1 in 20 firms fully disclosed environmental targets in 2019

The percentage of firms who have set goals for ESG declined to 15%.

Only one in 20 or 5% of Hong Kong-listed companies have disclosed environmental targets in their environmental, social and corporate governance (ESG) in 2019, according to a survey by professional services firm BDO.

The rest either provided incomplete information or non-disclosures on their policies. Packaging material was particularly found to have the lowest compliance level of disclosure, at 38%.

Although 39% fully disclosed environmental key performance indicators (KPIs) under the “Comply or Explain” provision, the remaining companies either exhibited incomplete or non-disclosure without any explanation.

Almost half or 46% did not disclose any information relevant to assessment of materiality with their results in the report. In addition, only 19% of the companies explained how they identify the reporting boundary of the ESG report.

The percentage of firms who have set goals for ESG declined to 15% in 2019 from 17% in the previous year. The survey found that the larger the company, the higher percentage in goals setting on ESG management.

Furthermore, only 4% of the companies aligned their ESG goals with the UN Sustainable Development Goals (SDGs). The top three SDGs amongst firms were good health and well-being, decent work and economic growth and responsible consumption and production.

In addition, 12% of Hong Kong-listed companies disclosed policies related in identifying issues related to climate that affected them and mitigating the risks of identified issues. 18% disclosed details about the actions they have taken in managing climate-related issues.

In terms of ESG reporting quality and performance, the utilities sector showed the highest score, whilst the conglomerates and information technology sectors scored the lowest.

“In particular, the survey finds that companies tend to sidestep publicly reporting the less favourable issues and drawbacks to their stakeholders, which undermines the balance of ESG reporting and which requires investors and other stakeholders to exercise their own judgement about actual ESG performance,” BDO said.

In partnership with the School of Professional Education and Executive Development at The Hong Kong Polytechnic University (PolyU SPEED), the survey sampled 500 of the most recent ESG reports published by both Main Board and GEM-listed firms on or before 30 June.