Significance of ESG Reporting
In order to connect business success with social progress, it is important to create economic value through addressing the social needs and challenges by focus on engaging your stakeholders like customers, suppliers, workforce and the community; to set up appropriate sustainability governance in the organization; to align the business and social objectives; periodically evaluate various Key Performance Indicators; generate Corporate-Social initiatives and continuous improvement plan. In all, the purpose of which is to create value and drive the organization attaining a more powerful force to address various day-to-day pressing issues relating to business development, operational efficiencies, innovation and productivity growth.
In accordance with Section 388, Schedule 5 of the Companies Ordinance (Cap.622), a directors' report for a financial year must contain a business review consisting of an analysis of using financial key performance indicators; a discussion on the company's environmental policies and performance; and the company's compliance with the relevant laws and regulations that have a significant impact on the company; and an account of the company's key relationships with its employees, customers and suppliers and others that have a significant impact on the company and on which the company's success depends.
Following the introduction of the Hong Kong Stock Exchange’s (“HKEx”) Environmental, Social and Governance Reporting Guide (“ESG Reporting Guide”) listed in Appendix 27 of the Main Board Listing Rules and Appendix 20 of the GEM Listing Rules, many organizations, listed companies in particular, are devoting more resources in complying and tackling with these disclosure requirements and concerns.
A good number of Hong Kong listed companies have already adopted the relevant ESG international guidelines or standards, such as Global Reporting Initiative, Carbon Disclosure Project and United Nations Global Compact.
Why Report on Sustainability Issues?
Sustainability helps corporations not only to demonstrate their responsiveness to the environmental and social concerns, but also enhance one’s operating efficiency and impacts its core business strategy.
- Enhance reputation
- Increase customer and employee loyalty
- Demonstrate accountability and transparency
- Strengthen business practice and corporate strategy
- Improve long-term risk management
- Meet demands of investors and other stakeholders
Ways to Increase the Credibility of ESG Report
- Show stakeholder engagement process
- Connect with overall business strategy
- Explain KPIs and results concisely
- Strike a balance between good and bad news
- Verify data in particular those information disclosed in the report
- Address material sustainability issues