Hong Kong Exchanges and Clearing Limited (HKEx) recently published a "Consultation Paper on Review of the Environmental, Social and Governance Reporting Guide" (CP on Review of ESG Reporting Guide) to seek views on its proposed changes to the ESG Guide including the introduction of certain "comply or explain" provisions. It is intended to implement the proposed changes for financial years commencing on or after 1 January 2016 whereupon issuers would need to start gathering the necessary information for the purpose of publishing their ESG reports under the new ESG Guide in 2017.

Responses to the CP on Review of ESG Guide should be submitted on or before 18 September 2015.

HKEx is of the view that following implementation of the new requirements under the Companies Ordinance (Cap 622) to discuss ESG policies and performance, it is an appropriate time to upgrade and revise the ESG Guide to align the rule with the statutory requirement in ESG disclosures and to align Hong Kong with international best practice.

Under the proposed new ESG Guide, issuer must disclose ESG information on an annual basis (covering the same period as the annual report); state in the ESG report whether it has complied with the "comply or explain" provisions; and in event of deviation, give considered reasons.

The proposed new ESG Guide will re-arrange the different 'aspects' covered under the existing ESG Guide of Emissions, Use of Resources, The Environment and Natural Resources as an aspect under the subject matter 'Environmental'; and Employment, Health and Safety, Development and Training, Labour Standards, Supply Chain Management, Product Responsibility, Anti-corruption, and Community Investment as an aspect of the subject matter 'Social'. The proposed "comply or explain" provisions mainly cover the General Disclosures for each aspect and the Key Performance Indicator for each aspect under the subject matter 'Environmental'.