RobecoSAM AG, which specializes in providing ESG data, has launched the Asia Status Report 2018. The report uses the SAM Corporate Sustainability Assessment (CSA), an independent evaluation of companies’ sustainability performance. Where does Asia stand and how is Hong Kong performing can be gauged from this report. It shows that Asian companies outperform the global average of performance in sustainability management. However, there is significant room for improvement in Hong Kong and China.
Environmental reporting
Hong Kong scored 72, lagging behind the Asia average of 77.99 (China scored 57). Along three dimensions of environmental reporting, Hong Kong does well in terms of coverage, that is, the scope of the disclosure. However, Hong Kong lags behind with a score 10% lower than Asia average in terms of data covering three quantitative environmental key performance indicators (KPI). The score of Hong Kong in terms of assurance, which adds to the credibility of reporting, is not available but China’s score is very low at 17.
Social Dimension
Asia in general lags behind in tracking and disclosure of company-wide data on employee training and development. Increasingly scrutinized by international investors, Asian companies tend to engage in “easy targets” such as general CSR and philanthropic activities, rather than addressing human rights. Hong Kong scored only 15 out of 100 for human rights, which is the third lowest score, ahead of only China, which scored 6. Human rights commitments need a company-specific human rights policy in accordance with internationally accepted standards for the company’s own operations, its suppliers and partners.
Corporate governance
Asia, in general, scored relatively low on gender diversity, board structure and management ownership requirements. Hong Kong had the second-best gender diversity score among all Asian Countries and performed better than China in all governance aspects. However, scoring below Asia average for the board structure and non-executive chairman, Hong Kong certainly needs to put in substantial efforts.
According to SAM, the wide range of sustainability scores within Asian countries indicates that the early movers have not yet inspired mass adoption of world-class sustainable practices and transparency standards in any of the 11 Asian countries covered. While Hong Kong companies have significantly higher scores than Chinese companies in general, it is recommended that they focus on improving KPIs reporting, human rights commitment and board structure to reach the Asia average.
