ESG Reporting in the Hong Kong Stock Exchange: an empirical analysis

Abstract

The study examines how the Hong Kong Stock Exchange moved towards a more sustainable way of doing business with the introduction of the ESG Reporting Guide and its inclusion in the Main Board Listing Rules. In particular, the study aims at understanding how the more demanding requirements due to be issued from 1 July 2020 will affect the Reporting of companies listed in the Exchange. First, the study analyses the rule making process and illustrates how the Guide has been updated, from its introduction in 2012 to the third version in 2020, along with the characteristics of each Guide and main changes observed, in conjunction with the incremental approach on the level of requirements disclosure. In order to understand the development of the Guide, literature is used to understand how this type of non-financial reporting is influenced by cultural and political variables within the country in which is developed, but it also highlights to what extent this practice has positive effects on company’s financial and economic value, also from an investors’ perspective. Through an empirical analysis focused on ESG Reporting of 11 companies based in Hong Kong and listed in both the Exchange and the DJSI, the author tries to understand how the reporting has evolved in the Stock Exchange at the crucial points of the evolution of the Guide, forecasting how the attitude and response of the companies toward the disclosure is going to change after the implementation of the new requirements.