HKEX ESG Reporting Guide - High Level Principles: Materiality, Quantitative, Balance & Consistency

Below is a high level & structured summary of the key reporting principles under the Hong Kong Stock Exchange (HKEX) Environmental, Social and Governance (ESG) Reporting Guide, which forms part of Appendix 27 (Main Board) and Appendix 20 (GEM) of the Listing Rules for listed companies.

HKEX ESG Reporting Guide — Overview

• The ESG Reporting Guide sets out the disclosure framework for all listed issuers on the HKEX.

• It became mandatory to comply with “comply or explain” provisions since 2016, and subsequently strengthened in updates (notably in 2020 and 2022) to align with global practices (like TCFD).

• The Guide requires companies to disclose both governance and performance elements of ESG management.

Key Reporting Principles of the HKEX ESG Reporting Guide

The ESG Reporting Guide identifies four key reporting principles that underpin the preparation and presentation of ESG reports:

Principle	Description	Purpose / Good Practice
1️⃣ Materiality	Focus on ESG issues that are significant to the issuer and to its stakeholders. The report should disclose how materiality was determined (e.g., via stakeholder engagement, risk assessment).	- Conduct materiality assessment regularly. - Prioritize topics with both business and stakeholder impact. - Use a materiality matrix for transparency.
2️⃣ Quantitative	The ESG report should include measurable KPIs and data (qualitative + quantitative) to demonstrate performance over time.	- Provide metrics with measurement standards (e.g., GHG emissions in tonnes CO₂e). - Disclose consistency and explanation of calculation/estimation methods. - Present year-on-year comparisons.
3️⃣ Balance	Present an unbiased picture of performance — avoid cherry-picking good results. Discuss both achievements and areas for improvement.	- Include both positive and negative trends. - Be transparent about challenges, incidents, or missed targets. - Build stakeholder trust through balanced disclosure.
4️⃣ Consistency	Apply consistent methodologies and frameworks for data collection and reporting across reporting periods so that results are comparable.	- Clearly explain any changes in scope, methodology, or KPIs. - Ensure comparability between years. - Maintain stable reporting boundaries.

Governance and Framework Link

The HKEX ESG Guide also defines a mandatory disclosure requirement (MDR) around

governance, which complements the reporting principles:

Governance Requirement	What It Covers
Board Responsibility	The board must have overall responsibility for ESG strategy and reporting integrity.
ESG Management Approach	Companies must describe how they identify and manage ESG risks and integrate them into enterprise risk management (ERM).
Stakeholder Engagement	Processes and outcomes of stakeholder engagement should be disclosed (linked to materiality).

Example of Alignment to Global Standards

Global Framework	Comparable HKEX Principle	Comment
GRI (Global Reporting Initiative)	Materiality & Quantitative	Similar emphasis on stakeholder relevance and performance indicators.
TCFD (Task Force on Climate-related Financial Disclosures)	Governance, Quantitative, Balance	Climate risk disclosure and metrics align.
ISSB / IFRS S1–S2	Consistency & Quantitative	HKEX moving toward alignment for ready transition to IFRS Sustainability Standards.

Summary Table

Category	Key Elements
Mandatory Disclosure Requirements	Board governance, ESG management approach, reporting boundary and application of reporting principles
Reporting Principles	Materiality  Quantitative   Balance   Consistency
“Comply or Explain” KPIs	Environmental (emissions, energy, water, waste) and Social (employment, health & safety, supply chain, product responsibility, community)
Annual ESG Report Deadline	Within five months after the financial year end
Board Statement	Required, describing the board’s oversight and assessment of ESG-related risks and opportunities

In Short

The four reporting principles — Materiality, Quantitative, Balance, and Consistency — ensure that an HKEX ESG report is relevant, measurable, transparent, and comparable.

They serve as the foundation for credible ESG communication, guiding issuers toward higher-quality, decision-useful, and globally aligned sustainability disclosures.

References & additional readings

1. https://www.hkex.com.hk/-/media/HKEX-Market/Listing/Rules-and-Guidance/Environmental-Social-and-Governance/Exchanges-guidance-materials-on-ESG/step_by_step.pdf

2. https://en-rules.hkex.com.hk/rulebook/appendix-c2-environmental-social-and-governance-reporting-code-0

3. https://en-rules.hkex.com.hk/rulebook/environmental-social-and-governance-reporting-guide-1

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