CUHK Business School Announces the 4th Hong Kong Business Sustainability Index

Corporate Social Responsibility | CUHK Business School

Corporate Social Responsibility | CUHK Business School

To encourage the adoption of corporate social responsibility and sustainability, CUHK Business School announces the 4th Hong Kong Business Sustainability Index HKBSI and compilation of a BSI for the Greater Bay Area.

A recent announcement of the 4th Hong Kong Business Sustainability Index (HKBSI) and compilation of a BSI for the Greater Bay Area has created a quite a buzz in the field of education and business area. The report was announced by the CUHK Business School as an effort to encourage the adoption of corporate social responsibility and sustainability. But before going ahead with adopting such a scheme, how many of you are actually aware of this term and the meaning of this concept? In today’s article, let us look for all the important details you should know about Corporate Social Responsibility.

What is Corporate Social Responsibility?

Corporate conscience, Corporate citizenship, or Corporate Social Responsibility (CSR) are the different names of the same concept in the world of business. It is described as the integration of socially beneficial practices and programs into the corporation’s business culture. It has long-term profit models for online as well as offline businesses by making them efficient add attracting positive attention for the efforts.

In simple terms, you can also say that it is the company’s effort in improving society in a certain way. It may include donating money, implementing environmentally friendly policies at the workplace, nonprofits, and many more.

Now, you would be thinking – but how does this help the business in any way? So, let us make this statement that CSR is important for businesses, nonprofits, as well as the employees. Now let us see how.

Benefits of Corporate Social Responsibility –

For Businesses –

Improves Brand Image

Brand image is very important for any business to work better on the economic grounds, and adopting corporate social responsibility will help you magnify the brand image. Businesses that show commitment towards various causes are looked upon as more philanthropic ones. Your consumers will always feel good about doing business with you if they know that you support a good cause.

Increases Media Coverage

Adopting Corporate Social Responsibility definitely does good for the society, but the business won’t find any profit (apart from inner satisfaction) if no one knows about it. Your business will find more profit from adopting CSR if media if covering your activities. So, tell people how much good you can do for them, and in return get benefits too.

Boosts Employee Engagement

Employees prefer working in a company with a good public image, and with good media coverage. If employees are happy with your company, they will themselves work harder for the brand and create a business. This way business can indirectly benefit from engaging in social causes and adapting to corporate social responsibility and sustainability.

For Employees –

Positive Environment at Workplace

Business environments are more enjoyable when they engage in corporate social responsibility. When employees feel the positive vibes, they will walk in every day to work and also be productive and engaged. With instilling such as environment, every single individual will try to create a positive environment by adapting to the CSR theme.

Increases Creativity

With a good environment in the business culture, people will be more productive and engaged in the development of the company. The employee when knows that the company is looking towards the betterment of society and other global concerns feel more related to the business. Closer the relation, better the productive and creative rate. This way, by incorporating corporate social responsibilities, companies can help employees to be more creative in their work.

Helps in Professional and Personal Growth

When businesses have a culture of CSR, they can set a role model for their employees to encourage them for donations and volunteerism. This helps the employees to contribute their money and time for worthy causes that will make them feel a better person altogether. This also helps with their teamwork skills, which make them grow professionally as well as in personal life.

These are some of the benefits of having a culture of CRS in your organization. So, when are you planning to join your name in the list of businesses in Hong Kong to adopt the culture of corporate social responsibility and sustainability?

The top 10 company ranking announced for the first time; compilation of a business sustainability index for the Greater Bay Area is in progress

The Chinese University of Hong Kong (CUHK) Business School’s Centre for Business Sustainability (CBS) announced results of the 4th Hong Kong Business Sustainability Index (HKBSI) today, where leading companies listed in Hong Kong have shown increasing concerns for corporate social responsibility (CSR) and business sustainability. The top 10 HKBSI company ranking was also unveiled for the first time.

Compared to the results of the 3rd HKBSI released in July last year, the overall average score of the 50 constituent companies of the Hang Seng Index (HSI) as at 6 June 2018 in the 4th HKBSI was 56.01 (out of 100 points), an increase of 10 per cent, whereas the average score of the top 20 Index companies has recorded 75.57 (out of 100 points), up by around 4.29 per cent from that of the last round.

HKBSI aims at encouraging companies in Hong Kong to adopt corporate social responsibility (CSR) as a progressive business model for them to achieve business sustainability. Putting a spotlight on the largest companies as a leading force, 50 HSI constituent companies were invited to complete an online assessment questionnaire concerning their CSR performance for the financial year ended in 2016/17, based on publicly available information. Each company was assessed in three major areas, namely CSR Values, CSR Process (comprising CSR management and practices) and CSR Impact against seven stakeholder groups, as well as the company’s contributions to economic, social and environmental sustainability. As the Technical Partner of the project, SGS Hong Kong Limited conducted sample check and verification of the information provided by individual companies.

Prof. Carlos Lo, Director of Centre for Business Sustainability

Prof. Carlos Lo, Director of CBS, explained that the assessment of HKBSI is based on the unique “Values – Process – Impact” (VPI) model, which was developed by the Sustainability Management Research Centre and launched in 2015. Prof. Lo said, “There has been progressive advancement in the performance of business sustainability over the past four rounds of HKBSI. However in this latest round, despite an increase in the overall average score, the standard deviation was also visibly large (18.99 points), reflecting a huge performance gap between the top and bottom companies.”

For the top 20 HKBSI companies, the mean score of this round has recorded a significant improvement of 32 per cent (from 57.25 points in the 1st HKBSI). On the other hand, the number of “Explorer” companies with scores below the overall average of 50 greatly reduced. Eight companies achieved over 80 points and reached the “Pace-setter” level which is comparable to international standard. The Hong Kong and China Gas Company Limited is the best-ranked company which is also the first ever company achieving over 90 points and reaching the top level of “Exemplar”. This reflected that the company’s performance of business sustainability has attained the international standard.

Among the assessment aspects of VPI, in comparison with the results of the 3rd HKBSI, all the four aspects (Value, Management, Practice and Impact) have seen improvements. “Values” has registered the highest mean score of 66.34 points and the highest growth of 22.67 per cent in the 4th round. “Process-Management” (61.36 points) and “Process-Practice” (62.35 points) have also performed well, recording 20.38 per cent and 66.98 per cent rise respectively. The average score of “Impact” (39.23 points) has chalked up an impressive increase of 20 per cent; yet, “Impact” has remained as the weakest area across the board. As for the top 20 HKBSI companies, their scores in “Value” and “Process” have been stable (above 80 points) in the latest round, which shows that these companies are mature in the two aspects. These companies’ average scores on “Impact” has been improved from 50.75 to 57.66, up by 14 per cent from that of the last round.

The results of the 4th HKBSI assessed under the VPI model reflects that more companies have been increasingly concerned about business sustainability and hence have committed diligent effort in implementing CSR practices in this round of assessment. Prof. Lo indicated that this year, 86 per cent of the index companies published standalone Environmental, Social and Governance (ESG)/sustainability report, and the figure was only 72 per cent last year and 2 per cent even with no reporting.

Prof. Lo attributed the high score in “Values” to the companies’ increasing adoption of conceptual frameworks related to business sustainability and CSR, as well as their greater concern for various stakeholders. It shows that companies have increasingly approached their CSR activities in a strategic manner, with defined priorities aligned with their business drivers, thus enabling the companies to leverage their strengths for achieving better impact on the beneficiaries.

Commenting on the “Impact” of the VPI model, the weakest area that companies performed, Prof. Lo pointed out that many companies are still implementing CSR on project-driven basis. Although many have begun to take “Impact” more seriously, they still lack the ability to measure, both qualitatively and quantitatively, the results and impacts of their CSR practices and activities. He said evaluation and review of these practices are still relatively less developed in many companies, and it will be important for them to apply measurable Key Impact Indicators and comparable data related to CSR management. Such evaluations are useful for companies in not only improving their internal governance, but also strengthening their external accountability.

Currently, more than half (52 per cent) of the HSI constituent companies are non-Hong Kong based companies, comprising of H-shares, red chips and other mainland Chinese firms listed in Hong Kong. The overall average score of these companies in the 4th HKBSI recorded a 14.43 per cent rise to 48.44 (out of 100 points) when compared to that of Hong Kong based companies (7.02 per cent), showing a bigger performance improvement in business sustainability. One non-Hong Kong based company even occupied a place in the Top 10 ranking, while three others were ranked between 11-20.

Echoing the recently launched Hang Seng Stock Connect Hong Kong Big Bay Area Index, CBS will extend its sustainability index project to the Guangdong-Hong Kong-Macao Greater Bay Area and even the Greater China region. The compilation of a new business sustainability index that covers both Hong Kong-listed stocks and mainland-listed A-shares with operations in the Greater Bay Area is in the pipeline. 66 constituent companies from the Hong Kong and Shenzhen stock markets that are eligible for southbound trading under the Stock Connect scheme will be included. In the future, CBS also plans to compile a business sustainability index for constituent companies of the Taiwan Capitalization Weighted Stock Index (TAIEX). Prof. Lo indicated that when mainland China, Hong Kong and Taiwan have their own business sustainability indices, we can then compile a consolidated one for the Greater China region with HKBSI serving as a benchmark. The consolidated business sustainability index can not only encourage and motivate companies in the region to adopt CSR as a progressive business model for them to achieve business sustainability, but also to serve as a robust indicator for ESG investors in selecting companies with socially responsible corporate behavior to invest.

The Hong Kong Business Sustainability Index – Average Scores

4th HKBSI 3rd HKBSI Changes (4th vs 3rd HKBSI)
2nd HKBSI 1st HKBSI Changes (4th vs 1st HKBSI)
Overall Mean (all companies) 56.01 50.82 +10.21% 45.73 41.75 +34.16%
Top 20 Mean 75.57 72.46 +4.29% 68.82 57.25 +32.00%
HK-based Mean 64.22 60.01 +7.02% 55.44 49.42 +29.95%
Non HK-based Mean 48.44 42.33 +14.43% 36.02 35.17 +37.73%

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Overall Performance Level

4th vs 3rd HKBSI 4th HKBSI 3rd HKBSI 2nd HKBSI 1st HKBSI
90-100 points
Exemplar
+1 1 (2%)
80-89 points
Pace-setter
+3 8 (16%) 5 (10%) 2 (4%)
70-79 points
Achiever
-3 3 (6%) 6 (12%) 10 (20%)
60-69 points
Performer
+1 8 (16%) 7 (14%) 3 (6%) 8 (16%)
50-59 points
Practicer
+5 12 (24%) 7 (14%) 4 (8%) 12 (24%)
Below 50 points
Explorer
-7 18 (36%) 25 (50%) 31 (62%) 30 (60%)

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Overall VPI Scores

4th HKBSI 3rd HKBSI Changes (4th vs 3rd HKBSI) 2nd HKBSI 1st HKBSI Changes (4th vs 1st HKBSI)
Values 66.34 62.40 +6.31% 55.53 54.08 +22.67%
Process – Management 61.36 58.48 +4.92% 54.80 50.97 +20.38%
Process – Practice 62.35 56.22 +10.90% 51.71 37.34 +66.78%
Impact 39.23 32.59 +20.37% 28.51 32.71 +19.93%

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VPI Scores – Non Hong Kong-based Companies

4th HKBSI 3rd HKBSI Changes (4th vs 3rd HKBSI)
Values 61.88 57.50 +7.62%
Process— Management 53.73 50.96 +5.44%
Process– Practice 53.67 45.45 18.09%
Impact 30.71 23.36 +31.46%

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The Top 10 HKBSI Company Ranking

1. The Hong Kong and China Gas Company Limited
2. HSBC Holdings plc
3. MTR Corporation Limited
4. Sun Hung Kai Properties Limited
5. CLP Holdings Limited
6. BOC Hong Kong (Holdings) Limited
7. Hang Seng Bank Limited
8. China Resources Power Holdings Co., Ltd.
9. New World Development Company Limited
10. Swire Pacific Ltd. ‘A’

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The 4th Hong Kong Business Sustainability Index Company List (in alphabetical order)

AAC Technologies Holdings Inc.
AIA Group Limited
Bank of China Limited
Bank of Communications Co., Ltd.*
The Bank of East Asia, Limited*
BOC Hong Kong (Holdings) Limited*
China Construction Bank Corporation
China Life Insurance Co. Ltd.
China Mengniu Dairy Company Limited
China Merchants Port Holdings Company Limited
China Mobile Limited*
China Overseas Land & Investment Limited
China Petroleum & Chemical Corporation
China Resources Land Limited
China Resources Power Holdings Co., Ltd.*
China Resources Power Holdings Co., Ltd.*
China United Network Communications Group Co., Ltd.
CITIC Limited
CK Asset Holdings Limited
CK Hutchison Holdings Limited
CK Infrastructure Holdings Limited
CLP Holdings Limited*
CNOOC Limited*
Country Garden
CSPC Pharmaceutical Group Limited
Galaxy Entertainment Group Limited
Geely Automobile Holdings Limited
Hang Lung Properties Limited*
Hang Seng Bank Limited*
Henderson Land Development Company Limited*
Hengan International Group Company Limited
The Hong Kong and China Gas Company Limited*
Hong Kong Exchanges and Clearing Limited *
HSBC Holdings plc*
Industrial and Commercial Bank of China Limited
Link Real Estate Investment Trust
MTR Corporation Limited*
New World Development Company Limited*
PetroChina Company Limited
Ping An Insurance (Group) Co. of China Ltd.
Power Assets Holdings Ltd.*
Sands China Ltd.
Sino Land Company Limited*
Sun Hung Kai Properties Limited*
Sunny Optical Technology (Group) Company Limited
Swire Pacific Ltd. ‘A’*
Tencent Holdings Limited
Want Want China Holdings Limited
WH Group Limited
Wharf Real Estate Investment Company Limited*

*Top 20 Companies

Prof. Kalok Chan, Dean of CUHK Business School (6th from left), Mr. Tim Lui, SBS, JP, Chairman of the Securities and Futures Commission (SFC) (middle), Prof. Carlos Lo, Director of Centre for Business Sustainability at CUHK Business School (2nd from left) and guests posed for a group photo during the launching ceremony of Centre for Business Sustainability.

Prof. Kalok Chan, Dean of CUHK Business School (9th from left), Mr. Tim Lui, SBS, JP, Chairman of the SFC (middle), Prof. Carlos Lo, Director of Centre for Business Sustainability at CUHK Business School (10th from left) and representatives of the top 20 HKBSI companies posed for a group photo.