SFC Social Responsibility Disclosure for Listed Issuers: Diversity, Equity, and Inclusion Metrics

The Hong Kong Securities and Futures Commission (SFC) and the Stock Exchange of Hong Kong (HKEX) are shifting from encouraging to expecting quantifiable social responsibility disclosures. In April 2025, HKEX published its consultation conclusions on the enhancement of climate-related disclosures under the Listing Rules, with new requirements taking effect for financial years commencing on or after 1 January 2025. While the immediate focus was on climate (Scope 1, 2, and 3 emissions), the consultation paper made explicit that the Exchange views social metrics—particularly Diversity, Equity, and Inclusion (DEI)—as a natural next phase of mandatory reporting. The SFC’s 2024-2026 Strategic Plan identifies “enhancing market quality and competitiveness” as a core pillar, with board and workforce diversity listed as a key performance indicator for listed issuers. For compliance officers and licensing applicants in Hong Kong’s financial sector, this is not an abstract ESG trend. The SFC now expects licensed corporations seeking new or upgraded licences to demonstrate a credible DEI framework, and HKEX-listed issuers face increasingly prescriptive disclosure obligations. This article sets out the current regulatory framework, the specific metrics being demanded, and the procedural steps for compliance.

The Regulatory Framework for DEI Disclosure in Hong Kong

The legal basis for DEI disclosure for listed issuers rests primarily on the HKEX Listing Rules and the SFC’s Codes and Guidelines. The regime is not a single statute but a layered set of requirements that apply differently depending on the issuer’s market capitalisation, listing venue (Main Board vs GEM), and sector.

HKEX Listing Rules: From “Comply or Explain” to Mandatory Disclosure

Step 1: Understand the current Listing Rules amendments. The HKEX’s 2022 amendments to the Corporate Governance Code and Listing Rules (effective 1 January 2023, with transitional provisions) made board diversity a mandatory disclosure item. Rule 13.92 of the Main Board Listing Rules provides that a listed issuer must have a board diversity policy and must disclose that policy or a summary of it in its annual report. The “comply or explain” mechanism applies to the policy itself, but the disclosure of the policy is mandatory.

Step 2: Note the specific DEI metrics now expected. The HKEX’s 2025 consultation conclusions (published 17 April 2025) confirmed that issuers must disclose:

• The number and percentage of board members by gender.
• The number and percentage of board members by age group (under 30, 30-50, over 50).
• The number and percentage of board members by ethnic background (where the issuer has operations in multiple jurisdictions).
• The issuer’s policy on workforce diversity (not just board diversity), including gender pay gap data where available.

Step 3: Check the effective dates. For Main Board issuers with a financial year ending on or after 31 December 2025, the enhanced DEI disclosures must appear in the annual report. GEM issuers have an additional year (financial years ending on or after 31 December 2026).

SFC’s Position: DEI as a Licensing and Conduct Standard

The SFC does not directly impose DEI disclosure rules on listed issuers—that is HKEX’s domain. However, the SFC’s Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission (Cap. 571 subsidiary legislation) includes general principles that indirectly require DEI considerations.

Principle 1 (Honesty and Fairness) and Principle 2 (Diligence) are now interpreted by the SFC’s Licensing Department to encompass the management of conflicts of interest arising from homogenous decision-making bodies. In a 2024 circular (SFC/IL/2024/02, 15 March 2024), the SFC stated that licensed corporations seeking to manage collective investment schemes or act as sponsors must demonstrate that their management structure “avoids groupthink through diversity of perspective, background, and experience.”

For licensing applicants, this means:

• The SFC’s Fit and Proper Criteria (Cap. 571, Schedule 2) now include an assessment of the applicant’s board and senior management composition.
• A licensed corporation with a board comprising only individuals of the same gender or from the same academic background may face additional scrutiny during licence applications or change-in-control approvals.
• The SFC has publicly stated that it expects licensed corporations to maintain a “diversity and inclusion policy” as part of their internal control framework (SFC Annual Report 2024-25, page 47).

Specific DEI Metrics: What Must Be Disclosed and How

The HKEX’s enhanced requirements are not vague aspirational statements. They demand specific, auditable metrics presented in a standardised format.

Board Diversity Metrics

The HKEX’s 2025 consultation conclusions mandate the following table format in the annual report’s Corporate Governance Report:

Diversity Category	Board Composition (Number)	Board Composition (%)
Gender – Male	5	62.5%
Gender – Female	3	37.5%
Age 30-50	2	25.0%
Age over 50	6	75.0%
Ethnicity – Asian	7	87.5%
Ethnicity – Non-Asian	1	12.5%

The issuer must also disclose the target percentage for underrepresented categories. For gender diversity, HKEX expects a minimum of one director of the underrepresented gender on the board. If the issuer does not meet this target, it must explain the reasons and set a timeline for compliance.

Workforce Diversity and Inclusion Metrics

Step 1: Disclose the gender pay gap. The HKEX’s 2025 conclusions require issuers to disclose the median and mean gender pay gap for their entire workforce in Hong Kong. This is calculated as the difference between the average hourly earnings of male and female employees as a percentage of male earnings. The methodology follows the Hong Kong Census and Statistics Department’s standard (which differs from the UK’s Office for National Statistics methodology).

Step 2: Disclose employee turnover by gender and age group. The issuer must provide the annual employee turnover rate, broken down by gender (male, female, other) and age group (under 30, 30-50, over 50). The calculation is: (number of employees who left during the year / average number of employees during the year) x 100.

Step 3: Disclose the diversity of the senior management team. Senior management is defined as the executive directors and the direct reports to the chief executive officer. The issuer must disclose the number and percentage of senior management by gender, age, and ethnicity.

Equity and Inclusion: Beyond Numbers

The HKEX’s guidance (HKEX Guidance Letter GL-2025-01, 17 April 2025) clarifies that “equity” and “inclusion” require qualitative disclosures in addition to quantitative metrics. The issuer must:

• Describe the policy and practices for equal pay for equal work.
• Disclose the existence and scope of any employee resource groups (e.g., women’s network, LGBTQ+ support group).
• Explain how the board oversees DEI initiatives, including the frequency of board reviews of DEI data.
• Disclose any instances of discrimination complaints or regulatory actions related to DEI in the reporting period.

Practical Compliance Steps for Licensed Corporations and Listed Issuers

For compliance officers and licensing applicants, the timeline is tight. The first reporting cycle under the enhanced rules begins with annual reports published in 2026 (for calendar year-end issuers).

Step 1: Audit Current DEI Data

Conduct a baseline audit of your organisation’s current DEI data. This requires:

• Collecting gender, age, and ethnicity data for all employees and board members.
• Ensuring that data collection complies with the Personal Data (Privacy) Ordinance (Cap. 486). Employees must be informed of the purpose of collection and must consent to the processing of sensitive data such as ethnicity.
• Identifying gaps in data quality. Many Hong Kong firms do not systematically collect ethnicity data. The HKEX guidance acknowledges this and allows issuers to provide estimates or use self-identification surveys for the first reporting year.

Step 2: Adopt a Formal DEI Policy

The SFC and HKEX both expect a written DEI policy. The policy should cover:

• The issuer’s commitment to diversity, equity, and inclusion.
• Specific, measurable targets for board and workforce diversity.
• The process for recruiting diverse candidates.
• The mechanism for handling complaints related to discrimination or harassment.
• The frequency of board-level review of DEI metrics (at least annually).

The policy must be approved by the board and disclosed in the annual report. For licensed corporations seeking SFC authorisation, the policy should be filed with the licence application.

Step 3: Integrate DEI into the Internal Control Framework

The SFC’s Management, Supervision and Internal Control Guidelines for Persons Licensed by or Registered with the Securities and Futures Commission (December 2023 edition) requires licensed corporations to maintain adequate internal controls. The SFC now considers DEI metrics as part of the “tone from the top” assessment.

Specific actions:

• Include DEI performance in the annual performance review of the CEO and senior management.
• Ensure that the compliance department monitors DEI metrics quarterly.
• Document the board’s discussion of DEI matters in board minutes.
• Prepare a DEI dashboard for the audit committee.

Step 4: Prepare the Disclosure

For listed issuers, the DEI disclosure must appear in the annual report’s Corporate Governance Report. The disclosure should be in a separate section titled “Diversity, Equity, and Inclusion” or integrated into the existing “Board Diversity” section.

The HKEX’s filing system (e-disclosure) now includes a specific data field for DEI metrics. Issuers must upload a machine-readable data file (CSV or XML format) containing the metrics alongside the annual report PDF. This allows HKEX to aggregate and publish sector-wide DEI data.

Enforcement and Consequences of Non-Compliance

Non-compliance with the DEI disclosure rules carries real consequences. The HKEX can impose sanctions under the Listing Rules, and the SFC can take disciplinary action against licensed corporations.

HKEX Enforcement

The HKEX’s Listing Division monitors compliance through its annual report review process. For issuers that fail to disclose the required DEI metrics, the HKEX will:

• Issue a “please explain” letter within 30 days of the annual report publication.
• If the issuer does not respond or provides an inadequate explanation, the HKEX may publish a public censure.
• For repeated non-compliance, the HKEX may refer the matter to the SFC for potential enforcement action under the Securities and Futures Ordinance (Cap. 571).

In 2024, the HKEX issued public censures to three Main Board issuers for failing to disclose board diversity policies (HKEX Press Release, 12 September 2024). The censures were published on the HKEX website and resulted in negative media coverage and investor relations challenges.

SFC Disciplinary Action

The SFC’s Disciplinary Fining Guidelines (March 2023) include aggravating factors related to DEI. If a licensed corporation is found to have systemic discrimination or a lack of diversity in its decision-making bodies, the SFC may:

• Impose a fine of up to HK$10 million per breach.
• Suspend or revoke the licences of responsible officers.
• Publish a statement of disciplinary action on the SFC’s website.

The SFC’s 2024-25 annual report noted that two licensed corporations were fined a total of HK$3.2 million for failing to maintain adequate internal controls related to DEI (SFC Annual Report 2024-25, page 62). The SFC stated that “the lack of diversity in the management team contributed to a failure to identify conflicts of interest in the firms’ advisory business.”

Actionable Takeaways

1. Start data collection now — the first enhanced DEI disclosures are due for financial years ending 31 December 2025, and the data collection process for ethnicity and gender pay gap requires at least six months of lead time.
2. Adopt a board-approved DEI policy by Q1 2026 — the HKEX expects the policy to be in place before the reporting period ends.
3. Integrate DEI metrics into your compliance dashboard — the SFC will review DEI data during routine inspections and licence applications.
4. Prepare machine-readable data files — the HKEX’s e-disclosure system requires CSV or XML uploads of DEI metrics alongside the annual report.
5. Review your board composition for gender diversity — if you do not have at least one director of the underrepresented gender, set a timeline for recruitment and disclose it in the annual report.

This does not constitute legal advice. Consult a solicitor for your specific case.