13 Sept 2017
BDO Survey: ESG Reporting Of Hong Kong Listed Companies
Effective from 1 January 2016, every listed company in Hong Kong is required to disclose its ESG information on an annual basis. To understand ESG reporting practices since the implementation of this regulation, BDO Hong Kong has conducted a desktop survey and reviewed the ESG disclosures of 300 companies listed on the Main Board. Of the 300 companies surveyed:
- 20% were constituents of the Hang Seng Index, Hang Seng China Enterprises Index and/or the Hang Seng Corporate Sustainability Index, and 80% were non-index stocks.
- 77% were first-timers to ESG reporting and over 60% of them disclosed some social data not compulsory under the general disclosure requirement.
- The utilities sector led with the highest score, whereas the materials and information technology sectors scored the lowest.
- In terms of data disclosure, the energy, financial and utilities sectors were leaders and the consumer goods and information technology sectors lagged.
ESG reporting can be an important tool for tracking and managing external and internal risks, as well as for highlighting corporate governance efforts. For instance, in managing supply chain, by using ESG assessment on suppliers and providing support to enhance suppliers’ ESG performance, a company can maintain product sustainability and build customer confidence. However, while over 80% of the surveyed companies assessed their suppliers, less than 10% of them provided support to enhance suppliers’ ESG performance. Disclosing concluded corruption cases can also increase transparency and help improve stakeholders’ confidence in a company. However, despite over 90% of the companies had anti-corruption measures in place, around 40% of them did not mention whether there were concluded corruption cases in the operating year. Lack of transparency on this front may affect stakeholders’ confidence.
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