88% of Hong Kong investors say that a company’s sustainability efforts would affect their investment decision according to this new study on Environmental, Social and Governance (ESG) Reporting by MSLGROUP, SHINEWING Hong Kong and YouGov. The study, conducted by YouGov, surveyed 200 investors with more than HK$100,000 to invest in the past 12 months and who are mostly senior management and professionals in Hong Kong on their views on Corporate Social Responsibility (‘CSR’) and the effect of the planned implementation of “comply or explain” reporting obligation which may come into effect in 2015.

1. A study of the impact of effective sustainability reporting on investment decisions of people in Hong Kong

2. The 2008 financial crisis has changed the game

3. 43
28
25
0
10
20
30
40
50
60
70
80
90
100
%
TOP 3 PERFORMING LISTED COMPANIES IN TERMS OF CSR
SUN HUNG KAI PROPERTIES
HSBC
HONG KONG CHINA AND GAS COMPANY
42% pay more attention to companies’ CSR efforts today
compared to before the 2008 financial crisis
…people paying more attention post-2008

4. People want to invest in companies with effective sustainability programmes

5. People’s investment decisions are being influenced
88% of Hong Kong investors say that a company’s sustainability efforts would affect their investment decision
88%
12%
Unlikely / Very unlikely
Likely /
Very likely

6. …and women appear to be more influenced than men
75% more women than men say their investment decision would be influenced by a company’s sustainability efforts

7. …although it still follows after the fundamentals

8. …people still want business and stock performance
Business Performance
Stock Market Performance
Business Strategy
Corporate social responsibility (sustainability)
Investor relations
77%
76%
48%
22%
20%

9. …but even business performance is associated with CSR
86% Likely / Very Likely
86% of respondents believe that companies with effective CSR programs deliver better business performance

10. Not all factors are equal

11. …there is variance in perceived importance of sustainability elements
Operating practices cited as the most important component of CSR/Sustainability programmes followed by environmental protection
Operating practices
Environmental protection
Workplace quality
Community involvement

12. The Hong Kong Stock Exchange plans to raise the level of some recommended disclosures in the Environmental, Social and Governance Reporting Guide to comply or explain by 2015.
Why now?

13. Standards to consider
Getting started

14. Core components
Workplace quality
Environmental protection
Operating practices
Community involvement
Social (Labour practices/ human rights)
Environmental
Social (Product responsibility)
Social (Impacts on society)
•Working conditions
•Health & Safety
•Development & Training
•Labour standards
•Emissions
•Use of resources
•Environment & natural resources
•Supply chain
•Product responsibility
•Anti-corruption
•Community involvement
•Employment
•Occupational health & safety
•Education & training
•Child labour / forced labour
•Emissions / Effluents & waste
•Materials / Energy / Water
•Products & Services
•Supplier assessment (Environmental / Labour practices / Human rights / Impacts on society)
•Customer health & safety / Customer privacy
•Anti-corruption
•Local communities
HKSE ESG Guidelines
GRI G4 Guidelines

15. Helpful tips for companies

16. Map out what is material/relevant to your organisation
•Understand what aspects of your business have an impact
•Social, environmental, economic
•Positive, negative
•Actual, potential
•Direct, indirect
•Short term, long term
•Understand your boundaries – where do these impacts occur
•Internal, external
•Far reaching, localised

17. Map out what is material/relevant to your organisation

18. Engage and educate functions across the business of project rationale
•You will need support
•data collection
•affecting change and improvements
•CEO/COO/CFO email to key personnel, impressing the importance
•Town-hall meeting with key personnel to explain the initiative, why it is important and the impact on the organization
•Issue guidelines on what to consider

19. Review reporting of peer organisations
• Approach
• How do they establish
materiality
• What is their process
• How are they affecting
improvements
• What they consider material
• How are they presenting the
content

20. Start early
• Some information will need to be analyzed
• There can be a lot of information to gather
from a number of divisions, teams and
individuals
• All the information needs to then be
compiled
• This all then needs packaging up into a
coherent report
6 months to one year

21. Start realistically
•Don’t overwhelm/scare-off the teams and individuals that need to contribute
•Don’t make the initiative so unwieldy it never reaches completion
•Ensure you are going to be able to demonstrate year on year improvements
•Remain consistent
•Ensure continuity
ESG Report

22. Put benchmarks in place that enable and drive year on year improvements
•Try to identify metrics against which you can demonstrate improvement. Examples
•Workplace incidents
•Carbon emissions
•Waste volume
•Water usage
•Economic impact from community initiatives

23. Six tips for companies looking to benefit
1.Review the reporting of peer organisations
2.Map out what is material/relevant to your organization
3.Engage and educate functions across the business of project rationale
4.Start as early as possible
5.Start realistically
6.Put benchmarks in place that enable and drive year on year improvements

24. THANK YOU

25. Respondents Demographic Breakdown
S1-4