The Hong Kong Trade Development Council (HKTDC) is introducing a new metric that assesses Hong Kong’s delivery of ESG (environmental, social and governance) related products and services.
The HKTDC ESG Index analyses how local, Mainland China and international businesses perceive Hong Kong’s capabilities across ESG’s three categories.
“We believe the index will significantly contribute to the overall understanding of the business world’s prioritisation of sustainable operational models, and the real and lasting contribution Hong Kong is making to this shift,” said Irina Fan, Director of HKTDC Research.
Provisional findings gave Hong Kong an aggregate score of 64.3, well above the neutral watershed level of 50.
The initial research – which factored in the views of more than 1,200 buyers and exhibitors surveyed at HKTDC’s trade fairs and business events – found that business executives from different geographies differed in their evaluations of Hong Kong’s ESG capabilities.
In the case of Hong Kong’s environmental credentials, respondents from Mainland China mainly attributed Hong Kong’s strengths to its provision of relevant investment opportunities.
International enterprises had a particularly high regard for the availability and diversity of green and sustainable solutions, while local business rated the quality and innovation of Hong Kong’s related products and services most highly.
Regarding the social category, mainland survey respondents were most impressed by Hong Kong’s ESG-related expertise and talent, followed by the city’s success in promoting cross-border ESG knowledge exchange.
International and Hong Kong-based respondents highly rated the engagement of local businesses in community development and social welfare programmes, as well as the ability to find socially responsible business partners.
For the governance sub-index, all participants valued Hong Kong’s proficiency in facilitating ESG-oriented international collaborations, particularly with regard to international standard-setting and providing market access. Mainland respondents also singled out the effectiveness of Hong Kong’s ESG reporting frameworks and regulations.
ESG’s commercial advantages
In addition to its core focus on how Hong Kong is viewed as an ESG hub, the research explored other aspects of ESG-related business.
Almost 90% of respondents saw ESG considerations as an integral element of their overall business decision-making process, underscoring the general acceptance of these principles.
All buyers sourcing ESG-related products or services indicated they were willing to pay a premium, with 68% of this group saying that premium could be at least 10%.
Prioritising ESG-friendly solutions can enhance a company’s corporate image and help ensure compliance with regulatory requirements and risk-management protocols.
All vendors providing ESG-related products or services said they earned additional profit margins from such products or services. Approximately 72% of them reported that the additional profit margins delivered by such activities were 10% or higher than those from comparable products and services that were non-ESG-compliant.
These vendors also saw themselves as positively differentiated from their competitors, by meeting demand for ESG-related products and services.
The initial research for the HKTDC ESG Index was based on surveys at seven HKTDC trade fairs and business events from April to December 2024. The research will be completed in March and the first full edition of the index will be released afterwards.