Featured Product

    HKMA Presents Findings of Textual Analysis of ESG Disclosures of Firms

    October 29, 2020

    HKMA published a report presenting observations from the textual analysis of the environmental, social, and governance (ESG) reports of listed firms in Hong Kong. This study applies a wide range of computer-based textual analysis techniques to analyze the annual ESG-related textual disclosure of listed firms since the introduction, in 2016, of the mandatory disclosure requirement by the Stock Exchange of Hong Kong. The findings show that exposure of firms to ESG risks is one important source of uncertainty in their stock valuations and this uncertainty can be reduced effectively by their ESG disclosure. The fact that firms can benefit from being more transparent in ESG issues gives strong support to the continuing efforts of regulators to improve the ESG disclosure of firms.

    The report provides a brief overview on the development of the ESG disclosure practice and requirements worldwide. It lays out the textual analysis of ESG reports, presents key observations, and discusses the empirical models and results of the effect of ESG disclosures on the stock valuation of listed firms. ESG funds have been found to be relatively resilient to the market turbulence during the COVID-19 crisis, suggesting that ESG factors significantly differentiate between stock valuations among firms. The key observations to the analysis include the following:

    • Length of ESG disclosures have broadly increased since 2016, with firms in sectors more exposed to environmental issues, such as utility and energy, tending to disclose more information.
    • Importance of environmental issues increased in ESG disclosures, while social and governance-related disclosures continue to dominate.
    • Forward-looking information accounted for an important part of the ESG disclosures.
    • Comparability of ESG reports among firms increased over time, while there was little improvement in the readability of reports.

    Keywords: Asia Pacific, Hong Kong, Banking, Securities, ESG, Disclosures, Governance, HKMA

    Featured Experts
    Related Articles

    BOE Sets Out Its Thinking on Regulatory Capital and Climate Risks

    The Bank of England (BOE) published a working paper that aims to understand the climate-related disclosures of UK financial institutions.

    March 13, 2023 WebPage Regulatory News

    OSFI Finalizes on Climate Risk Guideline, Issues Other Updates

    The Office of the Superintendent of Financial Institutions (OSFI) is seeking comments, until May 31, 2023, on the draft guideline on culture and behavior risk, with final guideline expected by the end of 2023.

    March 12, 2023 WebPage Regulatory News

    BIS Paper Examines Impact of Greenhouse Gas Emissions on Lending

    BIS issued a paper that investigates the effect of the greenhouse gas, or GHG, emissions of firms on bank loans using bank–firm matched data of Japanese listed firms from 2006 to 2018.

    March 03, 2023 WebPage Regulatory News

    HMT Mulls Alignment of Ring-Fencing and Resolution Regimes for Banks

    The HM Treasury (HMT) is seeking evidence, until May 07, 2023, on practicalities of aligning the ring-fencing and the banking resolution regimes for banks.

    March 02, 2023 WebPage Regulatory News

    BCBS Report Examines Impact of Basel III Framework for Banks

    The Basel Committee on Banking Supervision (BCBS) published results of the Basel III monitoring exercise based on the June 30, 2022 data.

    February 28, 2023 WebPage Regulatory News

    PRA Consults on Prudential Rules for "Simpler-Regime" Firms

    Among the recent regulatory updates from UK authorities, a key development is the first-phase consultation, from the Prudential Regulation Authority (PRA), on simplifications to the prudential framework that would apply to the simpler-regime firms.

    February 28, 2023 WebPage Regulatory News

    DNB Publishes Multiple Reporting Updates for Banks

    DNB, the central bank of Netherlands, updated the list of additional reporting requests and published additional data quality checks and XBRL-Formula linkbase documents for the first quarter of 2023.

    February 28, 2023 WebPage Regulatory News

    NBB Sets Out Climate Risk Expectations, Issues Reporting Updates

    The National Bank of Belgium (NBB) published a communication on climate-related and environmental risks, issued an update on XBRL reporting

    February 24, 2023 WebPage Regulatory News

    EBA Updates Address Securitization Standards and DGS Guidelines

    The European Banking Authority (EBA) published the final draft of the regulatory technical standards that set out conditions for assessment of homogeneity of the underlying exposures in simple, transparent, and standardized (STS) securitizations.

    February 21, 2023 WebPage Regulatory News

    FSB Publishes Letter to G20, Sets Out Work Priorities for 2023

    The Financial Stability Board (FSB) published a letter intended for the G20 Finance Ministers and Central Bank Governors, highlighting the work that FSB will take forward under the Indian G20 Presidency in 2023

    February 20, 2023 WebPage Regulatory News
    RESULTS 1 - 10 OF 8793