ESG and Emerging Liability Risks in Hong Kong SAR

Amidst the coronavirus pandemic, 2020 has seen environmental, social and governance (“ESG”) issues rise exponentially in prominence, with a focus on ESG by corporations and funds frequently being framed as a reason for outperformance compared to “non-ESG” peers. While it remains true that ESG presents significant opportunities, businesses globally are now also having to consider ESG as a source of legal, operational and regulatory risk.

Hong Kong SAR is no exception to this, and over the past 12 months has seen a marked increase in the pace of regulatory change. The interest in ESG is not limited to investors and regulators, but also includes scrutiny from governments and activists, all inevitably giving rise to potential risks. 

With ESG developments increasing pace in Asia, this alert highlights key litigation and regulatory risks in Hong Kong SAR, considered under four broad themes: 

  • Disclosure-related litigation
  • Regulatory scrutiny
  • "Green-washing" and mis-selling
  • Director and senior management responsibility