Grasping the Trend in Sustainability Integration

– Compliance and Achievement

Tracy Zhou

2016.08.10

Where Are You Now?

Beginner

(before or on the first or second ESG reporting cycle)

Intermediate

(already on the third to fifth reporting cycle in full compliance with relevant guidelines)

Advanced

(developed at least ten reports in full compliance with prevalent guidelines / standards)

Journey of ESG / Sustainability Reporting

What Comes Next?

Travelling on an ever-extending

journey…..

• Development of reporting requirements

• Implication to business

• Expectation from stakeholders

source: ESG Analytics

ESG Requirements by Region

“There has been steady increase in number of social reporting requirements by regulatory bodies and stock exchanges around the world” – drawing on the Initiative for Responsible Investment at Harvard

University’s work on global CSR disclosure requirements

Moving Forward...Fast!

• HKEx released its ESG Guide in January 2013, and upgraded to the new version on 31 December 2015

• By April 2016, 15 stock exchanges around the world has published guidance (a significant increase over the past months), with another 22 are committed to doing so

Source: Policy makers raising the bar on sustainability reporting worldwide, GRI news 06 April 2016

• In 2016, Global Reporting Initiative (GRI) G4 Guidelines will transition to GRI Sustainability Reporting Standards (GRI Standards), led by the Global Sustainability Standards Board (GSSB)

• On 17 July 2016, the public consultation on the draft standards was closed

Picture source: Transition to Standards, GRI website

Future…Standardization!

Timeline Action

July - August Analysis of public commentsGSSB review of public comments

By 1 September GSSB meeting to approve the GRI Standards or determine the need for re-exposure

By end of 2016 (tentative)

Expected release of GRI Standards

Source: The business of sustainability: McKinsey Global Survey results, October 2011

Future…Integration!

Business processes where sustainability has been integrated:

• Mission and values

• External communications

• Corporate culture

• Internal communications

• Operations

• Strategic planning

• Marketing

• Employee engagement

• Supply chain management

• Budgeting process

Future…Investment with ESG Focus!

Source: 1) M. Khan, G. Serafeim, and A. Yoon, Corporate sustainability: First evidence on materiality, Harvard Business School working paper, March 20152) Sustaining sustainability: What institutional investors should do next on ESG, McKinsey&Company, June 2016

A recent study indicated that there had been a positive effect (up to 6.0%) on financial returns of investors’ treatment of ESG issues, especially material issues

Based on data from 1992 to 2012 on companies’ ESG performance* across 45 industries in six sectors, including:• Financial services• Healthcare• Telecommunications• Non-renewable resources,• Services, and• Transportation

*using the Sustainability Accounting Standards Boards’ material factors

Expectation From Stakeholders

What are the issues “on societal and company agendas - and consequently in the public disclosures – 10 years from now?”

• Global issues

• Challenges to society’s development

• Challenges to the environment

• Challenges to efficiency

• Challenges to society’s governance and economic models

– GRI The Next Era of Corporate Disclosure, March 2016

Trends of Future Reporting

• The general context - where a business operates and decisions made – will be affected by challenges from a number of categories

• The role played by a business will be larger than today in shaping the solutions to these challenges

• The capacity of taking action and finding innovative solutions will come from further engagement

- Sustainability and Reporting Trends in 2025, Preparing for the future, GRI, October 2015

Driver:

Meeting regulatory

requirements

What can you do?

Awareness training

Gap analysis

Data collection

Driver:

Empowering stakeholders for

collaboration and innovation

What can you do?

Supply chain engagement

Community involvement

Partnership development

Influencing peers

Your Strategies?

Basic Compliance

Influence for Excellence

Performance Improvement

Driver:

Enhancing business performance

What can you do?

Competence building

Performance assessment

Peer benchmarking

Strategic planning

Co

nte

nt to

Rep

ort

Our Comprehensive Support Package

Alignment

Advancement

Achievement

1

2

3

AAA Sustainability Integration

Received over 20 international and local reporting

awards in the past 2 years

Why HKPC? Industry Acknowledgements

Corporate Sustainability

Corporate Sustainability

All-around Consultancy

ServicesGovernment-

funded Projects to

Promote Best Practices

Standard, Compliance & Certification Consultancy

Information Portal and

Training

Hong Kong Convention and Exhibition Centre Management Limited (HML)

• Hong Kong’s 1st ISO 20121 Certificate

Prevailing International Standards

ISO 14001 Environmental Management System

ISO 50001 Energy Management System

ISO 20121 Event Sustainability Management System

Environmental & Energy Management Systems

Corporate Sustainability

Happy Organization Label Scheme

Hong Kong Green

Organisation Certification

Hong Kong Awards for

Environmental Excellence

Customer Service

Excellence Award

Hong Kong Corporate Citizenship

Award Scheme

Manpower Developer

Award Scheme

ESG Platform &Schemes

Thank You!