A few of Asia’s greatest corporations are pushing again towards plans from the Hong Kong Inventory Trade to demand better disclosure on atmosphere, social and governance points.
In Might, HKEX proposed forcing listed corporations to publish statements about ESG-related dangers. However the Chamber of Hong Kong Listed Firms, whose members embody Tencent and China Cellular, mentioned it desires the alternate to go away disclosure to the discretion of corporations.
“Too many extra obligations will add to compliance challenges,” Mike Wong, chief govt of the chamber, mentioned in an electronic mail to the Monetary Instances. “The extra disclosure necessities are reasonably onerous and cumbersome.”
The battle pits Asian corporations towards a few of the world’s largest asset managers, who’re supporting the brand new disclosures, simply as Asia is pulled into the worldwide sustainable-investing wave. Hong Kong can be going through rising competitors from exchanges in China to record mainland corporations.
If adopted as proposed, the foundations would require corporations to reveal extra details about dangers associated to local weather change and new particulars about greenhouse fuel emissions. The alternate has mentioned it desires to implement the disclosure proposals from subsequent 12 months.
Whereas some giant corporations reminiscent of China Gentle and Energy are going “over and past” the HKEX’s present ESG disclosure requirements, different corporations “shouldn’t be pressed to reveal one thing that carries no obvious worth to them”, the chamber mentioned in a July 19 submission to HKEX.
A spokesman for HKEX declined to remark.
The Hong Kong company group’s resistance to necessary ESG disclosures contrasts with another main markets. The UK is exploring mandating corporations disclose climate-related dangers, whereas France requires traders within the nation to reveal how they deal with ESG standards.
In Asia broadly, ESG investing is in its infancy. The US and Europe account for about 80 per cent of the world’s sustainable investing property and Japan accounts for about 6 per cent, based on a JPMorgan report this month. China and Hong Kong are nonetheless growing ESG frameworks and requirements, the financial institution famous.
However Hong Kong began to push forward on ESG this 12 months. The territory’s Securities and Futures Fee printed steerage on disclosures and the Hong Kong Financial Authority has set targets for inexperienced finance.
Some worldwide traders are eager for these plans to advance. Boston-based State Avenue World Advisors applauded HKEX’s proposal in a July 18 letter. “Disclosure necessities specializing in monetary materiality would help corporations in effectively and meaningfully offering info to traders,” mentioned State Avenue, which additionally known as for Hong Kong to embrace the work of Sustainability Accounting Requirements Board (SASB) as a strategy to harmonise ESG reporting.
The Asia Company Governance Affiliation, whose members embody the enormous California retirement funds Calpers and Calstrs, in addition to corporations reminiscent of UBS Asset Administration and T Rowe Value, mentioned it strongly endorses the necessity for company boards to supervise ESG and sustainability reporting.
“It’s obvious that many boards aren’t studying their very own sustainability reviews, nor discussing materials ESG dangers and alternatives in any element,” the ACGA mentioned.
The Worldwide Company Governance Community (ICGN), whose members embody the Ontario Lecturers’ Pension Plan, Hermes Funding Administration and Nissay Asset Administration, acknowledged that necessary ESG disclosure “could also be provocative to some listed corporations”, however mentioned such necessities would “kick into play” ESG reporting.