Most ESG decisions by Hong Kong and mainland China executives primarily driven by compliance, PwC survey shows
- Senior executives believe that neglecting ESG factors in decision-making could affect their companies’ ability to attract business opportunities and retain clients
- Despite recognising the importance of ESG, many organisations are struggling to decide what actions to take, PwC China’s Elton Yeung says at the Asian Financial Forum
The strategic decision-making of companies when it comes to ESG is still primarily being driven by compliance and not through value-added activities, a survey of senior executives in Hong Kong and mainland China showed.
Neglecting environmental, social and governance factors in the decision-making process could affect their organisation’s ability to attract business opportunities and retain clients, over half of the 105 respondents said in the study conducted last month by the Hong Kong Trade Development Council (HKTDC) and accounting firm PwC.
The survey, which was released at the Asian Financial Forum (AFF) on Monday, explored the perceptions of business leaders towards the prospect of ESG investing, and the role Hong Kong can play to facilitate future development in this area. The theme of this year’s forum was “navigating the next normal towards a sustainable future”.
“The vast majority still think failing to address ESG issues would bring adverse impacts or disruptions to their business,” Elton Yeung, vice-chairman of PwC China, said at the AFF during the presentation of the survey. “This is a warning sign that despite recognising the importance of ESG, many organisations are struggling to know what actions and decisions they should take.”
Over half of those surveyed saw the board and chief executive officer as actively engaged in ESG matters within the organisation. However, when it came to incorporating ESG elements into the organisation’s strategic decision-making process, some 77 per cent said complying with government policies or regulations was an extremely or very influential consideration.
The second highest consideration came from aligning with the company’s mission and values.
“We saw lower responses around the value-add factors, such as driving product and service innovation, or opening new business and investment opportunities,” said Yeung.
Respondents also saw no shortage of opportunities for the overall development of ESG investing in Hong Kong.
Some 52 per cent pointed to the pricing and trading of ESG financing instruments as presenting significant opportunities for the city, while 48 per cent saw potential in the green bond market.
“It can lead in the trading of ESG financing instruments, the green bond market and the unified carbon emissions trading market in the GBA,” he said.
The variety of ESG-linked financial instruments and government incentives to promote ESG adoption received the lowest score on competitiveness by the executives.
“There’s probably more to be done by the government and regulators to broaden the scope of permissible ESG products and incentivise the private sector’s participation and investment,” said Yeung.
