Driving Corporate Governance and ESG Excellence: The Power of Electronic Communication

Environmental, social, and governance (ESG), plays a crucial role in shaping corporate operations. As societal concerns and environmental consciousness continue to grow, companies are expected to demonstrate their commitment to ESG and practices across various sustainability dimensions.

Environmental challenges are becoming more pressing, and the public is demanding greater environmental responsibility and sustainable practices from companies. Insights into a company's ESG awareness can be communicated in various ways, from disclosures in periodic reports to corporate publications such as annual and interim reports, quarterly updates, meeting notices, and listing documents. Companies must effectively communicate their ESG principles, commitments, and practices through diverse channels in order to build broad social trust and gain public support. A robust ESG management system not only reinforces a company's sense of social responsibility but also enhances its relationship with the public, ultimately bolstering its reputation and increasing brand awareness.

HKEX's Journey Towards Electronic Communication

On March 27, 2001, the Stock Exchange of Hong Kong Limited (HKEX) issued the "Corporate Communications Using Electronic Means" announcement:

• "HKEX will consider granting waivers to allow listed issuers to send or make available corporate communications to holders of securities using electronic means if this would be allowed under applicable laws and regulations and the listed issuers own constitutional documents. The listed issuer must first have received from the relevant holder a definite confirmation that the holder wants to receive or have made available to the holder the corporate communications using the method the listed issuer has suggested."

On January 2, 2009, HKEX took further step to facilitate electronic communication with its registered shareholders:

• “HKEX’s shareholders are encouraged to access Corporate Communications from the company through HKEX’s corporate website, which helps protect the environment. HKEX believes it is also the most prompt, efficient and convenient method of communication with its shareholders.”

On December 16, 2022, HKEX published conclusions on proposals to expand paperless listing regime:

• One of the key changes to the Listing Rules included “the mandatory electronic dissemination of corporate communications by listed issuers to the extent permitted by the laws and regulations.”

In June 2023, HKEX published the consultation conclusion of the "Proposals to Expand the Paperless Listing Regime and Other Rule Amendments”:

• “To mandate that listed issuers must disseminate corporate communications to their securities holders electronically to the extent permitted under their applicable laws and regulations.”

The Advantages of Electronic Corporate Communication

To keep abreast of the current landscape, numerous corporations have revised their communication policies to provide shareholders with the option to receive corporate communications electronically, replacing traditional paper mailings. This shift towards electronic communication offers a multitude of benefits, including:

1. Convenience and Speed: Electronic communication enables real-time dissemination of corporate information, regardless of time or location, enhancing the efficiency of information disclosure and ensuring timely access for shareholders.
2. Cost Savings: Compared to traditional mailing or courier processes, electronic communication significantly reduces expenses associated with postage, printing, and paper usage. This reduction in operational costs can positively impact a company's financial performance.
3. Security and Reliability: Electronic communication employs robust technologies to ensure accurate delivery of messages. Unique backup and recovery mechanisms are in place to prevent mishaps such as lost mail, providing enhanced security and reliability for sensitive corporate information.
4. Diversification: Electronic communication offers the flexibility to utilize multiple channels, including email, instant messaging, and social media. This allows companies to choose the most suitable and effective methods for communication and engagement based on their shareholder preferences.
5. Environmental Friendliness: By embracing electronic communication, companies contribute to environmental sustainability efforts. This shift reduces resource waste associated with paper mailings and minimizes the carbon footprint, aligning with corporate social responsibility goals.

Companies should prioritize strengthening employees' environmental awareness and actively encourage the shift towards electronic communications. In this way, companies can drive sustainable development, reduce their ecological impact, and align their operations with environmentally responsible practices.

Furthermore, electronic communication fosters standardized, transparent, and efficient corporate governance. It plays a pivotal role in ensuring effective communication between stakeholders, facilitating timely decision-making, and contributing to a company's long-term growth and success.

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