Hong Kong companies rank highest in Asia for environmental sustainability
Bridging the intention-action gap among Asian companies crucial to further sustainable development in the region, according to Refinitiv report
Companies in Hong Kong recorded the best overall performance in Asia for environmental sustainability out of eight markets with an average score of 70.06, followed by South Korea (64.57) and India (63.12), according to Refinitiv’s inaugural “Financing a Sustainable Future in Asia” report.
The report is the first in a series which looks at the Environmental, Social, Governance (ESG) performance of the largest companies across Asia, with the first edition focused on environmental performance metrics.
Asia’s largest companies did well in reporting on environmental impact when compared to their global peers, with Asian companies’ regional average environmental pillar score exceeding the global average by 2.74 points. The scores were based on emissions, resource use, and innovation.
Japanese and Taiwanese companies finished fourth and fifth in the region overall respectively, with Malaysia in sixth place. Singapore ranked second-lowest while at the bottom was China.
Many companies have policies to reduce emissions, but not all of them have specific reduction targets, signifying a gap between intention and action. In Asia, 69 percent of companies have an emissions policy, but only 30 percent have specific emission reduction targets.
One major success story in Asia is green finance, with green bonds growing substantially in the first half of 2019 to reach US$21.9 billion. This was an increase of 29.6 percent from a year ago. China issued US$8.3 billion, which was the most in Asia and third globally, while South Korea issued US$3.9 billion and Japan US$2.2 billion. Southeast Asia raised US$3.3 billion from green bonds in total.
Biodiversity refers to biological diversity, and ultimately the health of the world’s plant and animal life and habitats. When looking at biodiversity impact, companies both in Asia and globally appear to have been worryingly stagnant, with just 24 percent of companies globally and 29 percent in Asia measuring this. Across the region, Japanese companies are the most advanced in this area, with 40 percent measuring biodiversity impact, and Taiwan the lowest at 12 percent.
Elena Philipova, global head of ESG at Refinitiv, says, “With Asia set to lead global economic growth in the coming decade, the region’s companies and business leaders will play a prominent role in the sustainable development agenda. As many of the world’s most pressing environmental and social concerns, such as climate change and social inequality, reach critical junctures, it is important that companies take their responsibilities seriously. ESG data and transparency play an important role to drive and influence the changes required to sustain future economic and social growth.”
Julia Walker, head of market development, risk at Refinitiv, says, “Achieving the Sustainable Development Goals is a collective effort that starts with the most influential members of society, including large companies, leading the way. It requires a deep collaboration between the public and private sectors, as well as mobilisation of significant finances to succeed. Daily, we see more financial institutions increasing due diligence and directing investment towards more responsible and sustainable companies and investments. As concerns in areas such as climate change grow, we expect this trend to accelerate.”
Below are the key findings for Asia:
• Based on Refinitiv’s Environmental Pillar Scores, the regional average score for Asia is 62.34, which is slightly higher than the global average of 59.6.
o Within Asia, companies in Hong Kong (70.06) performed the best in the region, followed by South Korea (64.57) and India (63.12).
• Emissions: 69 percent of Asian companies have emissions reduction policies, which is a significant increase from 55 percent in 2013. However, Asian companies with specific emissions reduction targets remained relatively stagnant, with a slight increase from 28 percent in 2013 to 30 percent in 2017.
o Hong Kong leads the way in Asia around adopting emissions policies, where 87% of organisations have emissions policies, while Japan fared the best for emissions reductions targets.
o China has the largest gap between intention and action, where 77 percent of companies have emissions polices but only 8 percent have reduction targets.
• Water efficiency: 62 percent of the companies in Asia have a water efficiency policy, but only 16 percent maintain specific water efficiency targets.
o Hong Kong leads the region in setting water efficiency polices at 81 percent, while China experienced the greatest growth of 44 percent increase over five years.
• Ethical supply chains: 56 percent of companies in Asia have supply chain policies and are committed to developing environmentally products and services.
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