Only 37% of business executives of Hong Kong-listed companies have incorporated environmental, social and governance (ESG) factors into their core strategies, even though majority understand their value, according to a joint survey by KPMG, CLP and the Hong Kong Institute of Chartered Secretaries (HKICS).

The study, which surveyed more than 200 senior executives, found around 70% of executives acknowledging ESG’s value in their businesses.

Why is Hong Kong  ESG adoption low?

Also, 38% of executives said that they found ESG to be essential for success, while 30% believed ESG to be good for attracting investors looking for long-term sustainable investments.

Forty one percent of respondents were also found to consider ESG in boardroom discussions.

However, more than one third of executives are challenged by limited ESG knowledge, the belief that ESG issues do not significantly affect the business, and the belief that ESG offers limited short-term/immediate returns.

The study also found 43% of executives willing to increase their investment in improving their company’s tracking of ESG issues in the next three years.

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However, only 13% of executives said that they intend to add board members with ESG-related skills.

KPMG China business reporting and sustainability partner Pat-Nie Woo said: “A number of studies have found that strong ESG performance can create competitive advantages, including a more stable investor base, lower cost of capital and better access to financing, improved employee engagement and customer loyalty.

“These benefits are vital to the companies seeking to create long-term value and strengthen their corporate performance.”