The Hong Kong Stock Exchange is to implement new requirements for board diversity at listed companies following a consultation which included feedback from some of the world’s leading institutional investors.
Listed companies will have to, on a comply or explain basis, have a policy on board diversity and disclose it in their corporate governance reports – along with any measurable objectives for implementing the policy, and progress on achieving those objectives.
The new requirements come into force on September 1 2013. It follows a consultation earlier this year, which the exchange said showed “overwhelming support” for the plans.
A number of leading global investors were among the 139 bodies which made submissions to the consultation.
The California Public Employees’ Retirement System (CalPERS) said: “We see diversity as a route to improving the quality of boards, and thereby corporate performance.
“We also see this as a one of the components of Sustainability: Environmental, Social and Governance (ESG) that should be integrated into the investment decision making process.”Hermes Equity Ownership Services added: “We believe that company boards will be most effective if they reflect the diversity of their businesses and their stakeholders.”
Dutch pension giant PGGM stated: “We do not believe that diversity only relates to gender, but should be viewed in a broader sense: diversity of perspectives and experience, including – but not limited to – professional experience, psychological type, ethnicity as well as national, cultural and social background.”
“We note the overwhelming market support”
“We note the overwhelming market support for the exchange to promote board diversity and to introduce measures in the [corporate governance] code,” said Mark Dickens, Head of Listing at the exchange. The exchange will provide training on the new measures as part of regular Listing Rules training. But it won’t provide samples of the policy because it says each company should develop a policy on its own. It says: “Providing samples may encourage box-ticking compliance. The issuer should develop a policy that has been debated at the board level.” Announcement