Carpe diem with purpose
TPB’s Founder & Director, Pat Dwyer explains why Hong Kong companies need to demonstrate better management of their carbon emissions.
Significant findings from a Trucost report released this week include the urgent need for Hong Kong companies to reduce carbon emissions and disclose information on managing climate risk. Trucost’s report analysed carbon reporting and performance by 100 companies listed on the Hong Kong Stock Exchange, based on a performance period of three years (2011 to 2013).
At The Purpose Business, (TPB), we begin any discussion with the fundamental question – Why? As a matter of principle we know that managing carbon emissions, along with pursuing new ways of operating in a low carbon manner, is the right thing to do.
The Trucost report highlights that for Hong Kong companies to remain competitive, they should respond to investors demanding information to allow them to integrate climate change considerations into their investment decisions (Mercer, 2013). Our analysis of the risks and opportunities that need to be addressed explains why Hong Kong companies need to demonstrate better management of their carbon emissions:
Risk 1: Compliance is no feat. There is a need to shift from reactive to proactive stances. Hong Kong companies (and their companies that reach in to China) have been described as having a compliance mind-set, going through the motions as a tick-box exercise. While this marks a step in the right direction, compliance simply is the baseline license to operate.
However, simply achieving compliance does not in any way indicate a level of risk management that is required today. Genuine risk management requires a systematic and strategic approach of measuring, managing and monitoring carbon emissions to yield greater understanding of one’s own operations, thereby formulating a stronger and more informed position for competitive advantage.
Risk 2: “We’re too small for this problem”. Hong Kong is made up of 93% service industries with the majority operating as SMEs. This allows organizations to use their small scale as a defence, thereby making it easier to claim that carbon emissions are caused by another entity.
The reality is that many of the factories and operating entities based in China are actually Hong Kong-owned and controlled. Therefore, the ownership – and the necessary risk management, does indeed rest with them. Hong Kong-based companies account for a significant proportion of the operations of smaller factories located in China.
Opportunity 1: Hong Kong companies have to play a part in strengthening the competitiveness of Hong Kong. The financial sector and the Hong Kong Stock Exchange have a real opportunity to drive this and be seen as leaders who run well-managed companies in the region. Through the Hong Kong Stock Exchange, companies can play their part in raising the bar so as to truly uphold the “world class city with world class financial products and access to China” status that is consistently claimed.
The Hong Kong Stock Exchange needs to do more in terms of proactively engaging investors, institutional investors, and the financial sector to support the development of more “green” financial products while promoting opportunities in this area. The release of the ESG reporting guide is a step in the right direction, which companies must heed.
Opportunity 2: Hong Kong is the gateway to China and China is currently seizing opportunities in the environment as demonstrated by three major trends:
- China has launched a Green Financing platform through the People’s Bank of China . This is a good example of creating more “green” financial products and also represents a massive opportunity for Hong Kong.
- ESG reporting in China has increased from approximately 200 reports in 2000 to over 2,000 in 2015. Even if this is triggered largely by compliance, it is still a step to the right direction. It means that the door is already open to the conversation and that carrots can now replace sticks as the key driver.
- China has been ahead with carbon markets for selected cities and in 2016 the country plans to go national, setting a market emissions cap of four billion tonnes of CO2 equivalent.
The time is now, Hong Kong. Carpe diem with purpose.
Original Posting date: July 23 , 2015
The global focus on single-use plastic is growing exponentially, and this is not a conversation confined to consumers and restaurant managers. Resources, and therefore waste, […]
Businesses have the responsibility to implement waste management solutions. Throughout the stages of a product or service life cycle, waste is generated at various levels […]
Hong Kong's waste management landscape is changing, and TPB's Business Development Lead, Fiona Donnelly, reveals how giving garbage more attention can bring new opportunities. Sadly, the topic […]