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Sustainable business: more Hong Kong firms are getting their ESG reporting checked by external auditors as investors look for reliable data, industry survey finds
- The study by the Hong Kong Institute of Certified Public Accountants found the number of firms opting for external ‘assurance’ has leapt in the last two years
- Slower adoption by smaller companies may be because of doubts about the costs versus the benefits, says institute’s president
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Listed companies in Hong Kong are increasingly taking on external auditors to check their environmental, social and governance (ESG) reporting, as investors and stakeholders look for more reliable and verifiable data, according to an industry survey.
“Assurance” for ESG reporting – essentially an audit or evaluation of the claims being made – is not mandatory for listed companies in most jurisdictions, including Hong Kong.
But as the requirements and expectations for such disclosures become more stringent, investors and stakeholders are looking for more reliable and relevant data, the Hong Kong Institute of Certified Public Accountants (HKICPA) said in its “ESG assurance in Hong Kong 2023: An evolving landscape” report published on Tuesday.
All of the roughly 2,600 Hong Kong-listed companies are required to publish annual sustainability reports on their ESG performance, alongside mandatory periodic financial reports.
Obtaining independent verification of their ESG performance can allow companies to build trust and credibility with stakeholders who are increasingly taking such factors into account in their investment decisions, according to the HKICPA.
“Larger companies are responding more rapidly to the fast-moving ESG environment, and the expectations and needs of investors and other stakeholders,” said Loretta Fong, president of the HKICPA in a statement. “This is what we would have predicted, given their more international investor base and greater resources.”
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