austcham news 185 by The Australian Chamber of Commerce in Hong Kong

ESG EDITION The Australian Chamber of Commerce Hong Kong and Macau 香港及澳門澳洲商會

ISSUE 185, 2016

Hong Kong’s New ESG Standards Benefit Investment, Profitability and Corporate Longevity P.10

Cover Story: AustCham’s innovative new sustainability series ‘ESG and Its Impact’ highlights information as vital to business success

P.16

Industry Insights: ESG Reporting: A step closer to impactful business

P.13

Special Feature: Australians in Finance www.austcham.com.hk

Contents

austcham news issue 185 03 Chamber Chatter 05 Events Update 06 Cover Story Hong Kong’s New ESG Standards Benefit Investment, Profitability and Corporate Longevity

12 ESG Spotlight

13 Industry Insights

Editorial Committee: Drew Waters Karen Wu

ESG Reporting: A step closer to impactful business

14 Hong Kong Focus

15 & 18

15 Membership eCard Benefit

17 Australians in Finance

19 AustCham Mentor Programme

The Australian Chamber of Commerce in Hong Kong and Macau has more than 1,500 members from some 500 companies doing business here. It’s the largest Australian business grouping outside the country and the second largest of 28 International Chambers of Commerce in Hong Kong. The AustCham mission is: To promote & represent Australian business & values while enabling members to connect, engage & grow bilateral relationships.

20 Corporate Profile Servcorp

Advertising: Karen Wu Email: karen.wu@austcham.com.hk

CONNEC T • ENGAGE • REPRESENT

Committees in Action

Published By: The Australian Chamber of Commerce in Hong Kong and Macau Room 301-302, 3/F, Lucky Building 39 Wellington Street, Central, Hong Kong Tel: +852 2522 5054 Email: austcham@austcham.com.hk

21 On The Scene Disclaimer:

austcham news Online version

The views expressed in this publication are not necessarily those of the Australian Chamber of Commerce in Hong Kong and Macau, its members or officers. The Australian Chamber of Commerce in Hong Kong and Macau takes no responsibility for the contents of any article or advertisement, makes no representation as to its accuracy or completeness, and expressly disclaims and liability for any loss however arising from or in reliance upon the whole or any part of this publication. Copyright © 2016 The Australian Chamber of Commerce in Hong Kong and Macau

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Chamber Chatter

Chairman's Column The Environmental, Social and Governance (ESG) space is the focus of this month’s AustCham News. Companies have an incentive to pay attention to ESG if they feel that doing so will deliver a return of some sort. Value maximisation is an incentive, and focusing on ESG helps achieve this. For the average punter, ascertaining the “true” value of a company is still highly problematic. This is largely the result of information asymmetries that endure in spite of the progress that has been made in revisiting old accounting orthodoxy and in controlling more vigorously various interactions between actors in the capital markets. The financial reporting environment has evolved to ensure that the content of publicly available company accounts is more consistently prepared and, therefore, more comparable and decision-relevant than in the past. However, if maximizing company value is the name of the game, there is still much that can be done. Most valuations still focus on market indicators, and on attaching clearer dollar signs to tangible assets. Problematically, the gamut of assumptions implicit in valuation approaches that rely upon market metrics often compounds estimation bias so greatly that placing faith in the end result is akin to trusting in Mystic Mary’s daily horoscope as a guidebook for life choices. One explanation for this is that insufficient information is available to investors to adequately resolve the uncertainty that confronts them when wrestling with the old chestnut of how much risk there is and, therefore, what compensation should be sought. It is a simple progression; the blacker the box, the higher the risk premium, and the costlier the capital. Is there a fix? Well, there is no miracle solution that will lead to the efficient wonderland that would be created by perfect information. But there are practical steps that companies can take to make their condition better known to investors, thereby inflating future value estimates and compressing discount factors in a way that delivers an immediate increase in shareholder value. Perhaps the most effective action many companies can take is to extend their existing reporting framework to provide detailed supplementary information on the value of their intangibles. This value is in the form of human capital, structural capital, and social capital. Increasingly, it lies in convincing society that the company cares about ESG. Considerable empirical evidence now exists in support of the notion that voluntarily communicating information on intangibles (including ESG), in the right way, leads to an increase in share price. The information does not necessarily have to be expressed in dollar terms. Non-financial performance metrics also work to more fully inform report users. This being the case, all interested parties are sensibly motivated to look into the often invisible corners of business that are a hiding place for soft assets – to identify positive ESG factors and leverage them. …................................................................................................... November 1 is Melbourne Cup day and I am delighted to advise that the Chamber’s board will convene in Macau that day to attend a function being hosted by members and to hold a board meeting. We very much look forward to catching up with many Macau based members. …................................................................................................... I hope that you will connect with the Chamber this month in some way, and that you will continue to share your views on how best the Chamber can serve you. Richard Petty chairman@austcham.com.hk

issue 185 | austcham news

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Chamber Chatter

Across My Desk Welcome back to the humidity after the recent rain. I hope you all survived the Typhoon and were able to make the most of the day off? We kicked off our new ESG series of events this month with the very generous support of Baker Tilley. This has become a topical discussion over the past months, with HKEx requiring a “Comply or Explain” for listed companies in Hong Kong, which will scale up again in January next year. The next of the series will concentrate on a different aspect of ESG, and will drill down into some detail. It was a great response for the first event, and we hope to see you at the second. Watch this space. On topic, I was very pleased to attend the the Hong Kong Sustainability Award Launching Ceremony at The Hong Kong Management Association this week. I look forward to monitoring the nominations and the recipients of this initiative over the next few months and wish the Association the very best for the process. Our newest working group, the Marketing and Media Network, held its inaugural information event earlier this week, with globally recognised speaker Chris Stephenson outlining the impact Artificial Intelligence will have on the marketing approach into the foreseeable future. It was a great evening, with some good networking to compliment the highly evocative presentation. Thanks to all involved, and especially to our series partner St Regis, for their generous support. Coinciding with the inaugural E-Prix in Hong Kong, our Sustainability and Business Technology Networks staged a discussion on Hong Kong’s transport vision into the next decade. We were very privileged to be able to hold this in the press facility within the E-Prix circuit, with the

SENsational Consultancy Ltd.

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Their experienced team will provide the necessary training, which includes disability and logistical awareness; inclusion etiquette and sensitivity; interactive workshops; integrative leadership and skills building, to fit each company’s requirements, as this is not a ‘one size fits all’ process.

generous support of Alex Arena and his team at HKT, and Alejandro Agag from Formula-e. I have recently altered my LinkedIn profile after our presentation by Chris Reed this month. I believe a number of those attending may have done the same, in order to achieve a better response from the exposure. Good tips and a pretty good lunch at Frites Central. A very select group of our members enjoyed a degustation at the Salt Popup Restaurant in Conrad Hotel, with Chef Luke Mangan presenting some exquisite dishes from his team. Australia on a plate, indeed! A great evening. We will be holding our next Board of Directors meeting in Macau for the first time in November, and I am looking forward to interacting with our membership there. Our Women in Business Network is hosting Elizabeth Proust Chair of AICD, and Nicola Wakefield-Evans at a luncheon to discuss the path to C-Suite and Boardrooms as part of the Leadership Series, and our re-formatted ACCESS China Forum will roll out later in the month. In relation to this, I recently met the newly appointed IP Councillor for China, David Bennett, who will take up his role in Beijing toward the end of the year. Trademarking and IP protection will form a significant component of any organisations plans when creating business opportunities in China, and I am pleased to have access to David’s department to advise our members. It’s going to be busy in the lead-up to Christmas party season, so please check the events calendar regularly. Most importantly, of course, is the Chamber Christmas Mix at Six on 7th December, and the Macau Christmas and SAR event on 14th, perhaps, at the brand new Parisienne. Mark your calendars, everyone.

Drew Waters, Chief Executive

They believe that providing companies with a greater understanding of people with disabilities can help to successfully integrate their potential employees in the workplace. Once achieved, employers will find differently-abled employees contributing to the benefit of all. Creating a new corporate culture and environment is not easy, but it is not impossible either. To ensure continual, progressive and sustainable business success, it is imperative for employers to hire on merit, not on perception. Book your training session via email today: awareness@senconsultancyltd.com Website: www.sensationalconsultancyltd.com facebook: /SENsationalAwareness

AustCham is a non-profit organisation and provides this space free of charge to other, selected non-profits or charities.

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he internet has transformed the way we live our lives. For many of us, it’s where we communicate. For some, it’s where we shop. For others, it’s even where we fall in love. But the more of our lives are spent in cyberspace, the more important it becomes to protect yourself online. Stay Smart Online Week has just passed in Australia, but it doesn’t mean the message is any less applicable. The Australian Cyber Security Centre’s 2015 Cyber Security Survey found half of respondent businesses had experienced at least one cyber incident in the past 12 months. And for individuals, the Australian Cybercrime Online Reporting Network received more than 41,000 reports of cybercrime – nearly of half of which were scams. Thankfully, staying smart online doesn’t need to be complicated. Whether you’re a business or an individual, with a few, simple steps, you can ensure your on-line experience is safe and secure. Use complex passwords featuring numerals and special characters, and making sure to use a unique password for each account. Install a spam filter on your emails and be wary of

A Letter from Canberra phishing email attempts that purport to be from a reputable sender, such as a bank, a Government agency or a local utility company. Make regular backups of your data and keep your software updated to the most recent version. The Stay Smart Online website staysmartonline.gov. au has a number of useful tools and guides on everything from privacy and passphrases to online finances and payments, backups and protection. It also offers a free alerts service that explains recent online threats and offers simple tips as to how they can be managed. The tips are just as relevant to Australians based in Hong Kong as Melbourne. We’ve all heard horror stories of cybercrime, but the internet doesn’t have to be a scary place. And with a little preparation and awareness, you can be safely messaging, shopping and dating with the best of them. Gai Brodtmann MP, Federal Member for Canberra and Co-Convenor of Parliamentary Hong Kong Friendship Group

EVENTS UPDATE NOVEMBER AT A GLANCE… Fri, 11 Nov, 8:00am - 9:30am The Latest Development of the Kai Tak Sports Park Project Victoria Suite, The Hong Kong Club, 1 Jackson Road, Central, Hong Kong Tue, 15 Nov, 12:30pm – 2:00pm An insight into Australia's boardrooms and the path to the C-suite lunch ANZ, 22/F, Three Exchange Square, 8 Connaught Place, Central, Hong Kong

Thu, 24 Nov, 6:30pm - 9:00pm The 63rd InterCham Young Professionals' Cocktail PLAY, 1/F, On Hing Building, 1 On Hing Terrace, Central, Hong Kong Wed, 30 Nov, 8:00am - 9:15am Does Your Organisation Run on Fear? AustCham Business Centre, 3/F Lucky Building, 39 Wellington Street, Central, Hong Kong

DECEMBER AT A GLANCE…

Wed, 16 Nov, 10:00am – 3:00pm Hong Kong Australasian Emerging Company Showcase 2016 Lower Lobby, Conrad Hong Kong, Pacific Place, 88 Queensway, Hong Kong

Wed, 7 Dec, 6:00pm - 9:00pm Christmas Mix Yum Cha, 2/F, Nan Fung Place, 173 Des Voeux Central, Hong Kong

Tue, 22 Nov, 12:30pm – 2:00pm Have your cake and keep it too – Tax effective planning for Hong Kong based Australian expats Suite 4606, Two Exchange Square, 8 Connaught Place, Central

Wed, 14 Dec, 6:00pm – 8:00pm Macau Christmas Mix TBC issue 185 | austcham news

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Cover Story

Hong Kong’s New ESG Standards Benefit Investment, Profitability and Corporate Longevity - Ingrid Piper

ince January 1, 2016, the Stock Exchange of Hong Kong (SEHK) has required all Hong Kong listed companies to comply with a new element of regulation attached to end of year financial reporting. They must now disclose Environmental, Social and Governance (ESG) factors impacting on their business annually, a step that previously was only a voluntary process in HKSAR. The move obviously creates increased transparency for potential investors wanting accurate information about a company’s risk profile and future growth prospects but it also goes much further than that. The much talked about ESG risks have a global impact that stretches from multinational companies to SMEs and supply chains, to potential Millennial investors looking for sustainable and ethical investment. By definition, Environmental, Social and Governance (ESG) criteria is a set of standards for a company’s operations that socially conscious investors use to screen investments1. In Hong Kong, they

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include emissions and resources, employment and labour practices (health, safety and training) as well as operating practices like anticorruption and community engagement. Ellie Pang, Vice President, Policy and Secretariat Services Unit, Listing Department, Hong Kong Exchanges and Clearing Ltd (HKEX) said the 2016 move brings locally listed companies in line with increasing global ESG regulation. ESG in Hong Kong “Whenever we make any changes to Hong Kong listing rules, we benchmark it against international practice. ESG is actually very difficult to benchmark because every country does things differently. “In Australia for example they have ESG requirements embedded in their principals of corporate governance,” Pang says.

Interestingly, research by the Australian Council of Superannuation Investors (ACSI), which represents 29 Australian superannuation funds and six international pension funds, managing a combined $AUS 1.5 trillion, found 13 per cent of ASX200 companies still do not provide meaningful reporting on sustainability factors. A further 17 per cent provide only a rudimentary level of disclosure, highlighting a need for further practical guidance tailored for Australian companies2. Pang says ESG requirements in Hong Kong now have a wider scope than Australia. “Ours is a lot more comprehensive, in the UK for example, they have had laws requiring companies to disclose their greenhouse gas emissions since 2014, as well as gender diversity and human rights.” Pang says Singapore looks to the Global Reporting Initiative (GRI), the most adopted international standard for ESG regulation.

“We wanted to have a simpler guide than the Global Reporting Initiative for our companies to start reporting, a stepping stone to perhaps move on to GRI in the future…”

Bringing HKSAR in line with international ESG changes was not an overnight decision. Since 2012, locally listed companies have been subject to voluntary ESG disclosure. Pang says 50 per cent of these companies complied with ESG reporting under voluntary disclosure. Following consultation in 2015, HKEX took the next step, requiring mandatory disclosure from January 1, 2016. This is currently being implemented in two phases, based around a company’s reporting year.

“We wanted to have a simpler guide than the GRI for our companies to start reporting, a stepping stone to perhaps move on to GRI in the future, if they are capable of doing so. Large companies in Hong Kong such as CLP are already doing GRI reporting at a higher level than the HKEX guide,” she said.

For example, 70 per cent of Hong Kong listed companies have a December 31, 2016 financial year-end, meaning they’ll need to publish compliance by March or April the following year. Of the remaining companies, approximately 300 have a March 31st or April year-end while a further 80 companies end their financial years in June.

In the U.S., the Sustainability Accounting Standards Board has issued standards for 45 industries in 6 sectors with standards for more than 80 industries in 10 sectors scheduled for implementation this year. Additionally, the United Nations’ Sustainable Stock Exchanges Initiative provides guidance for exchanges wanting to highlight the business case supporting the reporting of ESG information.

Pang says the second phase of HKEX’s requirements begins on January 1, 2017 after which listed companies will also need to disclose or explain environmental KPIs in line with Appendix 27 of the HKEX guide. However, disclosing social KPIs will remain as a recommended practice only. Failure to comply with ESG requirements will be seen as a breach of listing rules.

1 Source: www.investopedia.com 2 Source: www.asx.com.au

issue 185 | austcham news

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Cover Story “Management must understand the ESG process is more important than the end product…”

Comply or explain According to HKEX statistics, Pang says people tend to comply rather than explain, a move she says she doesn’t necessarily want to see. “ESG rules are a bit like corporate governance rules, one size does not fit all,” she says. “You cannot have one rule and say everyone must comply with one rule because then you would have disclosures where people just tick the box and comply without focusing on things that matter the most to them or affect the environment or society the most. “Companies differ in their size, complexity and operations, so different environment and social issues affect different types of companies. “Having the opportunity to explain is not necessarily a bad thing. Taking the path to explain rather than comply might just lead to giving too much detail,” Pang says Good for business According to Pang, compliance is only one of the many drivers to increased ESG reporting. She says supply chain pressure is also adding to the demand for companies to increase their ESG efforts. Even small companies are affected in the supply chain. “For example if you are a manufacturer that supplies to a U.S. or European company, you will find that the companies you supply might demand to see your ESG information. “Even for large companies like power companies, the pressure is huge to produce ESGs because institutional investors say I won’t invest in your company unless I see an ESG report. “Other drivers include business reputation and retaining the best and brightest staff. People want to work for companies that appear to care about the environment,” she says. Ultimately, she says management must understand the ESG process is more important than the end product. 1 2

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Source: www.investopedia.com Source: www.asx.com.au

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Cover Story

AustCham’s innovative new sustainability series ‘ESG and Its Impact’ highlights information as vital to business success - Ingrid Piper

he Australian Chamber of Commerce Hong Kong and Macau (AustCham) with support from Baker Tilly Hong Kong, kicked off an innovative series of business forums focusing on sustainability with a panel discussion - ESG and Its Impact, in October, exploring new Environmental, Social and Governance (ESG) requirements in HKSAR. AustCham hopes the new series will inspire local companies to adopt achievable sustainable practices that not only meet new requirements for disclosure of ESG information as required by the Stock Exchange of Hong Kong (SEHK), but also benefit the environment, as well as a company’s reputation and bottom line, irrespective of the size of the company. From a personal and AustCham perspective, Chief Executive Drew Waters believes ESG is important factor is sustaining business growth. “ESG is about building business relations, how you attract staff and what you tell your shareholders,” he said. “It’s an essential part of presenting a business to suppliers, customers and staff. You can also use ESG to measure your supply

Andew Ross, Managing Director, Baker Tilly Hong Kong

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Ellie Pang, Vice President, Policy and Secretariat Services Unit, Listing Department, Hong Kong Exchanges and Clearing Limited.

chain. Do businesses in your supply chain comply with your ESG standards for instance? If not, should you look elsewhere? If it does, you’re building communality B2B. And you need to remember potential shareholders are looking for greater returns and seek a bottom line that can be easily researched,” Waters said. Baker Tilly Managing Director Andrew Ross said having a large number of attendees at the very first sustainability series panel discussion highlighted keen interest in ESG and its impact on doing business in Hong Kong, at a time when new HKEX disclosure requirements have become mandatory. “Sustainability is a hot topic at the moment and it was great to see such a big turnout, with attendees notably different from those who usually attend business forums,” Ross said. Offering insights into how their respective organisations focus on ESG initiatives were panelists Mark Harper, Sustainable Development Manager, John Swire & Sons (H.K.), Joseph Tong, Manager – Sustainability Management, Fuji Xerox Hong Kong and Professor Carlos Wing-Hung Lo, Department of Management and Marketing and Director, Sustainability Management Research Centre, Hong Kong Polytechnic University, together with Ellie

Fiona Donnelly, Business Development Lead, The Purpose Business

Joseph Tong, Sustainability Management, Fuji Xerox (Hong Kong) Limited

Pang, Vice President, Policy and Secretariat Services Unit, Listing Department, Hong Kong Exchanges and Clearing (HKEX). Swire, a company whose longevity spans more than two centuries sees ESG as an opportunity. Harper cited biofuel and nano technology as two areas the company is exploring in accordance with its philosophy of sustainability. “Sustainability is at the heart of Swire business. It’s the right thing for us to do as a business and the right thing for us to do as a society,” Mark Harper said. While ESG is grabbing headlines internationally, many companies doing business in Hong Kong have been quietly going about making it part of their business ethos for decades. Tong said Fuji Xerox’s corporate philosophy of sustainability dates from 1992. “Fuji Xerox recognises that sustainability is not additional, it’s simply fundamental to our business. For example, in 2005 we set a carbon reduction target of 30 per cent by 2020.” Investors also want companies to reveal more information. “An Ernst & Young survey revealed that two thirds of investors believe listed companies did not provide adequate information and an increasing number of investors consider ESG essential to decision making,” Ellie Pang said. She believes HKEX has an important role in helping to close this information gap. To encourage compliance, HKEX has developed online educational tools designed to help companies meet ESG requirements. “The greatest complaint we received is that people said they were already stretched, they don’t have the spare money to do this. That’s

“Two thirds of investors believe listed companies did not provide adequate information and an increasing number of investors consider ESG essential to decision making…” why we have put out training resources such as the webcasts, a toolkit and a guide on how to do ESG reporting on our website. “If a company’s ESG data is not too complex and its operations are quite simple, then it should be able to do an ESG report by studying our online resources without having to go to experts,” she said. However, Professor Lo, who promotes corporate social responsibility as a business model though the Hong Kong SME Business Sustainability Index and the Hong Kong Business Sustainability Index, believes that for companies to fully comply with local ESG requirements, more research needs to be done to establish the business relevance of ESG. “We need to establish business relevance with ESG and try to link ESG with business profitability,” he said. Sustainability expert and Co-Chair of AustCham’s Sustainability Committee Helen Cochrane, a Director of Meinhardt Infrastructure & Environment said focusing on ESG and its impact on business sets the tone for future discussions in this series. “As an environmental consultant, I encourage a sustainable bottom line. One of the areas which hasn’t really had much attention in Hong Kong is returns to business from compliance,” she said. Cochrane said following the success of the first Sustainability Series lunch time forum, future discussions would look at niche topics like supply chains. ‘ESG and Its Impact’s’ panel of experts was ably moderated by Fiona Donnelly, Business Development Lead, The Purpose Business.

Professor Carlos Lo, Professor of Department of Management and Marketing & Director of Management Sustainability Research Centre, The Hong Kong Polytechnic University

Mark Harper, Sustainable Development Manager, John Swire & Sons (H.K.) Limited

issue 185 | austcham news

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ESG Spotlight

Program is transforming lives

ommonwealth Bank chief executive Ian Narev knows that young graduates educated at top-quality boarding schools with the backing of the Australian Indigenous Education Fund have a resilience and tenacity that make them “incredibly attractive” employees. Unlike costly government schemes that have done little to redress Aboriginal disadvantage, the AIEF is Australia’s most successful indigenous education program, consistently achieving school retention and Year 12 completion rates above 90 per cent. The program has grown from supporting 43 scholarship students in 2009 to almost 550 students this year. More than 300 of its students have completed high school and gone on to work or university study. Another 19 scholarship holders have finished university, including Mitch Heritage, a University of NSW commerce alumnus who has been accepted for the CBA’s competitive graduate program. His story is reported today. The opportunities provided to him and hundreds of young Aborigines to achieve their potential through hard work are making a profound difference to their lives, their families and their communities. For this reason, the program has attracted support from the commonwealth government as well as corporate backing from BHP Billiton, CBA, HSBC, this newspaper and others. As lawyer Noel Pearson, a long-time proponent of boarding school education for students from remote Cape York communities, wrote in these pages in June, the trend is creating a “revolution” for the better.

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Unfortunately, government investment in the AIEF in recent years has lagged that of the private sector by tens of millions of dollars, putting the future scope of the program in jeopardy. Without significant government backing, 500 students will miss out on life-changing opportunities for a good education on AIEF scholarships in the next few years. While urging the Turnbull government to exercise spending restraint, we are also strong advocates for more effective spending on indigenous support. The need for a royal commission into the child protection and youth detention systems of the Northern Territory underlines the extent of government and bureaucratic failures. The AIEF, in contrast, offers the chance for a modest investment of taxpayers’ money, with every dollar linked to a successful outcome. AIEF chief executive Andrew Penfold is proposing a prudent “one out, one in” model, under which the organisation would receive funding each time a student graduated from Year 12, with the funding to pay for the next student to enter the program. For the sake of Australia’s most disadvantaged young people and the national interest, the government should respond positively. Source: The opinion piece calling on the government to re-commit to AIEF's work with additional funding was first published in The Weekend Australian.

Industry Insights

ESG Reporting: A step closer to impactful business Following a consultation with the market in 2015, the Stock Exchange of Hong Kong (‘the Exchange’) issued a revised version of Appendix 27 Environmental, Social and Governance (‘ESG’) Reporting Guide (‘the Guide’) in December 2015, that was partly effective for issuers on the Main Board1 for accounting periods starting on or after 1 January 2016, and will become fully effective for accounting periods starting on or after 1 January 2017. This means that 2016 is a year of change for issuers – they will have to disclose more about their ESG activities and results, and prepare to disclose even more in their 2017 ESG reports.

he new Guide concerns Environmental and Social subject areas, whereas the ‘G’ continues to be addressed in the separate Corporate Governance Code. Both Environment and Social subject areas comprise various aspects and for each, the Guide sets out ‘general disclosures’ and ‘key performance indicators (‘KPIs’)’ to be reported in order for an issuer to demonstrate how they have performed. The Exchange however encourages issuers to identify additional Environment and Social issues and KPIs if the Board believes they substantially influence the assessments and decisions of stakeholders. The Board has overall responsibility for an issuers ESG strategy and reporting and should not consider the Guide as merely a check box exercise. In a move towards the approach taken for financial reporting, four new principles help determine which aspects should be reported on and how: • Materiality is the threshold at which ESG issues become sufficiently important to investors and other stakeholders that they should be reported. • Quantitative: KPIs need to be measurable and accompanied by explanations of its purpose impacts and giving comparative data. • Balance: The ESG report should provide an unbiased picture of the issuer's performance. • Consistency: The issuer should use consistent methodologies to allow for meaningful comparisons of ESG data over time. Through applying the above, issuers can determine what information should be disclosed in the report. The Guide then stipulates one of two levels of disclosure obligations for each item to be reported: a. "comply or explain" provisions – as determined in the Corporate Governance Code, Appendix 14, or b. recommended disclosures. If an issuer does not report on a provision that is defined as "comply or explain", it must provide reasons why in its ESG report.

The disclosure obligations set out in the Guide can be summarised as follows: Headings/topics:

Disclosures: Recommended Comply or explain

ENVIRONMENT – 3 aspects general disclosures* (emissions, resources, For 2016 - 12 KPls For 2017 - 12 KPls environment) SOCIAL – 8 aspects (under 3 topics: employment and general disclosures* labour practices, operating practices, community)

20 KPLs

* general disclosures comprise policy + description of degree of compliance with relevant laws and regulations The 12 Environment KPIs will move from being ‘recommended’ disclosures in 2016 ESG reports to ‘comply or explain’ in 2017. This means that issuers may have to collect new data for the first time with effect from as early as 1 January 2017, depending on their financial year. Pat Dwyer, founder of The Purpose Business, comments ‘This is a welcome development for the Exchange and Hong Kong market, that keeps Hong Kong tracking in the same direction as other international capital markets where there are increasing demands for more transparency on ESG matters and more non-financial indicators are expected by investors and other stakeholder groups.’ Pat continues ‘This new Guide also sees the ESG disclosures from the Exchange working in complement with the new disclosures required through the Business Review2 section of the Directors Report set out the Companies Ordinance Cap 622. Aligning the ESG and financial reports provides a more holistic way of understanding an enterprise’s results and impacts, which makes so much sense. We don’t believe in disclosure for disclosure’s sake but that ESG factors should be embedded in a business strategically so that they deliver true impact. To consider such areas as just a bolt on and a compliance necessity, is missing many positives and is a potentially risky way to manage a business.’ Source: Baker Tilly Hong Kong

Note: This article covers highlights from the new Guide only. Please refer to the Exchange’s website (https://goo.gl/QmP47p) for full text. 1 Note the changes to Main Board’s Appendix 27/the Guide explained above were reflected in the equivalent guide for the GEM market, Appendix 20. 2 For more details about the Business Review section of the Directors Report: https://goo.gl/ajQKkb. issue 185 | austcham news

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Australia and Hong Kong, partners in market development Australia has been one of the key player of the HKTDC Hong Kong International Wine & Spirits Fair since its inception with wine regions and trade organisations mounting pavilions. Demand for Australian wine is evident in the import figures with Australia ranked second after France in value terms for wine imports into Hong Kong. In 2016, Australian wines look promising, US$168 million in value imported to Hong Kong from January to July this year. That is a growth of 73.9% over the same period in 2015. Asian demand driving wine market expansion Wine traders looking to expand business are increasingly turning to Asian markets. Wine consumption in Europe is flat or even declining while Asia, by contrast, is a sparkling prospect. Euromonitor International reports that wine sales in Asia amounted to US$63.8 billion or 5.8 billion litres in 2015, up 3.6% and 3.7% respectively per annum in the past five years. The future looks even rosier. From 2015 to 2020, wine sales in Asia are forecast to grow 7.4% per annum in value terms and 5.3% per annum in volume terms. Wine sales in China is bountiful amounted to US$40.4 billion or 4.4 billion litres in 2015, up 8.4% and 4.8% respectively per annum in the past five years and are forecast to grow 9% per annum to 2020 in value terms and 7% per annum in volume terms. Wine Fair a key element in trade The HKTDC Hong Kong International Wine & Spirits Fair has acted as a great stimulant to trade. The 9th edition takes place on 1012 November at the Hong Kong Convention and Exhibition Centre and more than 1,000 exhibitors are expected. Over 20,000 visitors represented 75 countries and regions attended the 2015 edition. Trade organisations from both New World and Old World producers form pavilions to

14 • austcham news | issue 185

impress visitors with the strength of their regional wines. Some of those committed to the 2016 fair are the Argentina Pavilion, Austrian Wine Marketing Board, Bulgarian Wine Export Association (New), Canadian Food Exporters Association, Sopexa and Bettane + Desseauve, Veronafiere, Japan External Trade Organization and Spanish Institute for Foreign Trade. Mario Marson, Chief Winemaker, Sunshine Creek, Australia was impressed by a myriad of Asian wine lovers and private collectors visited the 2015 fair, many of whom represented growing Asian markets. “We are exhibiting in Hong Kong International Wine & Spirits Fair for the third year to make our brand more recognized internationally. At last year’s exhibition, we met many Chinese mainland customers and a number of buyers from different places like Korea, Vietnam and India, showed strong interest in our products. The Hong Kong fair allows us to reach out to buyers who love our wines.” On the other hand, Wojciech Sliwinski, Wine Sales Director, Mag Dystrybucja, one of the biggest distributors of beverages and alcoholic products in Poland with an annual turnover of about EUR200 million. He distributes a great variety of wines from Spain, Italy and Portugal mainly. Wojciech Sliwinski found the fair was rewarding, “I’ve found three potential suppliers from the Chinese mainland and Korea for wine accessories like baggage tags and wine openers with a futuristic design. These accessories can be appealing gifts we give away to customers buying wines from us. I will spend up to EUR50,000 to buy wine accessories here. I am also in talks with an Italian exhibitor for red wine and white wine, and with a UK exhibitor for gin. I will meet some suppliers of Australian

and Chilean wines for more opportunities.” Fair features enhance marketing Over 70 events will be featured include grand tastings, master classes, wine tastings, cocktail demonstrations and seminars, which all give important exposure to exhibitors. A major highlight is the annual Wine Industry Conference. Asia’s first Master of Wine, Debra Meiburg MW, serves as the Conference’s advisor and moderator. The last day of the fair is a public day, this allows exhibitors to interact with the consumer market and provide direct market intelligence as well as product feedback.

HKTDC Hong Kong International Wine & Spirits Fair information Date :

10-12 November 2016 (Thu-Sat)

Venue :

Hong Kong Convention and Exhibition Centre

Hotline :

1830 668

Website :

www.hktdc.com/ex/hkwinefair/21

1. 10-11 November open to trade* visitors only. Immediate consumption of liquor purchased at the exhibition venue is not allowed. 2. 12 November opens to both trade* and public* by ticket admission. * Aged 18 or above only. Trade visitors can reserve the admission badge through mobile info site: hktdc.com/wap/wine/T118

Committees in Action

Young Executives: Turning around the Spirit of Australia

hamber members and guests got a personal insight into the spectacular turnaround of one of Australia's leading global brands at the latest AustCham Young Executive's CEO Forum.

Over 80 AustCham members and guests assembled at Herbert Smith Freehills' Central office to hear Gareth Evans, CEO of Qantas International & Freight, share insights into the extraordinary turnaround of Qantas, which recorded the best results in its 95-year history, and the tough decisions that had to be made by the airline's management along the way. Constantly striving for micro-efficiencies played a large part. Though small in isolation, these changes can have a significant effect on operations – turning around planes more quickly at the end of a flight for instance can mean fitting in one more flight per day for that aircraft. The changes also meant saying goodbye to a large number of employees – many of them long-serving – in pursuit of a leaner operation. The event was moderated by David Fraser, Managing Director (Greater China) of Flight Centre Travel Group, who was able to share his own insights into the travel industry and pose some interesting questions about cross-selling and new product offerings under the Qantas brand as the airline moves into the future. There are few opportunities to hear firsthand from the leaders of successful Australian brands and businesses, and for this reason, Herbert Smith Freehills has proudly partnered with AustCham Young Executives to present the CEO Forum Series since 2014. The CEO Forums are held on a quarterly basis with the next one scheduled for November this year. - Natalie Curtis, Herbert Smith Freehills

AustCham

Membership eC In

ard

October, AustCham members can enjoy

a special discount on purchasing Penfolds wines.

Spent $3,888 on Penfolds new vintage wines and receive a Riedel Red Stripe Bordeaux Grand Cru Glass with Bin 707 engraving* *Limited 20 pieces of Riedel glass per gift. Available while stocks last.

k Than ! You

issue 185 | austcham news

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Australia in Finance 1

16 â&#x20AC;˘ austcham news | issue 185

The annual Australians in Finance cocktail this year supported by IP Global brings together senior Australian executives working in finance in Hong Kong and aims to encourage closer engagement with AustCham’s activities. Proudly sponsored by:

Thank you to the venue partner:

AustCham Chairman Professor Richard Petty welcomes all.

Simon Constantinides of Event Sponsor IP Global.

Sam Le Cornu of Venue Partner Macquarie Group.

1. AustCham Deputy-Chair Andrew Macintosh and Bimal Umeria of Delta Capital. 2. AustCham Treasurer Darren Bowdern and James O’Collins of BNP Paribas Hong Kong. 3. Kevin Ch’ng of St. James’ Place and Sebastian Leotta of KPMG. 4. Francesca King and Jay Cheung of IP Global. 5. Nick Helms of Liberty Mutual Group and Adam Goern of TPA & Co. 6. Llewelyn James of IP Global and Ian Robinson of Robinson Management Ltd. 7. Paul Phenix of Baker Tilly Hong Kong and Catherine Simmons of Citi. 8. Simon Constantinides of IP Global and Michael Tracey of Erste Group Bank AG. 9. Sam Le Cornu of Macquarie Group and Jeff Hiew of Commonwealth Bank of Australia. 10. Henry Chan and Chloe Vuong (right) of Commonwealth Bank of Australia and Boe Campion of Ord Minnett Hong Kong. 11 Calvin Zhang, AustCham Chairman Professor Richard Petty, Hans Wang of CVC Capital and AustCham Director Clayton Hebbard. 12. Robert Quinlivan of Macquarie Group and Nick McDonald of Mercer. 13. Paula Hardgrave and Michelle Paisley of Mvision Strategic (Asia) Ltd, AustCham Deputy-Chair Fiona Nott and Grace Mak of NAB Private Wealth. 14 Elliott Shadforth and Shyamala Vyravipillai of EY. 15: Sean Rothsey of The Merkin Group and Peter Amour of AIF Capital. 16. Catherine Simmons of Citi and AustCham Chief Executive Drew Waters. 17. Jim Sherry of Gilt Chambers and Stephen Wong of Office of PCPD Hong Kong. 18. Digby Ross and Brian McKinstry of Foulger Underwood. 19. AustCham Board Director Bina Gupta and Bronwen Smith of IP Global. issue 185 | austcham news

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Committees in Action

2020 Vision: Hong Kong Transportation Outlook

aking the opportunity of coinciding with Hong Kong’s first e-Prix, AustCham’s Business Technology Committee and Sustainability Committee co-hosted a high-flying panel to discuss Hong Kong’s transportation outlook in the foreseeable future and talk about: • Hong Kong’s Current Transport Strategy, • Environmental impact: infrastructure and technology that will change Hong Kong for the better. • Smart City: future technology that can progress transportation transformation faster We highly appreciated the support from our event partners: Opening remarks Alex Arena, Executive Director and Group Managing Director of HKT

Panel session: Environmental impact infrastructures and technology that will change Hong Kong for the better

Evan Auyang, Director, Civic Exchange

Dr. Wing-tat Hung, Associate Professor, Department of Civil and Environmental Engineering, The Hong Kong Polytechnic University

Betty Yuen, Group Director & Vice Chairman, CLP Power HK

Kevin Poole, Executive Director, Third Runway, Hong Kong International Airport

Isabel Fan, Regional Director, Tesla Hong Kong, Macau and Taiwan

Geoff McClelland, Program Director, Hong Kong , CIO Connect

Jonathan Beard, Head of Transportation & Logistics, Asia, Arcadis

18 • austcham news | issue 185

Panel session: Hong Kong current transport strategy

Peter Lam, Managing Director of Engineering, HKT

Craig Price, Senior Vice President, International Projects, PCCW Global

Presentation on ‘Smart City – Future technology that can progress transportation transformation faster’

Closing remarks Alejandro Agag, Chief Executive of Formula E

AustCham Mentor Programme

Solving Business Problems with Design Thinking

ow do we know we're solving the right problem? Can we turn complexity into an advantage for our teams and organisations?

In the two hours applied & introductory session, experienced Design Thinking trainer & facilitator Kristin Low introduced the fundamentals of the Design Thinking process, as well as how to build a framework of creatively solving complex business problems. Thank you to our venue partner Cliftons.

ABOUT US

MENTOR INSIGHTS

SERVICES

NEWS

CONTACT

An Authentic Experience

that might otherwise stop individuals from meeting. The uniquely Australian egalitarianism and ‘fair go’ approach to life means that people from a diversity of nationalities feel welcomed in the community.

In the busy lives we lead in Hong Kong and the many stresses of our jobs and social commitments, it’s hard to carve out time for ourselves. Invites come thick and fast and prioritising our time can become a major issue. For those of us in the mentor program, it means we are purposely going outside of our existing commitments and day-to-day life - extending ourselves for our own personal growth.

The opportunity to build relationships with like-minded people and learn from professionals with similar motivations, but different life and work experiences, are benefits for both the mentor and mentee. For mentors, participating provides an avenue to positively ‘give back’ by sharing our expertise and experience with enthusiastic and driven people, seeking to make their mark. Importantly, mentoring gives mentees a professional support network to discuss their hopes, dreams and real-time career issues outside of their work-home-social circles.

or October, participants in the Mentor Programme focused on meeting with their ‘Mentor Circle’, a group of 3-4 mentoring pairs. Mentor Circle meetings provide support to the participants beyond their immediate mentoring relationships. This article was inspired by a discussion of my own Mentor Circle meeting.

The reasons why people are willing to prioritise mentor meetings go beyond a personal drive for self improvement. In a dog-eatdog city like Hong Kong, participating in the program provides an opportunity to make real connections with people. It’s not simply ‘networking’ - which many of us do in our jobs already. The mentor-mentee relationship gives us a common platform to build connection. It breaks down hierarchical or social barriers

Participating in a mentoring program is not for everyone. You need to know your goals, be prepared to open up and be vulnerable with a practical stranger, and be committed to the process. But for those who have taken the leap, they are rewarded with a richer, more authentic professional network in Hong Kong, as well as a journey in personal growth. - Stefanie Myers, Mentor of Class 2016 issue 185 | austcham news

• 19

Corporate Profile

Servcorp Limited Level 19, Two International Finance Centre, 8 Finance Street, Central, Hong Kong www.servcorp.com.hk

Servcorp Limited is a multinational organisation that provides premium serviced office space, virtual office products and IT services. It was established in 1978 and listed on the Australian Stock Exchange in 1999. As of June 2016, it operates in +150 business centres in 52 cities across 24 countries. What are the main skills of your job? I make complex problems simple! Despite operating in 24 countries in 52 cities and offering a combination of property, human & technology services, Servcorp is a reasonably simple business provided you stick to the system. What’s the most unusual thing you have had to do as part of your job? I lived in Myanmar for a year in 1990’s. Everything was unusual there. What does your company do really well? Our company runs 150 floors like it is ONE building. All the systems, technologies, fit-outs and training are all the same, underpinned by a single global technology platform. What is the vision of your company in 10 years? The vision is to use the single technology platform not just in Servcorp space (which should have doubled by then), but in other people’s properties as a service to them.

Marcus Moufarrige Chief Operating Officer What’s something most people don’t know about your company? We are an Australian Company and listed on the Australian Stock Exchange. What’s your company’s connection to Australia? We were founded in Sydney, Australia as a start up with very little capital. What will be the trend for serviced or virtual office? Currently Serviced Office / Flexible Workspace occupies less than 2% of world commercial office space. It is the view of many that this will grow to 10% in the next 10 years. In addition to that, as more and more business adopt telecommuting and a flexible workforce, virtual offices becomes more and more important. What is the expansion plan of your company? We’d like 5% of the growth mentioned in the previous answer, i.e. 5% of the 10% of commercial office space.

AustCham Platinum Patrons

20 • austcham news | issue 185

On The Scene

Chris Reed with AustCham Chief Executive Drew Waters.

Joseph Sullivan of SMS Management & Technology and Aruna Alimchandani.

Eric Cheng and Justin Leung of Ambition.

Paul Kidman of Blueprint and Daisy Lam of Ambition.

e: Tips to not

rofile photo relevant p d n a l a n io ss ackg round - A profe the right b se o o ch ful to - Be care image r and words, clea ur skills - Use key ption of yo ri sc de t ea n ely a plus to t is definit n te n co l a - Visu ge hts your pa share thoug your blog, s a to In in ed k ed in st intere - Use L at you are on topics th rofessional profile ur p expand yo

AustCham hosted the ‘10 Top Tips for Building an Awesome Personal Brand Online’ LinkedIn session and invited Chris Reed, one of the world's most viewed LinkedIn profiles as guest speaker. Chris has been named as an Official LinkedIn Power Profile 2012 – 2016 with 70,000 followers, he is also one of the Top 100 most influential LinkedIn Bloggers and is the No. 1 International Bestselling Author with his book "LinkedIn Mastery for Entrepreneurs".

‘Work Smarter, Not Harder’ practical seminar was held at CBRE, with guest speaker Mark Bunn, an international expert on natural health and mind-body performance. Mark is also a former AFL footballer. The seminar covers how to maximise your motivation, time management and productivity, in order to enjoy great health and achieve a healthier work-life balance.

Thanks to our venue partner:

issue 185 | austcham news

• 21

On The Scene The first session of AustCham Baker Tilly Sustainability Series: ESG and Its Impact was held earlier in October at Conrad Hong Kong. The event lined up a panel of experts to walk through attendees on different key aspects of ESG. Special thanks to series sponsor:

Robert Allender of Energy Use Strategy Advisors and GĂźnther Rittner of ThyssenKrupp Hong Kong.

AustCham Chief Executive Drew Waters welcomes all.

Matthew Leung of IPGOAL Strategic and K K Yeung of BMI Appraisals.

Fiona Chin of Fuji Xerox and Will Ng of The Purpose Business.

Nadira Lamrad of Business Environment Council Limited and Anson Wong of The Fred Hollows Foundation.

Sarah Obser and Lee Ming Chun of suPPPort Ltd.

22 â&#x20AC;˘ austcham news | issue 185

Belinda Poole and Sarah Fowler of Local Motion.

Andrew Ross, Managing Director of Event Sponsor Baker Tilly Hong Kong with AustCham Chief Executive Drew Waters.

Matthew Tong of Baker Tilly Hong Kong and Calvin Cheng of Tic Tac International Holdings.

Mark de Silva of Business Environment Council and Merrin Pearse of The Purpose Business.

Amy Zhang of PwC and Vicky Cheng of Bloomberg.

Aust moderator with The panel and Drew Waters. Chie f Executive

Cham

David Meredith of Tas’Mania Ltd, Rob Mann of Huon Aquaculture Group and Paul Fraley of Dimensional Insight.

Tom Croagh, Happy Le of Brookfield and Greg Penn of CBRE.

Louis Ching, Peter Bennett of SnagR Ltd and Elvin Wong of Intellect Principle.

The Autumn Mix at Six, hosted by the Construction, Property and Infrastructure Committee was held in late October at Studio Club. Special thanks to event sponsors:

Cheech Foo (middle) of Ignite Search with Loretta Ho and Adam Clermont of Payne Clermont.

AustCham Chief Executive Drew Waters, Nigel Smith of Colliers International, Bill Wang and Ryan Cunningham.

Justin Lam of Colliers International and Alex Katsanos of Advisian.

Mark Henderson of SnagR Ltd and Steve Lewis of Advisian.

Brian Hunter of PwC, CPI Committee Chair Paul Scott and Scott Smith of Aurecon.

Jeffrey de Varga of Diadem Pty Ltd and Ian Robinson of Robinson Management Ltd.

CPI Committee Chair Paul Scott welcomes all.

Congratulations to the lucky draw winners! issue 185 | austcham news

• 23

...buying property in Sydney?

let’s talk

What type of properties can you assist with? We are Sydney based specialists and can assist clients with any type of property from apartments to houses and commercial buildings. Investment Properties – For an investment property purchase, we are able to take an objective standpoint and methodically recommend properties meeting your strict criteria. Moving Home – We recognise the importance of finding not just a house but a home. Sometimes it’s the non-financial factors that matter most and we work with you and your family to ensure that we look at all requirements to find your perfect fit. Separately, on the commercial side, we also work with developers, hotel operators, managed funds and investors with budgets ranging from AUD $20m through to $100m+. With our extensive network of local contacts, we have access to a range of off-market development opportunities. As a Sydney based firm, how do you service clients in Hong Kong? We make frequent visits between Sydney and Hong Kong – averaging one trip a month. Our clients range from private clients to corporate clients looking for large-scale development sites. We maintain a strong in-person presence throughout the negotiation process back in Sydney giving us an advantage over firms based solely in Hong Kong or in Australia. As a boutique agency, our clients have direct access to me. We also deal directly with the client’s conveyancer, accountants and banking contacts to streamline the purchasing process.

How does a buyer’s agency work? We are engaged by the purchaser to act on their behalf in sourcing and negotiating the best property to suit their needs. Our services are of particular benefit to overseas based clients given the geographical challenges of purchasing property overseas. We save our clients significant time in researching and locating properties. We will only actively work with a handful of clients at any one time to ensure that we can provide a personalised service. Can I still borrow with my income in HKD? We maintain a close working relationship with all major Australian banks with offices based in Hong Kong. We can make referrals to local banking contacts as well as brokers in Australia to assist with your purchase. Where do I start? Our first step is an initial in-person consultation to know more about your property requirements and your motivations behind these decisions so that we can best help you. While we appreciate that your time is precious, this ensures we work efficiently to search, identify and shortlist the most suitable properties for you. Send us an email at info@adlerho.com with your requirements or use the contact us form on our website at www.adlerho.com and we’ll work out a mutually convenient time to sit down and discuss your situation.

Proudly supporting the Australian International School Hong Kong 2016 Fair AISHK, 3A Norfolk Rd, Kowloon Tong. 5 November 2016 11am to 5pm

ADLER HO P R O P E R T Y C O N S U LTA N T S

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