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Case study: How HKEX promotes business integrity

Headquartered in Hong Kong, HKEX is one of the world’s largest financial market operators, providing world-class facilities for trading and clearing securities and derivatives in equities, commodities, fixed income and currency. HKEX seeks to uphold the highest standards of ethics and integrity when doing its business  Tweet This!, reinforcing a strong culture of integrity and compliance among employees.

This case study is based on the 2019 Corporate Social Responsibility Report by HKEX published on the Global Reporting Initiative Sustainability Disclosure Database that can be found at this link. Through all case studies we aim to demonstrate what CSR/ ESG/ sustainability reporting done responsibly means. Essentially, it means: a) identifying a company’s most important impacts on the environment, economy and society, and b) measuring, managing and changing.

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HKEX is aware of the vital and leading role that it plays in setting and articulating corporate governance standards in the marketplace so as to secure market confidence and protect investors. Accordingly, HKEX has made a number of enhancements to maintain the highest standards of ethics and integrity in everything that it does. In order to promote business integrity HKEX took action to:

  • enhance the Group Anti-Bribery and Anti-Corruption Policy
  • launch a new web-based whistleblowing channel
  • update the LME and LME Clear Conflicts of Interest Policy
  • implement a Code of Conduct

What are the material issues the company has identified?

In its 2019 Corporate Social Responsibility Report HKEX identified a range of material issues, such as climate change, customer privacy/ information security, diversity and equal opportunities, ESG risks management and transparency, product responsibility. Among these, promoting business integrity stands out as a key material issue for HKEX.

Stakeholder engagement in accordance with the GRI Standards

The Global Reporting Initiative (GRI) defines the Principle of Stakeholder Inclusiveness when identifying material issues (or a company’s most important impacts) as follows:

“The reporting organization shall identify its stakeholders, and explain how it has responded to their reasonable expectations and interests.”

Stakeholders must be consulted in the process of identifying a company’s most important impacts and their reasonable expectations and interests must be taken into account. This is an important cornerstone for CSR / sustainability reporting done responsibly.

Key stakeholder groups HKEX engages with:

To identify and prioritise material topics HKEX engaged with its stakeholders through the following channels:

Stakeholder Group                Method of engagement
Shareholders/ institutional and individual investors

 

 

 

 

·      Annual general meeting, notices, circulars and announcements

·      Regular corporate publications including financial statements

·      Enquiries or feedback to the Board via the Group Company Secretary

·      Corporate Day, non-deal roadshows, investor meetings and conferences

·      Analyst briefings on HKEX’s interim and year-end financial results

Market regulators

 

 

 

·      Bi-monthly FSTB / SFC / HKEX tripartite meetings, regular liaison meetings and ad hoc work meetings

·      Daily, monthly and annual reporting

·      Attending to requests for documents or witness statements on an ad hoc basis

Government bodies

 

 

 

·      Regular verbal and written communication regarding the Group’s key initiatives and new developments

·      Responding to enquiries for the purpose of various government meetings, including the HKSAR Legislative Council meetings

·      Bi-monthly FSTB / SFC / HKEX tripartite meetings

Listed/potential issuers and market intermediaries

 

 

 

·      Market consultations on proposed changes to the Listing Rules

·      Publication of guidance materials including guidance letters, listing decisions and frequently asked questions whenever necessary

·      Regular publications including reports on the review of listed issuers’ annual report disclosure, corporate governance disclosures and ESG disclosures, Listed Issuer Regulation Newsletter and Enforcement Newsletter

·      Investigation into listing compliance via written enquiries

Market participants, members and information vendors

 

 

·      Regular consultative panel meetings, briefings, seminars and discussions

·      Market consultations on new proposals

·      Market rehearsals, connectivity and user acceptance tests before and upon launch of new/enhancement services

Mainland and overseas exchanges

 

 

 

 

·      Regular meetings on specific projects

·      Delegations for courtesy and training purposes

·      Annual board meeting of the World Federation of Exchanges

·      Participation in annual market surveys and trading information updates

·      Regular dialogue and staff exchange with other exchanges

Public and media

 

 

·      Regular media interviews and events, including media stand ups, media workshops, guided visits and media briefings

·      News releases on major business updates

·      HKEX websites and social media

NGOs, industry associations, professional bodies and market users

 

·      Market consultations on new proposals

·      Regular meetings and correspondences with market practitioners and related associations regarding listing/trading matters

·      Response to periodic assessments on HKEX’s sustainability performance

Employees

 

·      Monthly Executive Forum and quarterly Chief Executive presentations

·      People Survey

·      Town hall and focus group meetings whenever needed

·      Semi-annual Leadership Forum

·      Social activities organised by staff-initiated interest clubs, sports teams and volunteer team throughout the year

·      Annual summer events engaging employees’ family members

Suppliers/ business partners

 

·      Tender notices for procurement of products/services

·       Work inspection and supervision as scheduled

·      Supplier CSR Code of Conduct and CSR questionnaire for engaging key suppliers

What actions were taken by HKEX to promote business integrity?

In its 2019 Corporate Social Responsibility Report HKEX reports that it took the following actions for promoting business integrity:

  • Enhancing the Group Anti-Bribery and Anti-Corruption Policy
  • HKEX enhanced the Group Anti-Bribery and Anti-Corruption Policy with key changes, including strictly prohibiting the giving or receiving of cash gifts by all staff and the giving and receiving of non-cash gifts by Listing Department staff.
  • Launching a new web-based whistleblowing channel
  • HKEX launched a new web-based whistleblowing channel that allows employees to raise genuine disclosures independent of HKEX IT systems and in accordance with the Group Whistleblowing Policy. In addition, HKEX implemented a new HKEX External Whistleblowing Policy that allows external parties to raise genuine disclosures in a manner similar to employees. HKEX also enhanced its Group Whistleblowing Policy by:
    • centralising the whistleblowing reporting route to the Group General Counsel or Head of Regulatory Compliance;
    • empowering the Group General Counsel to appoint independent third parties to investigate received disclosures; and
    • introducing a new HKEX Whistleblowing Advisory Panel to provide advice, direction and oversight in exceptional circumstances.
  • Updating the LME and LME Clear Conflicts of Interest Policy
  • To reflect the enhanced regulatory scrutiny on conflicts of interest, HKEX updated the LME and LME Clear Conflicts of Interest Policy in 2019. Training was given for all line managers, informing them of their first line responsibilities around managing conflicts of interest and to ensure employees understand how to identify conflicts of interest. The policy update also culminated with all employees being required to declare they had read and understood the updated policy, and to make their annual conflict of interest declaration.
  • Implementing a Code of Conduct
  • In April 2019, the LME launched its Code of Conduct. The Code of Conduct represents a natural extension of HKEX Group Values, providing clear guidance for LME Group employees, LME member employees at the LME premises and attendees at LME events. The LME believes the Code of Conduct will facilitate the ongoing enhancement of conduct across the wider metals sector and help make sure all individuals in the industry can rightly expect a welcoming, respectful and inclusive environment.

Which GRI Standards and corresponding Sustainable Development Goals (SDGs) have been addressed?

The GRI Standard addressed in this case is: Disclosure 205-2 Communication and training about anti-corruption policies and procedures

Disclosure 205-2 Communication and training about anti-corruption policies and procedures corresponds to:

 

80% of the world’s 250 largest companies report in accordance with the GRI Standards

SustainCase was primarily created to demonstrate, through case studies, the importance of dealing with a company’s most important impacts in a structured way, with use of the GRI Standards. To show how today’s best-run companies are achieving economic, social and environmental success – and how you can too.

Research by well-recognised institutions is clearly proving that responsible companies can look to the future with optimism.



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By registering for the next 2-day FBRH GRI Standards Certified, IEMA & CIM recognised course you will be taking the first step in gaining the many benefits of sustainability reporting.

Most importantly, you will gain the knowledge to use the GRI Standards, project manage your own first-class sustainability report and:

  • Identify your most important impacts on the Environment, Economy and Society
  • Begin taking solid, focused, all-round sustainability action ASAP

 

References:

1) This case study is based on published information by HKEX, located at the link below. For the sake of readability, we did not use brackets or ellipses. However, we made sure that the extra or missing words did not change the report’s meaning. If you would like to quote these written sources from the original, please revert to the original on the Global Reporting Initiative’s Sustainability Disclosure Database at the link:

http://database.globalreporting.org/

2) https://www.globalreporting.org/standards/gri-standards-download-center/

Note to HKEX: With each case study we send out an email requesting a comment on this case study. If you have not received such an email please contact us.