For Hong Kong-listed firms, environment and governance disclosure is ‘box-ticking’ exercise: KPMG
Only 38pc of 400 listed firms randomly sampled complied on all 11 ESG aspects in their first report after the requirements took effect, according to a compliance review report issued by HKEX in May
Listed firms should see value in the Hong Kong stock exchange’s mandatory disclosure on environment, social and governance (ESG) issues and stop treating it as a “box-ticking” exercise, according to KPMG which verifies and advises on such reports.
Many only disclose historical figures and do not provide targets on key performance indicators such as carbon emission reduction, as well as an analysis on what the numbers mean for their operational risks, cost savings and business opportunities.
“Like financial statements, if you only give the numbers without explaining the details, the readers cannot appreciate the substance of the performance,” said Patrick Chu Man-wai, a partner at accountancy and consultancy KPMG responsible for business reporting and sustainability, in an interview.
“Although there are plenty of examples of good ESG disclosures out there, some companies do not see the value of ESG reporting but rather treat it as a box-ticking exercise with less than ideal quality and substance.”
He noted that some Hong Kong-listed mainland firms do not have designated ESG teams to coordinate and supervise the ESG reporting, which typically was completed by pooling data from different departments with no or little discussion at the board level of the findings.