In January of 2005, a groundbreaking report was released by the United Nations Global Compact. The report, titled Who Cares Wins, was the origin of the Environmental, Social, Governance (ESG) movement as we know it today. In 2005, the emerging globalized world was being presented with a host of problems that businesses were not equipped – or required – to deal with.
These problems include large issues such as climate change and environmental sustainability, as well as a host of new social issues like labour conditions, conflict and changing economic landscapes, namely income inequality as capital was being fed into these regions. While companies were having greater levels of interaction with the developing world through their vast supply chains, contracts, and sourcing, they did not all have a proportionate level of responsibility for their impact.
To address these issues, the United Nations sought to create a new international standard. Beyond the figurative “bottom line”, businesses were strongly encouraged to integrate ESG factors into their reporting.
This new approach has not only shaped the practices of businesses all over the world and throughout Asia, but most recently, here in Hong Kong. In December of 2015, exactly ten years after the United Nations Report, the Hong Kong stock exchange passed new legislation requiring businesses to begin publishing ESG reports, making it mandatory for listed companies to comply with these new regulations.
Yet beyond a web of new legislature and a rising global standard, what is the purpose of ESG information?
This global initiative was launched over a decade ago to create a future world with better investment markets and more sustainable societies. The initial contributors to Who Cares Wins, CEOs of some of the world’s largest financial institutions, saw the need for changes in our increasingly globalized world that we are still in the process of making today. Hong Kong is the latest to adapt to the growing demands for accountability and sustainability in business.
