Nowhere has this been more evident over the past few weeks than with the return of the Hong Kong Sevens after a three-year hiatus; a star-studded attendance list of global business doyens at the Hong Kong Monetary Authority’s Global Financial Leaders’ Investment Summit; a packed-out ReThink environmental conference, and Hong Kong’s biggest ever FinTech Week. While it may be too early to state that Hong Kong is back, things are well and truly moving in the right direction.
Increasing focus on the green and the good
A key feature of FinTech Week this year was its focus on ESG. At the opening ceremony, the Hong Kong Monetary Authority committed to the wider use of blockchain technology and the issue of tokenized green bonds. This comes on the back of the recent launch of Core Climate by the Hong Kong Exchanges and Clearing Limited. Core Climate is a new international carbon marketplace where participants will be able to source, hold, trade, settle and retire voluntary carbon credits.
Hong Kongers more knowledgeable about ESG than global peers
Against the backdrop of these new ESG developments, it comes as no surprise that the annual SEC Newgate ESG Monitor found Hong Kongers more knowledgeable about ESG than the global average. Unprompted ESG awareness in Hong Kong was 25 per cent, significantly higher than the global total of 15 per cent. Similarly, people in Hong Kong feel more informed about companies’ ESG activities and performance, with 51 per cent giving themselves a rating of 6 or more out of 10 vs 41 per cent globally.
Hong Kong people are also more active in their research of ESG activity. Forty-nine per cent reported looking for such information about companies at least sometimes versus only 33 per cent globally. In Hong Kong, people turn to the media first for information, followed by social media, search engines, and company websites. This finding underlines the importance of companies engaging with the media to convey the progress they are making in embedding sustainability at the heart of their businesses.
Prepared to boycott companies that break ESG trust
Armed with greater knowledge and curiosity about ESG, more Hong Kongers are prepared to act against companies that they feel have broken their ESG trust compared to their global counterparts.
Reflecting Hong Kong’s status as a financial hub with a vibrant retail investing environment, almost twice as many people reported having actively sold shares in companies that performed poorly in ESG compared to the global average. In addition, nearly half had boycotted a product or service, and a quarter had discussed it on social media. Conversely, almost half of Hong Kong respondents are prepared to receive a lower return on investment in companies with stronger ESG performance.
This is in parallel with the fact that enrolments for ESG investment courses have been surging in Hong Kong. Registrations for the Chartered Financial Analysts Institute’s Certificate in ESG Investing hit an all-time high in Hong Kong in July this year, with a 77.8 per cent increase compared to September last year.
A big appetite for corporate ESG information
While retail investors in Hong Kong are showing an increasing interest in sustainable investing, they are being hampered by a lack of information, according to a recent study by Pictet Asset Management and the Hong Kong University of Science and Technology. This finding was mirrored in the ESG Monitor. Seven out of ten respondents said that companies should communicate the results of their ESG efforts more clearly for consumers and investors.
It is evident that companies need to be transparent about their ESG mission and, crucially, about how sustainability shapes their corporate strategy, or they risk being punished by several stakeholders including their customers, clients, employees, and investors. Not only do they need to fulfill their mission, but they must also clearly communicate their actions to maintain their social license to operate