The Stock Exchange of Hong Kong Limited (“HKEX”) has revised Guidance Letter HKEX-GL86-16 to require additional disclosure on policy of board diversity (including gender) and how gender diversity of the board can be achieved in the case of a single gender board in respect of disclosure in listing documents by new applicants.
“Board diversity promotes effective decision-making and enhances corporate governance. The consideration of diversity is becoming an increasingly important factor when investors make their investment decisions. Promotion of board diversity is a key focus of the Exchange and an area we are committed to continuing to develop,” said Mr Graham, HKEX’s Head of Listing, said in a press release.
Applicants should disclose a policy on board diversity (including gender). Where an applicant has a single gender board, it should disclose and explain:
- how and when gender diversity of the board will be achieved after listing;
- what measurable objectives it has set for implementing gender diversity, for example, achieving a specific numerical target for the proportion of the absent gender on its board by a certain year; and
- what measures the applicant has adopted to develop a pipeline of potential successors to the board that could ensure gender diversity of the board.
Only 10% females holding board seats
According to a survey on ESG reporting in 2018, almost 65% of the largest 200 listed companies in terms of market capitalisation(“T200”) have at least 1 female director on the board. However, the total percentage of female directorship remains approximately 10%. Only 3.5% of the T200 have female representation of at least one-third in directorships.
Source: Survey of ESG Reports in Hong Kong 2018, Alaya Consulting
The revised Guidance Letter also sets out our expected disclosure on ESG matters, including material information on applicants’ environmental policies, and details of the process used to identify, evaluate and manage significant ESG risks, including climate-related.