Edited by Angus Yip, CSG Consultancy – Director of Sustainability
Two Years after ESG Reporting in Hong Kong
Time flies as it’s already two years after the semi-mandatory requirement for all the listed companies in Hong Kong to issue ESG reports. CSG Consultancy has been assisting them to write the reports, and we would like to share our comments, especially of those smaller listed companies which are not yet motivated.
Important but not Urgent ………
It was found that most smaller listed companies lack the knowledge and skills in ESG reporting, but most of them agreed that the reporting is the foundation of good performance. Stakeholder engagement is encouraged by Hong Kong Exchange as it can help to identify what material information to be disclosed. Interestingly we noticed that in the process stakeholder engagement, most stakeholders support the importance of ESG reporting, which can in turn reinforce the top management’s belief of ESG reporting’s benefits. However, many of them still adopt a “check-list” approach to do the minimum. The top management of smaller listed companies generally cannot see the urgency due to the lack of linkage between ESG reports and stakeholders’ short-term concerns. For those smaller listed companies with reputable funds as their shareholders, they are “pushed” to report well because shareholder’s pressure is effective enough.
Some Recommendations
- To nudge the top management for their commitment in ESG reporting, it is a MUST to create a clear mapping of ESG activities to cost saving, risk management (e.g. internal control and regulation compliance) and talent retention, a very concrete picture is needed to show how the benefits of ESG activities link up with its core competence and competitive edge.
- The ESG benefits should be presented in quantified manner showing how the reporting can create economic value.
- Annual improvement and target setting are necessary, even at a very slow pace, to prevent greenwashing.
