Almost all (99%) of the top 200 (T200: by market capitalization) listed companies have met the disclosure requirements under “comply or explain” provisions stipulated in the Environmental, Social and Governance (ESG) Reporting Guide, according to Alaya Consulting, a Hong Kong-based consulting firm that advises companies in non-financial reporting.
This represents a substantial surge from a year before, when only about 60% of these companies had reported ESG performance on a voluntary basis.
The Hong Kong Stock Exchange made it compulsory for listed companies to issue General Disclosure on 11 aspects related to ESG for financial year 2016 in December 2015. This was expanded to include 12 environment related key performance indicators (KPIs) in FY 2017.
Alaya Consulting has been tracking compliance of ESG by Hong Kong’s T200 companies for two years. The Firm believes these companies, representing two-thirds of the total market capitalization, are in a position to set the tone for good ESG reporting practices.
17% disclosed all 12 environmental KPIs
Although disclosure of environment related KPIs will come under “Comply or Explain” provisions only in FY 2017, 17% of the T200 have reported all environmental KPIs and approximately 81% have reported at least some of the environmental KPIs for FY 2016. However, few explanations have been provided for undisclosed environmental KPIs.
Tony Wong, Founder of Alaya Consulting, stated: “The fact that most companies began to disclose environmental KPIs marks a good starting. We expect the level of disclosure to grow significantly in FY2017 as additional compliance requirements come into effect.”
Among the 12 environmental KPIs, it seems that companies find energy consumption and conservation relatively easy-to-disclose. In contrast, consumption of packaging materials used for finished products remains the least reported KPI.