Integrated Reporting Arrives in Hong Kong…
“So that’s settled, Jeanne will help organise a workshop on integrated reporting while Paul Druckman, CEO of the IIRC is in town.” As I left the premises of the Hong Kong Institute of Certified Public Accountants, I wondered what I had gotten myself into…
Since the launch of the Hang Seng Corporate Sustainability Index in July 2010 and the publication of the Hong Kong Stock Exchange’s Environmental, Social and Governance (ESG) Reporting Guide in August 2012 as recommended practice from 1 January 2013 onwards, the growing momentum for sustainability and/or ESG reporting in Hong Kong has been unmistakeable. In various organisations, new sustainability teams have been created and quickly filled by a mix of environmental, health and safety, corporate social responsibility (CSR) or communications specialists as they prepare for the Stock Exchange’s declared intention of raising ESG data disclosure level to “comply or explain” by 2015.
When compared with financial reporting, sustainability or ESG reporting is a relatively new field in Hong Kong, with the first ever sustainability report published in the territory only in 2001 by MTRC. Many of the recent new hires will face a steep learning curve on how to produce a sustainability report as well as setting-up and maintaining internal ESG information and data management systems and processes – a prerequisite for robust reporting.
Meeting this challenge will be influenced by whether the organisations that they are working for have already developed or identified their internal business sustainability or “long-term business continuity” strategies.
For some industries or privately-owned companies, such as those in the infrastructure sector or family-owned businesses, long-term business continuity is typically embedded into their DNA. Here, the challenge will likely remain relatively confined to the reporting and communications arena, particularly in portraying the linkage of ESG performance to its long-term business strategy in a consistent and coherent manner.
For companies with a relatively short history, but without a clear business sustainability strategy, the new hires will very likely need to tackle their sustainability strategy development challenge as they take on the reporting challenge as well.
Given the current lack of experienced capacity, the concept of integrated reporting could serve to spark confusion…or inspire innovation…
When the organisation of the integrated reporting workshop began, I expected only half a dozen of the companies deemed to be relatively more advanced in their sustainability reporting to sign up for it. I was pleasantly surprised by the fact that over 20 companies with varying levels of experience in ESG reporting attended the workshop. Even more encouraging was the fact that each company managed to send not just their sustainability reporting representative, but also a financial or company reporting representative. In Hong Kong, where time is extremely precious, I’d like to believe that this is a sure sign that Hong Kong companies are ready to embrace not just sustainability reporting, but perhaps integrated reporting. The strong attendance by the big auditing firms also seemed to signal their potential willingness to invest seriously in developing local expertise and teams in their Hong Kong offices for sustainability/ESG reporting assurance – an essential piece to developing robust sustainability and/or integrated reporting practices in Hong Kong.
As I left the workshop with fresh memories of the animated buzz of discussion surrounding the IIRC’s draft prototype framework, I wondered whether Hong Kong’s mix of predominantly family-owned companies could one day become the Asian leaders in integrated reporting….
Jeanne Ng is Director – Group Environmental Affairs at CLP Group. CLP Group is one of the leading power companies in Asia-Pacific region. Powering Asia Responsibly means delivering economic value to our capital providers and social and economic value to our shareholders.
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