Gotta disclose?

Gotta disclose?

4 June, 2011
Disclosure of CSR information in HK
Reporting on corporate social and environmental measures
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Disclosure of corporate sustainability information to stakeholders is becoming the norm for companies, as increasingly people want to know about the actions and impacts of the companies with which they engage. Recent initiatives focusing on HK companies’ corporate sustainability progress include the HKQAA-HSBC CSR Index and Oxfam & CSR Asia’s CSR Survey of Hang Seng Index Constituent Companies. These initiatives help to demonstrate to companies that there is an increasing need to be transparent about their social and environmental contributions while helping to move along companies that have yet to start on creating strategies and programs of social and environmental responsibility.

CSR Asia collaborated with Oxfam to examine the degree of transparency and corporate social responsibility (CSR) of companies on the Hang Seng Index. Core areas examined were: CSR strategy & reporting, stakeholder engagement, workplace quality, environmental performance, supply chain and community investment. The findings indicated that companies that have responded well to CSR strategy & reporting performed well, since sustainable business practices are already in place. An area where many companies fell short was the supply chain, as organizations often do not have monitoring initiatives for their supply chains. On the other hand, the majority of companies were found to be tracking at least one item of environmental performance. Interestingly, the number of mainland China companies versus Hong Kong companies that have signed the UN Global Compact is double. The number of Mainland companies participating in the Carbon Disclosure Project (CDP) is also comparable to that in Hong Kong.

Jacqui Dixon, Director of CSR Asia’s Hong Kong offices, points out that “disclosure projects [such as the CDP] are getting companies to think about issues, but not all companies respond because they haven’t measured emissions or looked at climate change.” Dixon continues, “By responding, they realize they are doing little and can start doing some more”. Dixon recommends that companies respond to initiatives such as CDP instead of waiting; to choose not to disclose is a weak strategy in view of the current shift toward transparency. The CDP is an example of increasing interest from investors in companies measuring and reporting their impacts. With regard to increasingly detailed surveys, Dixon observes that “companies need to wake up to the fact that stakeholders will send more questionnaires, and increasingly more rigorous ones” and to ensure that responses provide enough details about companies’ sustainability initiatives, “companies will need to employ people or give staff the responsibility to respond to the surveys and be more transparent to the public”.

Dave Dore, Research Manager of the Association for Sustainable and Responsible Investing of Asia (AsRIA) observes that currently, environmental data tends to be reported more than social impacts. His general impression is the environment is in a way easier to measure as “it has a bit of history to it, and financial analysts can look back at metrics and see the efficiency in water or GHGs (greenhouse gases) and there are stronger analytics to support making an investment decision and linking that to a cost-benefit analysis”. Dixon further observes that “if companies are reporting data, it does tend to be more environmental but very few are measuring community impact” Dixon continues.
“Companies may report on the total money spent and the number of volunteers, but these are inputs”. Companies need to look beyond charity and philanthropy to make sure that there is an impact, emphasizes Dixon, such as improving employees’ morale or positively impacting the local community. “It is not just the inputs, but the outcomes and impacts, and companies are struggling to measure that” Dixon says.

There is growing support within many corporations when it comes to being involved in, and reporting on, environmental initiatives. More work needs to be done on supply chains and measuring the actual impacts from community involvement activities, but progress is being made and Hong Kong companies are showing a steady increase in awareness and participation. As companies continue to improve their measurement and reporting mechanisms, it is reasonable to look forward to the possibility that more Hong Kong companies will lead in CSR indices and participate in international disclosure projects to demonstrate to their stakeholders the positive impacts they are making in the communities in which they operate.

By: Ecozine Staff
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