Ben McQuhae & Co, in collaboration with The Hong Kong Chartered Governance Institute (the Institute), has issued a paper on the ‘Legal Developments In Directors’ Duties And ESG – What Every Hong Kong Company Director Should Know’.
Directors’ duties have developed over many years and are constantly evolving. In line with global developments and emerging trends, the short-term view of profitability for shareholders is giving way to a longer-term or sustainable view of profitability, taking into account the interests of relevant stakeholders. In this context, the paper highlights developments in directors’ duties to consider environmental, social and governance (ESG) developments for sustainable business operations.
The paper concludes that whether listed or not, directors of Hong Kong-incorporated companies are required to have regard to ESG risks and opportunities in discharging their duties. With sustainability and ESG now firmly embedded in Hong Kong’s policy objectives and regulatory landscape, widening directors’ duties for all Hong Kong-listed companies, irrespective of place of incorporation, under the Listing Rules is inevitable.
As advisors to boards on governance-related matters, governance professionals need to be well-equipped to ensure regular board consideration of ESG risks and their implications for the company’s business. Directors might find it helpful to seek advice from governance professionals, including company secretaries, to ensure that consideration of ESG risks and implications is a regular agenda item. Boards and governance professionals are reminded to seek duly qualified assistance regarding ESG matters where necessary.
Ben McQuhae & Co is grateful to collaborate with the Institute on this meaningful piece of work.
Check out the report at: https://www.hkcgi.org.hk/thought-leadership/publication-detail/2524/.