Dimming the lights for sustainability

PUBLISHED : Thursday, 23 July, 2009, 12:00am
UPDATED : Thursday, 23 July, 2009, 12:00am

While a number of Hong Kong companies are stepping up their efforts to become more socially responsible, many companies lack the internal resources to implement CSR policies.

Gaby Oetterli, head of corporate sustainability at the Business Environment Council (BEC), which offers assistance to Hong Kong companies to improve CSR, believes that some companies lack the resources to initiate any CSR projects.

'A lack of internal resources and know-how is a challenge,' said Ms Oetterli. 'Some Hong Kong companies are more inclined to see if there is any legislative incentive, but CSR is a voluntary, proactive initiative. It goes beyond legislation and helps prepare companies for upcoming legislation.'

A report commissioned by Oxfam and consultant CSR Asia released in December last year found that the majority of Hong Kong's listed companies had failed to adopt sound CSR policies and practices, particularly in the areas of supply chains, environment and the workplace.

Ms Oetterli agreed that some of these areas are new and more challenging to Hong Kong companies. In fact, the BEC has assisted firms in Hong Kong to be more proactive in fair trade.

The report also highlighted that CSR initiatives were strongest in corporate governance, strategy, stakeholder engagement and community investment. Many company executives were committed to a reporting guideline such as the Global Reporting Initiative, publishing separate CSR reports, and supporting additional charters like the United Nations Global Compact and the Equator Principals.

'We have seen more companies putting together a CSR management system and reports,' said Ms Oetterli. 'Some firms have taken the economic crisis as an opportunity to incorporate business plans which improve energy efficiency to cut costs.'

Ms Oetterli said that the BEC had seen more companies introducing energy-saving measures in order to save money and be environmentally friendly at the same time.

These measures included cutting down on the use of electricity in lighting and air conditioning. Excessive use of lighting includes building exterior and interior lighting, advertising, commercial properties, offices, factories, streetlights and illuminated sporting venues. Employees are encouraged to look at their use of various kinds of equipment in the office in order to be more energy efficient, said Ms Oetterli.

Some companies have also been looking at solutions to improve ventilation, but this can be difficult because air conditioning is mostly controlled centrally.

Despite the economic downturn, Ms Oetterli said she had seen more companies hiring CSR managers, but top management in domestic companies often liked to observe what their competitors are doing before making a commitment.

'It's harder to make progress in any CSR initiatives if the board of directors and chief executives are not committed,' said Ms Oetterli. 'You have to be in that mindset for the company to move forward.'

London-based Rachel Jackson, head of social and environmental issues at the Association of Chartered Certified Accountants (ACCA) agrees that commitment from top management is important when it comes to implementing any CSR initiatives.

The ACCA organises an annual award to recognise Hong Kong companies' efforts in improving the quality of sustainability disclosures by rewarding best practice.

Ms Jackson said although the quality of sustainability disclosures had certainly improved over the years helped by the emergence of generally accepted guidance such as the Global Reporting Initiatives, there was still room for improvement.

'Recently the general feeling is that the quality of the leaders has stagnated somewhat,' said Ms Jackson. 'We should also be mindful of the fact that the vast majority of companies in the world are not disclosing any type of sustainability-focused information at all.'

Ms Jackson said results from global surveys showed that there had been an increasing number of larger companies taking part in sustainability reporting activities - for example, those firms that have been included in indices such as the FTSE 100, ASX500 and Global 100.

But regional variations, as seen in the results of the CSR Asia Oxfam survey, are inevitable. Ms Jackson believes the situation in Hong Kong can be changed by having mandatory requirements to report, or via continued stakeholder/investor pressure.

There is no doubt that the financial crisis and uncertainty in terms of global economic outlook will continue to affect CSR reporting. Ms Jackson believes the methods of reporting will change as a result. For example, instead of printing there will be more use of the web and online reporting, which will save both funds and resources.

'The downturn could actually lead to benefits in reporting, such as making them more concise and focusing on material impacts only,' said Ms Jackson.

'It's important now more than ever to demonstrate good governance, robust risk procedures and a core strategy prepared for future risks and opportunities - so it is vital that those that already publish a sustainability report continue to do so, and it is certainly a strong business driver to start doing so for those that haven't yet.'

However, Ms Jackson said there would not be significant changes in sustainability reporting. 'But as companies prepare their budgets for 2010, one year on since the crisis, we are more likely to see the consequences of any budget cuts later this year or into next year.'