Hong Kong listed firms get ‘F’ on ESG report card, put on notice as rules become mandatory in 2021

Hong Kong-listed companies are giving the city a bad name by failing to meet the “comply or explain” disclosure rules on environmental performance indicators. It will get tougher when requirements on climate-change and social issues also become mandatory from 2021, industry consultants said.

Only 39 per cent of 500 randomly-chosen environment, social and governance (ESG) reports on or before June 30 fully disclosed their environmental key performance indicators under current “comply or explain” regime, according to a study conducted by BDO. The rest either gave incomplete or no disclosure, and failed to give sufficient explanation for them, the accounting firm said.

Only 12 per cent of them spelt out plans to deal with climate-change issues. Only one in five among the 12 per cent have divulged information on actions taken, the study shows.

There is still a gap between existing practices in Hong Kong and standards in more established markets such as the UK and US,” BDO’s head of risk advisory Ricky Cheng said in an interview. The result was “far from satisfactory in terms of compliance and quality,” he added.

ESG reporting enables companies to identify opportunities to reduce operating costs and grow revenues through sustainable development, better governance and risk mitigation, analysts said.