Less than 1% of the companies listed on the Hong Kong Stock Exchange (HKEx) disclose carbon information in accordance with international reporting standards, a survey has found.
The survey entitled Hong Kong Carbon Performance Report was compiled by Carbon Care Asia (CCA) and revealed also that of all companies in the Hang Seng Composite Index (HSCI), one of the stock’s index, only 9% of have formal carbon reporting.
In addition, none of the 1,221 listed companies outside the HSCI have any form of carbon disclosure. In light of the findings, CCA chief executive Albert Lai said that Hong Kong listed companies needed bold action to tackle the climate change challenge.
"If the business sector is slow to act, everyone in Hong Kong will suffer," he said. "Carbon reporting is not only the first step towards a low-carbon economy, but also a wake-up call for company executives who have more influence and responsibilities than most of them would realize."
The report also suggested that one out of four companies in the Hang Seng Large Cap Index, another index of the HKEx, had formal carbon reporting, while only 2.8% of small cap companies disclosed carbon information in some forms.
"This indicated that smaller firms are largely unaware of their own carbon footprints, which makes it impossible for them to develop a proper strategy to face the uncertain future," CCA said in a statement.
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The report also looked at sectorial performance and revealed that utilities was the best performing sector with two thirds of large cap companies producing formal carbon reporting.
The largest industries of Hong Kong’s economy such as consumer goods, properties and construction and financials, were the worst performing sectors with less than 20% of reporting in each sector.
"If we look at the overall performance of all companies listed on the main board, less than 1% of Hong Kong companies reported their carbon emissions in accordance with international guidelines such as the Global Reporting Initiative, compared with over 3% in Singapore," Lai said.
Commenting on the survey findings, Chartered Institute of Management Accountants head of sustainability Sandra Rapacioli told The Accountant: "The key to getting organisations to report on carbon and other material sustainability factors is to understand the business case for sustainability."
She added that only in this way would companies stop seeing carbon reporting as a tick box exercise. "It’s only when companies understand how financial performance is linked to environmental and social performance that they truly embed ESG [environmental, social and governance] factors into their strategy and decisions."
Rapacioli also said it’s the accountants’ role to demonstrate the business case for sustainability. "As integrators and navigators for their organisations, they need to account for all relevant factors and risks, and help their organisations incorporate economic, environmental and social factors at all levels of decision-making and reporting," she said. "Accountants have a crucial role to play as change agents in sustainable corporations."