(Hong Kong) – What’s the big deal about sustainability? Why for-profit companies should engage in activities designed to increase its profits without sacrificing the environment?
From ink cartridge recycling to sustainability reporting, Hong Kong companies are lagging behind their counterparts in Europe and the US. Experts have warned that this comes at a detriment to the Hong Kong economy, as business sustainability and social responsibility have become increasingly important from the perspective of stakeholders. In fact, responsible companies maintain a competitive edge over non-responsible enterprises, as they gain greater trust from clients, investors, and governments.
Taking all of this into account, it is vital for Hong Kong’s business sector to catch up to their global counterparts and embrace the global shift toward sustainability. Read on to find how Hong Kong businesses have fallen behind their environmentally conscious counterparts, and what can be done to catch up.
In 2017, a report on 300 Hong Kong-listed enterprises found that only 70 percent of businesses had divulged their environmental, social, and governance information. This same report showed that 55 percent of Hong Kong retail investors had increased their sustainable investments in the past five years, far below the 68 percent increase by their Asian counterparts.
There have been many recent and notable examples, of the detrimental effects a failure of corporate social governance can have on a business’ bottom line, and industry reputation. This year, Japan’s third-largest steelmaker, Kobe Steel, admitted to falsifying steel product quality data, for as long as a decade. This quickly sparked a devastating free fall in Kobe Steel’s share price.
Corporate Social Responsibility
Corporate social responsibility is a business philosophy describing the ultimate aim of enhancing the sustainability of a business. Hong Kong-listed firms have been urged to step up their sustainability efforts, and have been criticized on the world stage for falling behind their global counterparts.
Hong Kong-listed companies need to act fast to enhance their corporate social responsibility frameworks, to match international standards, attract global investors and to maintain the city’s status as a leading global financial hub.
In order to achieve sustainable growth, listed companies in leading countries including America, disclose their business information concerning the three main ethical considerations involved in corporate social responsibility: environmental, social and governance.
Almost two years ago, Hong Kong’s stock market regulator ordered these same disclosure requirements for Hong Kong’s listed companies. Leading sustainability advisors, however, claim that just 50 to 60 of Hong Kong’s nearly 2,000 listed companies have successfully upheld sustainability reporting requirements. In fact, the research suggests that few of these leading listed companies, appreciate the benefits of being environmentally and socially responsible.
While these companies are subject to significant reporting requirements, sustainability leaders state that these companies treat the requirements as simply a ‘box-ticking exercise’. It is therefore essential for Hong Kong businesses to treat sustainability reporting as a strategic necessity, and a method of monitoring their growth in implementing sustainable industry practices.
A Time for Change
Sustainability has become one of the major policy concerns in the world. As the world pushes towards sustainable development in businesses, the pressure is on for the Hong Kong businesses to balance continued economic development, with caring for the city’s natural environment.
Much has been done by Hong Kong’s businesses and governments to increase their sustainability efforts, but there is more to be done. Hong Kong is working with China’s government to develop green financing, which describes investments flowing into sustainable development projects and initiatives. Hong Kong’s monetary authority is also considering plans to issue green bonds in the city, allowing companies to issue debt to fund environmental and sustainability-related projects.
It has been almost two years since Hong Kong’s stock market regulator ordered listed enterprises to annually disclose their environmental, social and governance information. Despite this, many companies have still failed to understand the requirements, or are deficient in their sustainability practices. It’s time for Hong Kong businesses to catch up to their global counterparts and join the worldwide push for sustainability.