5 minute read
ESG and Sustainable Finance Best Practices - Interview with Ms. Edith Shih, Executive Director, CKH
Brought to you from the Boardroom of CK Hutchison
By Prof. Lapman Lee, Professor of Practice (ESG, FinTech, Governance), Polytechnic University and Managing Director, Triniton Advisors
Today’s interview with Ms Edith Shih, Executive Director and Member of the Sustainability Committee, CK Hutchison, and Past International President, The Chartered Governance Institute and Past President, The Hong Kong Chartered Governance Institute, is part of a series of in-depth and in-person ESG interviews with leading Hong Kong-listed companies with the objectives to identify best practices.
They include Bank of China (Hong Kong) Limited, CLP Power Hong Kong Limited, MTR Corporation Limited, and New World Development Company Limited covering all five industry sectors which the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD) provided industry-specific supplemental guidance.
It was a clear and sunny Monday morning when I entered Cheung Kong Center and pressed the 48th floor for my 11 a.m. meeting with Edith, the most senior female executive of the 300,000-strong CK Hutchison group, and a member of its seven-person executive board, chaired by Victor Li Tzar Kuoi.
I realised I was inside the command-and-control centre of a diversified multinational conglomerate with four core businesses (Ports, Retail, Infrastructure, Telecom) and operations across fifty countries.
The very first thing I noticed when Edith entered the Board meeting room, with her graceful presence, was that she brought in a thick pile of printed materials (double-sided of course) under her right arm with colourful stickers protruding out of them.
This turned out to be the draft of the CK Hutchison 2021 Sustainability Report with her hand-written edits all over the document. She told me that ‘this will see the light of day on Tuesday 31 May’ which was the following day.
1. How does a complex and diversified multinational conglomerate like CK Hutchison decide on which sustainability goals to focus on?
‘It is indeed a challenge to create a set of sustainability goals and make them work for our organisation, considering the breadth and depth of our four core businesses, and geographical reach in over fifty countries,' and she goes on to say ‘though it is an easier task today to get buy-in, capital investment and dedicated resources compared to ten years ago when the topic of sustainability was not at the top of the mind of many.’
Lapman Lee, Vice Chair of the Financial Markets Committee (left) and Ms. Edith Shih, Executive Director, CKH (right)
2. Is ESG all about managing risk, or do you also see opportunities?
"Yes, while companies and the media tend to focus more on creating awareness of and managing the material risks arising from dynamic and ever-increasing stakeholder expectations on ESG issues, there is a significant USD 12 trillion [1] potential economic opportunity (from revenues and savings) out there for sustainable business models and innovations to meaningful address the UN 2030 Sustainable Development Goals (SDGs)," Edith shared.
"For example, A.S. Watson’s 2030 Sustainability Vision focuses on offering sustainable products and services (one of six key sustainability goals at the Retail division) to meet the consumer trend of purchasing purpose-driven brands that advocate sustainability."
Yet, there appears to be an intention versus action gap that needs to be closed, where two-thirds of consumers say they would like to buy from purpose-driven brands, but only one in four do so[2] due to barriers such as the perception of higher pricing and lack of convenience.
3. As a role model for many in and outside the CK Hutchison group, can you share with us how we can improve diversity, equity, and inclusion?
"From a gender diversity perspective at the Board level, we have now five female directors out of eighteen Board members or 28% based on the expertise, perspective, and skillsets they bring to the table. What I would like to see is female directors enter the Boardroom not only as independent Non-executive Directors but also as Executive Directors."
"To achieve this, we need to proactively and systematically build a pipeline of more diverse (not just based on gender) next-generation leaders and equip them with the mindset, perspective and skills to take on the top spots based on merit. While we see growing female representation in leadership positions at one or two levels under the Board, where female leaders tend to have stronger representation in areas such as human resources, public relations, and insurance, they are not typically within Board level portfolios."
4. Not all companies have the resources at their disposal as CK Hutchison does. What would be one piece of advice for companies that are hiring a chief sustainability officer (CSO) or setting up their sustainability function for the very first time?
"I suggest, beginning with looking at companies they perceive as within their peer group, and then assessing where they are on the spectrum from best-in-class leaders, followers or laggards, decide where they want to be, and communicate that effectively to their key stakeholder constituents."
"Not all companies require a dedicated head of ESG or CSO from the start. You can very well invite an existing senior individual or individuals with the right (hard and soft) skills and expertise and ideally passion to wear a double-hat assigning clear additional responsibilities and KPIs." Take it one step at a time, and seek external expertise to augment the management team, if required."
Edith, it was my pleasure to exchange thoughts with you today and I look forward to seeing leading conglomerates like CK Hutchison being pioneers and role models in the sustainability journey to help balance people, planet and profit.
Ms. Edith Shih (left) and Lapman Lee (right)
Reference List
[1] Business and Sustainable Development Commission
[2] Harvard Business Review, The green elusive consumer, 2019
