Businesses worldwide have high levels of confidence in Hong Kong as an effective and well-resourced hub for ESG (environmental, social and governance) services, a recently published study suggests.
The first HKTDC ESG Index, compiled by the Hong Kong Trade Development Council (HKTDC), has given the city a 64.2 score, well above the neutral watershed level of 50.
The result is based on a survey of more than 1,500 exhibitors and buyers at 10 high-profile HKTDC fairs and business events over a 12-month period.
Hong Kong’s ESG capabilities were highly regarded across the environmental (63.7), social (65.0) and governance (64.2) sub-indices. The survey uncovered some differences between different geographies and sectors, however.
Within the environmental sub-index, Hong Kong’s diversity of green and sustainable solutions was viewed favourably across the board.
Hong Kong and mainland respondents were most likely to highlight these solutions for their quality and innovation. International respondents, by contrast, placed more emphasis on the ease of investing in green and sustainable opportunities.
For the social pillar, many local businesses cited Hong Kong’s engagement in community development and social welfare. Mainland and international respondents, meanwhile, valued Hong Kong’s ESG-related talent and training more highly.
In terms of governance, local respondents held Hong Kong’s international connections in especially high esteem. Respondents from Mainland China and overseas were more likely to point to Hong Kong’s ESG reporting framework as a significant factor.
ESG opportunities
Overall, 90% of people answering HKTDC’s survey indicated that ESG considerations were integral elements within their business decision-making. However, only 29% said they were currently engaged in buying or selling ESG products and services.
By industry, the banking and financial sector had the largest proportion of practitioners actively involved in sourcing or providing ESG solutions.
These findings reflect the many initiatives undertaken to consolidate Hong Kong’s position as a sustainable finance hub.
Last October, the Hong Kong Monetary Authority launched its Sustainable Finance Action Agenda. This prioritised achieving net zero within the banking sector, as well as promoting sustainable investment and finance, among other areas.
The Hong Kong SAR Government’s three-year Green and Sustainable Finance Grant Scheme, first launched in 2021, has been extended by a further three years, from 2024 to 2027. It now includes an expanded scope of subsidies that covers transition bonds and loans.
Green premiums
In the HTKDC survey, all buyers committed to ESG compliance were willing to pay more for green products and services. Of this group, 64% were prepared to pay a premium of at least 10%.
Similarly, all exhibitors committed to ESG compliance said that green initiatives were more profitable. Within this segment, 72% reported a profit margin boost of more than 10% for their ESG products and services.
The full HKTDC ESG Index report can be found here.
Preliminary findings, based on seven HKTDC events, had been released in February. These early readings were broadly consistent with the final result.
As a leading business hub, Hong Kong has established itself as a primary resource for many buyers and exhibitors based in Hong Kong, Mainland China and international markets who are committed to enhancing their sustainable business models.
The Hong Kong SAR Government has also put in place various measures, guidelines and incentives to implement sustainability in business operations, focused on sustainable development, energy efficiency, green buildings and renewable energy.
In 2021, the Government announced that it will spend HK$240 billion (~US$31 billion) on climate change mitigation and adaptation over the next 15-20 years.
