SWCS launching of “2023 ESG Research” – Hong Kong Listed Issuers Demonstrated Positive ESG Performance. However, Further Improvements Still Required
HONG KONG, Sept. 20, 2023 /PRNewswire/ — SWCS Corporate Services Group (Hong Kong) Limited ("SWCS") released its 3rd edition ESG research report – "2023 ESG Research Report" on September 19, 2023. Since 2021, SWCS has been conducting ESG research to examine the ESG reporting and climate disclosure responses of listed companies. SWCS aims to assess the current ESG performances disclosed by listed issuers against the Environmental, Social and Governance reporting guidelines required by the Hong Kong Stock Exchange (HKEX) . Furthermore, SWCS also provides specific recommendations on the various aspects where further improvements are required.
SWCS has successfully launched this report through a webinar format, with Dr. Maurice Ngai, CEO of SWCS Group, as the speaker, along with other speakers including Mr. Roy Fan, Head of Sustainability, Climate Change, and ESG Services at SWCS, and his fellow teammates: Ms. Charlene Kwong, Senior Manager, Ms. Connie Chan, Assistant Manager and Ms. Karen Tao, Consultant.
The report provides an in-depth analysis of the ESG reports of 345 Hong Kong-listed issuers, including 145 constituents of the Hang Seng Sustainability Index and 200 non-constituents, summarizing their disclosure status and areas for improvement through a comparison of various indicators.
Governance aspect – there is a need for a more detailed description of the roles and responsibilities of directors in ESG matters and appointing more board members in ESG committee can foster more active corporate sustainability.
While most listed issuers have disclosed board statements and ESG governance frameworks, there is room for improvement in describing director's active involvement in ESG affairs. Moreover, disclosure of target review results should be further enhanced. SWCS suggests that, in addition to compliance-related disclosures, the board should disclose further details regarding their specific roles and responsibilities in ESG matters. Furthermore, more board members should be included into the ESG committees to ensure directors are proactively participating in guiding the company towards its sustainability goals.
Environmental aspect – A higher percentage of listed issuers disclosed environmental targets compared to previous year.
While most listed issuers have demonstrated their capability in disclosing greenhouse gas emissions in Scopes 1 and 2, disclosure in Scope 3 remains relatively low. Concurrently, there have been an increase in the percentage of listed issuers disclosing environmental targets, as well as the disclosure in emissions, waste, energy efficiency and water efficiency targets, compared to previous years. SWCS recommends that listed issuers should adopt quantitative environmental targets more extensively to facilitate the quantification of goal performance progress and comparisons.
Social Aspect – Listed issuers should pay more attention to anti-corruption training disclosure.
While most listed issuers have made relevant disclosures in areas such as health and safety, and supply chain management, the disclosure in anti-corruption training requires further attention. SWCS recommends strengthening the management and disclosure of anti-corruption training to reduce compliance risks, protect corporate value and reputation.
Most listed issuers are still not meeting the climate-related information disclosure requirements that will be implemented by the HKEX, and should prepare for this as early as possible
According to the consultation paper titled " Enhancement of Climate-related Disclosures under the Environmental, Social and Governance Framework " published by the HKEX on April 14, 2023, SWCS has also reviewed the preparedness for the relevant proposed improvements. Our research findings revealed that the majority of sampled companies have yet to disclose information on the climate-related indicators outlined in the consultation paper. In some cases, the disclosure rate for certain indicators is alarmingly less than 5%.
In the corporate governance front, our research found that only half of the sample companies disclosed whether they held regular ESG meetings with their board. Most sample companies have not yet made public whether they have incorporated ESG and climate-related goals into the remuneration plans for directors and senior management. Considering that the consultation paper requires boards to disclose how they oversee management or committees, issuers may consider holding regular meetings as a means of monitoring climate-related matters.
On the strategy aspect, our findings show that very few sample companies have disclosed the quantified impact of climate-related risks on finance and their climate scenario analysis. Issuers should integrate climate issues into their strategic planning and formulate relevant policies and plans.
In terms of risk management, only a handful of issuers have disclosed how they address climate-related risks.
The consultation paper also includes several quantitative indicators such as Scope 3 emissions, and financial impacts of climate-related risks and opportunities, however, the proportion of disclosing these respective information did not exceed 15%. It is evident that the readiness of listed issuers in addressing climate change risks and opportunities and disclosing this information is clearly insufficient. Given that disclosure requirements are soon to be enforced by 2024, issuers are strongly advised to begin planning and preparing the relevant information for disclosure immediately.
SWCS looks forward to the active response to the global call by listed issuers in addressing climate change, and become essential players in promoting a low-carbon economy and enhancing climate resilience through comprehensive and transparent disclosures, and significantly improved ESG performance.
SWCS anticipates that this research report will assist issuers in meeting investors and market expectations while complying with ESG reporting requirements. If listed issuers encounter any difficulties or questions while planning and preparing for the ESG reports or looking into ways to enhance their ESG performances, they can contact SWCS for professional assistance to avoid compliance issues.
Please visit www.swcsgroup.com for more details of SWCS.
About SWCS
SWCS is a leading and visionary specialty corporate services provider, adhering a "Client-Centric" and "Cost-Effective" approach, adopting the unique "Through-Train" servicing model and utilizing "Cutting Edge" technology for premier client services. We provide tailor-made services according to clients' needs at different development stages, from Pre-IPO, IPO to after listing. Our "4+1+N" professional services include company secretarial and compliance, Environmental, Social and Governance reporting and advisory services (including climate change), ESOP and Family Trust, Investor Relations, SWCS Academy and other related corporate services.
