Third Annual Survey of ESG Reporting by Hong Kong T200
First year in which all environmental KPIs under Appendix 27 have become mandatory
The principal purpose of the survey is to examine ESG reporting practices being followed, primarily to identify gaps that need improvement. The research team of Alaya Consulting, strategic partner of InfoSymm, studied ESG reports of the top 200 Hong Kong listed companies with the largest market capitalization (“T200”). Data and analysis are based on review of public information comprised of annual reports and stand-alone ESG reports that disclose against the HKEX ESG Reporting Guidelines stipulated under Appendix 27 of the Listing Rules.
Alaya Consulting’s third annual survey of ESG reporting shows that involvement of boards of directors needs to be enhanced further and climate change risks need to be recognised and addressed by more companies.
Emphasising the need for earning greater trust of stakeholders, Alaya points out that over a third of companies still do not have a proper organisational structure for management of sustainability and 38% of companies have not disclosed materiality assessment. “Companies need to narrate and explain management approach, policies, target setting, monitoring systems and results achieved in a more comprehensive manner,” says Alaya.
The latest Survey has emphasized industry-specific analysis and has found that ESG scores of construction and industrial sectors are still weak, particularly in occupational health and safety while telecommunications and utilities have recorded relatively high scores. Disclosures on labour standards, human rights and use of conflict materials are also weak.
Against 23% last year, 30% companies are voluntarily using GRI standards which are a more comprehensive sustainability disclosure framework than the Appendix 27. As many as 26 companies are following two or more reporting guidelines, besides HKEX ESG stipulations (Appendix 27). Also, more companies are aligning Sustainable Development Goals with ESG reporting, though the number of companies that have set targets for reduction of GHG emissions has dropped. Nevertheless, on the whole, prospects of enhanced ESG reporting and the subsequent impact on the environment are bright.