Following our first comprehensive survey conducted in 2017, KPMG China continues to review the quality of sample environmental, social and governance (ESG) reports from Hong Kong listed issuers to track the development of ESG reporting. This issue focuses on the quality of key performance indicator (KPI) disclosures.

Almost 50 percent of issuers with a December financial year end reported quantitative data for the first time in 2018 as the disclosure of the HKEX ESG Reporting Guide’s (“the Guide”) Environmental KPIs was upgraded to ‘comply or explain’.

Issuers have achieved a major milestone on the ESG journey by beginning to track and report on KPIs. However, there is room for improvement in the reporting approach to give insight into their company’s performance, including:

• The KPIs disclosed are not always the most relevant or related to business priorities.
• Lack of transparency around KPI definitions and calculations, and occasional errors in data presentation.
• Insufficient context and information to explain what the data means.

In this issue, we discuss possible challenges that companies face, and also provide a checklist to help companies disclose KPIs that meet reporting requirements and expectations from stakeholders, as well as possible next steps.