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Lai Yee Choy, Environmental, Social and Governance Reporting Regulation in Hong Kong: Reforms, Inadequacies, and Proposals, Capital Markets Law Journal, Volume 19, Issue 3, July 2024, Pages 280–297, https://doi.org/10.1093/cmlj/kmae009
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1. Introduction
Aligning with China’s national policy direction, Hong Kong aspires to develop as the regional leader in green finance.1 To achieve this objective, Hong Kong has stepped up promoting environmental, social and governance (ESG) development and corporate ESG reporting in the city. The Stock Exchange of Hong Kong Limited (SEHK) put forth the ESG Reporting Guide appended to the Main Board Listing Rules in 2012, introducing corporate ESG disclosure on a voluntary basis.2 Throughout the period from 2013 to 2020, the SEHK has updated the disclosure obligation of ESG reporting from voluntary to comply-or-explain plus mandatory.3
There is scant academic literature delving into the SEHK’s ESG reporting regulations from a legal perspective. This article aims to evaluate the regulatory reforms of corporate ESG reporting enforced by the SEHK, which governs all companies listed in Hong Kong. It undertakes doctrinal research by analysing the legal principles, doctrines, and rules applicable to ESG reporting regulations in Hong Kong. It also conducts an inter-disciplinary analysis of the relevant principles in law, economics, accounting and management that are influential to ESG reporting. In addition to positioning the SEHK’s ESG reporting regulations within Hong Kong’s legal framework, the origins and reforms of the ESG Reporting Guide are demonstrated. This study highlights the principal inadequacies of the SEHK’s ESG Reporting Guide and proposes suggestions in six aspects for the SEHK to enhance the regulations by reference to international sustainability reporting standards and the other economies’ experiences. Having investigated the ESG reports issued by 100 Hong Kong–listed companies in financial years 2015–2021, this study provides practical examples to support the propositions. To the author’s best knowledge, no prior academic study has analysed the SEHK’s ESG reporting regulations from a legal perspective in this approach. Although this article focuses on assessing the ESG reporting regulations implemented in Hong Kong, the discussions are relevant to the regulatory landscape in many other economies where the ESG disclosure rules adopted share common characteristics.
