(HONG KONG, 14 November 2023) The Hong Kong Institute of Certified Public Accountants (“HKICPA”) today released the findings of a study, ESG Assurance in Hong Kong 2023: An evolving landscape, reviewing the state of play in environmental, social and governance (“ESG”) assurance in the local market. The research found that there was a moderate increase in the take up of external ESG assurance among listed companies and a significant jump for large companies. Meanwhile, the largest companies tend to set clear carbon targets. This research updated and expanded the Institute’s 2021 study on this theme, to gauge the changes in the reach of ESG assurance in the Hong Kong market over the past two years, against the rapidly developing ESG landscape. 

Currently, ESG assurance is not mandatory for listed companies in most jurisdictions, including Hong Kong. However, with the requirements and expectations on ESG reporting continually being raised, investors and stakeholders are looking for more reliable, relevant and verifiable data. Good quality assurance of ESG reporting can help fulfil that need.

·         Moderate increase in listed companies adopting external assurance overall, contrasting with a significant jump for large cap companies

Though obtaining assurance on their sustainability reporting is not a requirement for Hong Kong-listed companies, the HKICPA study found that, among the 31 December 2022 year-end companies, amounting to 1882 companies in all, there was an observable increase compared with 2021, with 141 (7.5%) companies adopting external assurance, compared with only 85 companies in 2021 (4.5%). For large-market-capitalization companies, the study found a much more substantial jump, from just over 20% of companies in 2021 to more than 41% in 2023, i.e., more than double the percentage in the previous study.  

“This clearly indicates that larger companies are responding more rapidly to the fast-moving ESG environment, and the expectations and needs of investors and other stakeholders. This is what we would have predicted, given their more international investor base and greater resources,” says Ms. Loretta Fong, President of the HKICPA

The slower take up of ESG assurance among the bulk of listed companies may be put down to a range of factors, Ms. Fong suggests. “As assurance is not mandatory, and they may be doubtful about the business case, i.e., the costs versus the benefits of assurance, so they are adopting a “wait and see” approach; secondly, at this stage, they may not have the full confidence in their own ESG data analysis and collection processes to have the information assured; and it could also indicate that many companies are publishing ESG reports primarily to fulfil the disclosure requirements of HKEX, and for image reasons, in order to, at least, meet the minimum expectations of the market.”

According to the HKICPA, one challenge from the assurers’ perspective has been that, so far, there has been no widely-adopted, harmonized set of international standards for ESG reporting. This situation may change with the recent publication by the International Sustainability Standards Board (ISSB), under the International Financial Reporting Standards framework, of the first two investor-focused International Sustainability Standards.

Among the 141 companies that obtained ESG assurance, the banking sector accounted for nearly 21% (29 banks), which is easily the highest number of any of the sectors identified, and way above the proportion of banks within the overall 1882 companies studied. This is likely to be attributable, in part, to the considerable ongoing efforts of Hong Kong’s financial services regulators to promote green and sustainable finance and ESG reporting.

·         CPA Firms are major ESG assurers

The study found that where ESG assurance is conducted, in 43% of cases, the assurer was a CPA firm and, for the 36 Hang Seng Index (HSI) companies that engaged external assurers on their ESG reports, the figure was even higher, at 56%. It was also found that, in 23% of cases, the auditor of financial statements was also the ESG assurer (44% for HSI companies). So, in the majority of cases where a CPA firm was the assurer, it was the same firm as the financial statement auditor.     

Ms. Fong explains that, currently, in Hong Kong and elsewhere, various different parties are offering ESG assurance in the market, and adopting different standards and benchmarks for their work, which makes comparisons difficult. “CPAs are well placed to conduct ESG assurance, given their training and experience in areas such as financial reporting/ auditing, internal control and risk management, and in the application of standards. Their work is also governed by professional and ethical standards and CPAs are regulated for compliance with these. “So a company knows what it is getting with a CPA assurer,” she adds. 

·         The largest companies tend to set clear carbon targets

Climate change is the most urgent and pressing issue in terms of ESG and it is no coincidence that the ISSB’s first sustainability disclosure standards include a standard on climate-related disclosure. For Hong Kong and Mainland China to achieve their stated targets of carbon neutrality by 2050 and 2060, respectively, it is also becoming more important for companies with operations in Hong Kong and the Mainland, particularly those with higher emissions, either directly themselves or in their supply chains, to establish their own carbon neutrality targets, and to set out interim steps towards achieving those. 

In fact, the study found that only around 16% (309) of the 1882 listed companies covered disclosed an objective of achieving carbon neutrality by a specific date. However, this percentage increased substantially to around 50% (35) among HSI companies. “This is probably due to the fact that the HSI companies generally have greater visibility and face more pressure from investors and other stakeholders to demonstrate their commitment to sustainability and good ESG practices. Therefore, they may be more motivated to set quantifiable targets, in order to meet these demands and maintain their reputation as industry leaders”, says Mr. Patrick Rozario, Review Panel Chair of the Best Corporate Governance and ESG Awards 2023 (“Awards”). “Broadly speaking, it is also the case that larger companies would be expected to have a greater impact on the environment. Hence, these companies are likely to be among the first to have to apply any new reporting standards,” adds Mr. Rozario.    

Among the 309 listed companies that have committed to net zero by a specific date, over 50% have interim targets in place. The results for HSI companies demonstrated an even more positive result, with over 80% incorporating interim targets. The HKICPA notes in the study report that, for companies that do not disclose meaningful and practical interim targets, there could be questions about whether disclosure of a long-term target reflects genuine a commitment or is just a form of window dressing or “greenwashing”. 

·         Importance of board-level ESG committees and role of qualified accountants

The research also found that over 15% (290 companies) of the listed companies researched had put in place a board-level ESG committee. “By having a dedicated committee, the board can give appropriate priority to ESG considerations and ensure they are aligned with the company's values, strategies and operations, as well as stakeholder expectations. The committee can also help shape the company's ESG agenda, policies, and risk management approach, says Ms. Loren Tang, Chair of the Awards Organizing Committee.

Among these 290 listed companies, over 40% of them had a director with relevant accounting qualifications on the ESG Committee. “Ideally, companies should consider engaging a full-time “Qualified Accountant (QA)” i.e., an executive director with accounting qualifications, who could sit on the committee and support the board in driving ESG strategy and reporting more effectively. This will be increasingly important in future, so as to facilitate integration of financial and ESG information, as investor-focused sustainability standards become more widely adopted. A QA can also help to ensure the adequacy of processes to verify the accuracy, reliability, and integrity of ESG data, particularly where it intersects with financial reporting,” explains Ms. Tang.

“ESG-related disclosure is a fast-moving area. More and more CPA firms are investing resources into developing and enhancing their ESG-related services to serve the needs of their existing and future clients. The Institute has been designated as the sustainability standard setter in Hong Kong and is also committed to ongoing capacity building in this area,” says Ms. Fong. She also points a proposed international standard specifically on sustainability assurance, issued recently for consultation by International Auditing and Assurance Standards Board. “In the long run, this could provide the basis for a more harmonized approach to ESG assurance”, she adds.

Key recommendations

Based on the results of the study, the Institute makes a number of observations and recommendations. These include a recommendation that boards of companies that do not currently obtain ESG assurance should consider the benefits of doing so, at least annually. Through obtaining independent verification of their ESG performance, companies can build trust and credibility with stakeholders, including investors, who, increasingly, take ESG factors into account in their investment decisions. The discipline that assurance requires of companies will also help to enhance their own decision-making by improving the quality of internal ESG information and data.

While there is more than one choice when it comes to engaging an assurer, CPAs represent a very good option, given their extensive financial knowledge, skillsets, the requirement they have for continuing professional development, in addition to the framework of professional and ethical standards and regulation that governs their work.

Companies, particularly larger companies, should consider setting up a board-level ESG committee. It ensures that ESG issues are given strategic attention and integrated into the company's overall business strategy. Increasingly, ESG factors will have a significant impact on companies’ reputation, risk profile, opportunities and, ultimately, their long-term success

Furthermore, companies should go beyond expressing general support for national/ regional carbon-neutrality goals, and set their own net zero targets to help achieve those goals. If they set such targets, they should also set measurable interim steps and key performance indicators to demonstrate actions and progress towards attaining those targets, and to dispel any doubts about greenwashing.

^{Ms. Loretta Fong, President of HKICPA (Middle), Ms. Loren Tang, Chairman of Organizing Committee, HKICPA Best CG & ESG Awards 2023 (Left), and Mr. Patrick Rozario, Chairman of Review Panel, HKICPA Best CG & ESG Awards 2023 (Right) today releases the ESG Assurance Research 2023.}

香港會計師公會研究揭示香港ESG穩步發展

大型上市公司對採用ESG外部鑒證關注增

（香港，2023年11月14日）香港會計師公會（公會）今日發表題為 《2023香港ESG鑒證最新情況 : 一個不斷演變的領域》的研究報告，探討香港市場目前環境、社會和管治（ESG）鑒證情況。研究指出，上市公司對ESG外部鑒證採用程度有所增加，而大型公司則呈現顯著增長；與此同時，最大型的公司傾向訂立清晰的碳中和目標。公會早於2021年已就相關主題進行研究，並於今年進一步更新及延伸其研究內容，以評估過去兩年香港市場上ESG鑒證覆蓋範圍之變化，以應對不斷發展的ESG環境。

現時，包括香港在內的大多數司法管轄區並未強制要求上市公司進行ESG鑒證。然而，隨著市場對ESG匯報要求和期望不斷上升，投資者和持分者正尋求具有可靠性、相關性及可供核實的數據，而具有質素的ESG鑒證正滿足市場需求。

以下為是次研究報告重點︰

·         採用外部鑒證的上市公司有所增加，高市值公司增幅尤為明顯

雖目前為可持續報告進行鑒證並非對香港上市公司之要求，但根據公會研究，其涵蓋1,882間於2022年12月年結的香港上市公司，當中有141間（7.5%）採用外部鑒證，較2021年的85 間（4.5%）錄得明顯增幅。研究亦揭示，大型上市公司使用外部鑒證的比率亦大幅上升，137間大型上市公司當中有57家進行外部鑒證，其比率由二零二一年錄得的20%增至目前逾41%。

香港會計師公會會長方蘊萱女士表示：「調查結果顯示，在應對快速變化的ESG環境，以及滿足投資者和持分者的期望與需求上，大型公司反應較為迅速。結果符合我們的預期，相信因為大型公司投資者較國際化及擁有較豐富資源。」

對於大部分上市公司對 ESG 鑒證探納程度較為緩慢，公會相信此與多項因素有關。方蘊萱女士補充︰「首先，取得ESG 鑒證並非強制要求，公司或需平衡相關的成本效益，令其採取觀望態度。其次，公司現階段或對自身ESG 資料分析和蒐集能力未具足夠信心。此外，公司發布ESG報告或純粹為了遵守港交所之披露要求，及維護公司形象，以滿足市場基本期望。」

公會認為，鑒證提供者目前正面對的挑戰在於，以往未有一套廣泛採用、具一致性的國際ESG報告準則框架。然而，隨著國際可持續準則理事會（ISSB）在國際財務報告準則框架下發布首兩項針對投資者的國際可持續準則，情況或有所改善。

有進行ESG 鑒證的141間公司當中，銀行業佔約21%（29間），數字為所有行業中最高，比例上亦冠絕研究的1,882間公司當中所有行業。公會認為，銀行業有較高比例進行ESG鑒證，可歸因於香港金融服務監管機構一直促進綠色及可持續金融和 ESG 匯報。

·         會計師事務所為主要ESG鑒證提供者

研究亦發現，有取得ESG 鑒證的企業中，43%的ESG鑒證工作由會計師事務所提供； 而有為其ESG報告進行外部鑒證的36間恒指成份公司中，該比例更高達56%。此外，由會計師事務所負責 ESG鑒證工作的個案當中，同時負責其鑒證及財務報表審計工作比率為23%（若只計及有進行ESG 鑒證的36家恒指成份股公司，比例更高達44%)，意味著在大部分的情況下，會計師事務所為企業的ESG鑒證提供者，同時擔任財務報表核數師。

方女士解釋，目前在香港和其他地方，市場上有各種不同的機構提供ESG鑒證服務，並採用不同的準則和基準進行相關工作，使其變得難以比較。會計師在進行ESG鑒證方面具備優勢，他們在財務匯報／審計、內部監控和風險管理等方面訓練有素及具有經驗，並熟悉相關準則。再者，他們的工作亦受到專業及道德標準約束及監管。她補充道：「有見及此，企業清楚了解會計師提供鑒證服務具備質素。」

·         最大型的公司傾向設訂清晰的碳中和目標

在ESG的眾多範疇中，氣候變化議題最迫在眉睫。ISSB的首套可持續披露準則中，涵蓋氣候相關披露的準則亦符合現況。由於香港和中國內地分別訂下於2050年和2060年前實現碳中和，減碳對香港和內地開展業務的企業，尤其是對碳排放量高企的公司越趨重要。他們可以選擇直接建立碳中和目標，或檢視其供應鏈，並制訂有關中期目標。

公會「最佳企業管治及ESG大獎2023」遴選委員會主席羅柏達先生表示：「調查所涵蓋1,882間上市公司當中，只有約16%（309間）為實現碳中和訂下清晰的目標日期。然而，在恒指成份股公司中，有關比例高達約50%（35間）。這可能是由於恒指成份股公司擁有較高知名度，在實踐可持續發展和良好ESG表現上面臨投資者和其他持份者的壓力。因此，這可鼓勵他們制訂可量化目標，以身作則並保持其作為行業領導者的聲譽。總括而言，由於大型公司普遍對環境產生更大影響，所以這些公司很可能是首批被要求應用新標準的公司。」

就有為實現淨零排放訂下目標日期的309間上市公司中，逾50%已制訂中期目標。其中，恒指成份股公司的表現則更為理想，逾80%的公司已有中期目標。公會在研究報告指出，對未有透露具體及可行中期目標的公司而言，其長期目標是否反映真正的承諾，還是只是一種粉飾或「漂綠」舉動，值得商榷。

·         合資格會計師在董事會級ESG 委員會的重要性

研究亦發現，逾15%（290 間）受訪上市公司已設立董事會級別的ESG 委員會。公會「最佳企業管治及ESG大獎2023」籌委會主席鄧苑儀女士表示：「透過設立專門委員會，董事會能夠妥善考慮ESG因素，並確保與公司價值觀、策略、營運以及持份者的期望一致。ESG委員會亦可協助塑造公司的ESG議程、政策和風險管理方法。」

在這290間上市公司中，超過40%的公司在ESG委員會擁有具備相關會計資格的董事。鄧女士解釋：「在理想情況下，公司應考慮聘請一位全職的合資格會計師，即具備會計師資格的執行董事，該專業人士可以擔任相關委員會成員，並更有效地推動ESG策略和匯報，以支援董事會運作。隨著以投資者為中心的可持續準則得到廣泛採用，合資格會計師的作用將變得不可或缺，他們可促進財務和ESG資訊整合。合資格會計師亦可確保有足夠步驟認證ESG數據的準確、可信及完整程度，以及其與財務報告的聯繫。」

方女士續說：「ESG相關披露領域近年快速發展。越來越多的會計師事務所正投入資源，開發和增強 ESG 相關服務，滿足現有和未來客戶需求。作為香港的可持續準則制訂者，公會將繼續致力深化ESG發展。」 她還指出，最近國際審計與認證準則理事會發表並就制訂可持續性報告鑒證的國際準則作公開諮詢。她補充說：「從長遠來看，這可令ESG鑒證的準則更協調及一致。」

主要建議

公會根據研究結果提出數項觀察和建議。首先，當前仍未進行ESG鑒證的公司董事會，應考慮每年至少一次檢視進行ESG鑒證的好處。透過取得ESG表現的獨立鑒證，企業可與投資者及持分者建立信任和獲取信譽，尤甚是目前投資者愈趨重視ESG因素，並將其納入投資決策過程。鑒證過程要求企業所需的營運紀律，有助通過提高公司內部ESG資訊和數據質素，亦可提高企業自身的決策能力。

同時，即使在市場目前有多個ESG鑒證提供者的選擇，但合資格會計師財務知識廣泛，能夠滿足持續專業發展和監管框架的要求。因此，合資格會計師是ESG鑒證的優秀選擇。

企業（特別是大型企業）應考慮設立董事會級別的ESG委員會。此確保公司持續關注ESG議題，並將其納入整體業務策略中。隨著時間推移，ESG因素將對公司的聲譽、風險狀況、機遇以及長遠成功影響深遠。

企業應制訂淨零目標，以協助其國家或地區實現碳中和目標。此外，企業亦可設定可量化的中期目標和關鍵績效指標，以展示實現目標的進展，並消除有關「漂綠」的質疑。

^{香港會計師公會會長方蘊萱女士（中）、公會「最佳企業管治及ESG大獎2023」籌委會主席鄧苑儀女士（左）、與工會「最佳企業管治及ESG大獎2023」遴選委員會主席羅柏達先生（右）主持記者會，發表《2023香港ESG鑒證最新情況 : 一個不斷演變的領域》調查報告。}