Hong Kong takes new step to promote ESG agenda to reluctant and wary small business owners
- The city’s Trade Development Council is working with Dun & Bradsheet to help SMEs attain ESG credentials to compete in global market
- Council to offer free consultation, fee waiver for small business owners, hoping to change perception of ESG as a drag on operating cost
Hong Kong’s trade promotion agency is stepping up efforts to support the city’s business owners, helping enhance their environment, social and governance (ESG) credentials and raise their competitive edge in the global market.
The Trade Development Council will add ESG consultations into its Transformation Sandbox programme for small and medium-sized enterprises (SMEs), which also offers branding and digitalisation advisory services.
The council expects to hold more than 100 business consultations related to ESG at no cost to business owners, hoping to change their mindset about the “sustainability” factor in their operations. The offer will be extended to some 500 SMEs in various sectors including construction, transport, catering and services.
“For a lot of SMEs, during the pandemic period or even now, it is not easy,” Patrick Lau, the council’s deputy executive director, said. “They do not want an extra pressure of higher cost. But if they do not participate, more customers might be lost.”
Dun & Bradstreet, a US-based information provider, will participate in the programme by helping assess and certify companies’ ESG credentials. It will waive a HK$25,000 (US$3,184) fee for the first 50 SMEs who apply and qualify during the promotion. Others could enjoy a HK$1,700 discount before July.
Lau said the city’s SMEs showed less passion for ESG consulting during the Covid-19 pandemic. The biggest challenge, he added, “is to recognise that ESG is not just a compliance model, but a business opportunity”, he added.
Hong Kong raises US$6 billion in city’s biggest green bond offering
Hong Kong-listed companies are required to publish annual ESG reports alongside their periodic financial reports to shareholders. However, the requirements are not imposed on more than 350,000 privately-owned SMEs that make up about 98 per cent of the businesses in Hong Kong.
Simon Ng, the CEO of Business Environment Council, said that a more transparent ESG profile will give SMEs an advantage, especially when they participate in global supply chains.
Good ESG reporting and disclosures will also help SMEs access more funding opportunities, according to Michelle Mak, D&B’s ESG head in Hong Kong. With ESG credentials, SMEs can also qualify for a growing pool of “green loans,” she added.
Bank of China (Hong Kong), for example, started a specific financial incentive scheme for SMEs with fee waiver to spur ESG targets. HSBC also offers loans with interest rates linked to ESG performance.
The Hong Kong Trade Development Council held a seminar on Thursday, which was “really helpful,” said Joanna Cheng, the owner of IL Sarto.
“We are small companies, we do not have great research power or labour to help us to understand this,” she added. The company does not intend to engage D&B’s services for now because “we do not have a lot of [ESG] data to provide.”
Banny Yu, the president of Hong Kong Apparel Society, who represents SMEs in the textile industry, said ESG is merely a “buzzword” for most SMEs at the moment. Efforts to promote ESG among SMEs will take time to succeed and require more policy support, he added.
“The council’s proposal seems right, but SMEs do not know what to do next,” Yu said. “The ESG campaign in Hong Kong gives me a feeling that someone wants to push us to do it, rather than us doing it voluntarily.”
