A study of the impact of effective sustainability reporting on investment decisions of people in Hong Kong
The 2008 financial crisis has changed the game
…people paying more attention post-2008
42% pay more attention to companies’ CSR efforts today compared to before the 2008 financial crisis
%
TO P 3 PE RFO RMI N G LI ST E D CO MPA N I ES I N T E RMS O F C SR
100 90 80 70 60 50
43
40 30
28
25
HONG KONG CHINA AND GAS COMPANY
SUN HUNG KAI PROPERTIES
20 10 0
HSBC
People want to invest in companies with effective sustainability programmes
People’s investment decisions are being influenced
88% of Hong Kong investors say that a company’s sustainability efforts would affect their investment decision
Unlikely / Very unlikely Likely / Very likely
12%
88%
‌and women appear to be more influenced than men
75% more women than men say their investment decision would be influenced by a company’s sustainability efforts
…although it still follows after the fundamentals
…people still want business and stock performance
77%
Business Performance
76%
Stock Market Performance
48%
Business Strategy
22%
Corporate social responsibility (sustainability) 20% Investor relations
…but even business performance is associated with CSR
86% of respondents 86% Likely / Very Likely
believe that companies with effective CSR programs deliver better business performance
Not all factors are equal
‌there is variance in perceived importance of sustainability elements Operating practices
Environmental protection
Workplace quality
Community involvement
Operating practices cited as the most important component of CSR/Sustainability programmes followed by
environmental protection
Why now? The Hong Kong Stock Exchange plans to raise the level of some recommended disclosures in the Environmental, Social and Governance Reporting Guide to comply or explain by 2015.
Getting started Standards to consider
Core components GRI G4 Guidelines
HKSE ESG Guidelines Workplace quality
• • • •
Social (Labour practices/ human rights)
• • • •
Environmental protection
• Emissions • Use of resources • Environment & natural resources
Environmental
• Emissions / Effluents & waste • Materials / Energy / Water • Products & Services
Operating practices
• Supply chain • Product responsibility • Anti-corruption
Social (Product responsibility)
• Supplier assessment (Environmental / Labour practices / Human rights / Impacts on society) • Customer health & safety / Customer privacy • Anti-corruption
Community involvement
• Community involvement
Social (Impacts on society)
• Local communities
Working conditions Health & Safety Development & Training Labour standards
Employment Occupational health & safety Education & training Child labour / forced labour
Helpful tips for companies
Map out what is material/relevant to your organisation • Understand what aspects of your business have an impact • • • • •
Social, environmental, economic Positive, negative Actual, potential Direct, indirect Short term, long term
• Understand your boundaries – where do these impacts occur • Internal, external • Far reaching, localised
Map out what is material/relevant to your organisation
Engage and educate functions across the business of project rationale • You will need support • data collection • affecting change and improvements • CEO/COO/CFO email to key personnel, impressing the importance • Town-hall meeting with key personnel to explain the initiative, why it is important and the impact on the organization • Issue guidelines on what to consider
Review reporting of peer organisations • Approach • How do they establish materiality • What is their process • How are they affecting improvements
• What they consider material • How are they presenting the content
Start early
6 months to one year
• There can be a lot of information to gather from a number of divisions, teams and individuals
• Some information will need to be analyzed
• All the information needs to then be compiled
• This all then needs packaging up into a coherent report
Start realistically • Don’t overwhelm/scare-off the teams and individuals that need to contribute • Don’t make the initiative so unwieldy it never reaches completion • Ensure you are going to be able to demonstrate year on year improvements • Remain consistent • Ensure continuity
ESG Report
Put benchmarks in place that enable and drive year on year improvements
• Try to identify metrics against which you can demonstrate improvement. Examples • • • • •
Workplace incidents Carbon emissions Waste volume Water usage Economic impact from community initiatives
Six tips for companies looking to benefit 1. Review the reporting of peer organisations 2. Map out what is material/relevant to your organization 3. Engage and educate functions across the business of project rationale 4. Start as early as possible 5. Start realistically 6. Put benchmarks in place that enable and drive year on year improvements
THANK YOU
Respondents Demographic Breakdown
S1-4