assessment of Mandatory Evaluation and management of climate-related risks material
Slide 16: Metrics: Environmental KPIs and proposed additional requirements
Governance Strategy Risk Management Metrics and Targets Metrics that issuer uses to measure, monitor and manage significant climate-related risks and opportunities, and assess performance Current “C or E” Environmental KPIs Proposed Additional Requirements Scope 1 and 2 GHG Emissions Scope 1, 2 and
Slide 17: GHG emissions disclosure requirements
Governance Strategy Risk Management Metrics and Targets GHG emissions: Information that enables evaluation of issuer’s carbon footprint and transition plan Current Proposed Requirement Requirement Scope 1 & 2 Comply or explain Mandatory emissions Scope 3 Voluntary Mandatory (with emissions interim p
Slide 18: Cross-industry metrics
Governance Strategy Risk Management Metrics and Targets Cross-industry metrics: Information that enables understanding of issuer’s exposure to climate-related risks, and the integration of such considerations into business strategy Assets or business activities vulnerable to Transition/ transition/p
Slide 19: Tips for Issuers
Tips for Issuers Enhancement Strategy Collaboration Identify gaps with internal Integrate climate risks and Collaborate between all policies and practices for Tips opportunities levels and teams within the planning system considerations into strategy company enhancements and decision-making process
Slide 20: One-stop ESG platform – ESG Academy
One-stop ESG platform – ESG Academy Publication and Training Assist listed issuers to integrate ESG considerations into business strategy ESG in Practice Encourage peer learning from best practices of other issuers External Resources References to external ESG frameworks, standards and guidance 20
Slide 21: Thank you!
Thank you! 21
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