Listed Companies - Are you ready for ESG reporting?

Listed companies, Are You Ready for Environmental, Social and Corporate Governance (ESG) Reporting? 

I have conducted a survey on the provision of information related to corporate social responsibility (CSR), sustainability reporting and corporate governance (CG) by Hang Seng Index composite companies through their websites in June 2007. In view that HKEx has a plan to raise the obligation level for ESG disclosure to "comply or explain" in 2015, a follow-up survey was conducted in mid March 2014.

The follow-up survey covered 50 Hang Seng Index Composite Companies in view of comparability. In addition, these companies have the representation of the relevant sub-sector within the Hang Seng Index directly reflecting that of the market as well as the market capitalization and turnover ranking of these companies.

The disclosure on CSR, Sustainability and CG on the websites of these HSI companies, including any links associated with the websites, would be defined as:

·         CSR – any contents covering the company’s involvement in the community, protecting the environment, etc.

·         Sustainability reporting – the periodical report(s) on a company’s efforts in sustainable development or corporate (social) responsibility

·         CG – any contents describing the different aspects of corporate governance such as board of directors, list of board committees, code of practice or CG related policies, etc.

Sharing on the research findings are as below.

Key Findings At A Glance

CSR Content	Yes	41
	No	9
	(TOTAL)	50
Sustainability Reports	Reports*	30
	Part of annual reports	10
	No such report	10
	(TOTAL)	50
* Separate report on sustainability, or corporate social responsibility
Corporate Governance	Yes	50
	No	0
	(TOTAL)	50

Highlights

1.      Though 41 companies have such disclosure in their websites, some of them were only a webpage listing the activities in chronological order, or with minimal description but some links to the sustainability or CSR reports.

2.      Among the 50 Hang Seng Composite Companies, 40 companies have either separate report or a section in their annual report on ESG disclosure whereas 12 out of 39 companies had such reporting in the 2007 survey.

3.      Although the HKEx consultation conclusions revealed that GRI may be daunting to listing companies just beginning the work, GRI reporting guidelines is widely adopted by those companies who have the sustainability disclosure. Among these, G3.1 of GRI is the most popular standard adopted:

4.      For those Mainland companies, some of them are also referring to the standard by Chinese Academy of Social Science (CASS). Meanwhile, only 6 of those having disclosure mentioned that they referred to the Guidelines issued by HKEx, while there were very a few stating that ISO 26000 and AA1000 have been referred when preparing the reports.

5.      18 reports included assurance by third parties whereas PricewaterhouseCoopers (PwC) and Hong Kong Quality Assurance Agency (HKQAA) are the two popular assurance companies.

6.      No matter it is disclosed as a separate report or in annual report, the usual format takes the PDF file. Meanwhile, 16 companies adopted web-based approach or even using e-book format.

Further Thoughts

1.      Will the disclosure requirement through Listing Rules affect the ESG activities of the companies? The answer is positive. There would be plenty room for the PR professionals to work on.

2.      Benchmarking for international standards for reporting like GRI? From the comparison of the surveys conducted in different year, more companies adopted the international standards. Training to enhance the understanding of these international standards would be an aspect to look into.

3.      Listed companies – are you ready for ESG reporting? Some are but some need to do more!