In today’s financial landscape, the importance of Environmental, Social, and Corporate Governance (ESG) is inevitably rising. In particular, Hong Kong has experienced a notable shift towards this trend, propelled by more stringent regulations. Nevertheless, a significant challenge emerges: many listed companies in the city grapple with seamlessly integrating ESG into their investor relations strategies.

Identifying corporate values from the three pillars of sustainability

Many listed companies in Hong Kong are not really familiar with how to strategically integrate ESG into the investor relations strategy. Many businesses are starting to worry or are slightly confused about the way to go.

As investor relations experts, understanding a company’s investment narratives and various promotional channels is fundamental.

“Yet, a company’s future worth is increasingly tied to how its ESG values are intertwined into its narrative.”

The key step is effectively merging traditional investor relations communications with ESG-centric ones. This requires utilizing methods and platforms ranging from annual reports and corporate websites to investor presentations. The goal is not only to convey investment opportunities but also to address associated ESG risks and potentials transparently.

ESG discussions are dual-natured. On the one hand, businesses must genuinely commit to ESG philosophy and structure their operations around these three pillars. On the other hand, investors must actively seek out and assess companies based on their ESG commitments. Nonetheless, catering to every stakeholder is challenging, given their diverse ESG concerns—climate risks, labour practices, human rights, or board diversity. Therefore, crafting communication strategies that address these varied expectations and concerns is crucial.

Measuring and standardizing ESG performance to global standards is vital

The LBS team consistently keeps up with the newest trends, adapts to changing reporting standards, and offers comprehensive training. This equips our clients with the knowledge they need to articulate their ESG commitments to stakeholders clearly and confidently. Through our collaborative approach, we aim to make ESG disclosure a value-enhancing aspect of our clients’ business strategies.

Transparency and consistent ESG disclosures form the bedrock of an effective ESG communication plan.

“A lack of clarity on a company’s ESG achievements and objectives can hinder its ability to effectively convey its overarching investment story.”

Therefore, companies must prioritize and understand the business considering ESG exposures.

Navigating the complexities of ESG can be challenging, but companies can find their way with the right tools and guidelines. Utilizing established reporting frameworks that offer guidance on ESG disclosures, such as the Global Reporting Initiative (GRI) and the Task Force on Climate-Related Financial Disclosure (TCFD), can help standardize the approach and improve stakeholders’ communication. In Hong Kong, GRI and TCFD are gaining widespread recognition and are being proactively implemented. It is paramount to ensure that companies are confident in their ESG disclosures and transparent about their achievements. It’s also essential to remind stakeholders of a company’s ESG commitments and the long-term benefits they offer beyond just short-term returns.

Measuring business success by profit and ESG performances

Our role is helping companies prioritize and understand the diverse needs and tailor the ESG investor relations strategies to address the concerns and expectations of stakeholders and investors, ultimately helping the corporate players to set targets and goals to improve their ESG performance in the long run.

Every company has different ESG pathways subject to their market positions, supply chain deployment strategies, revenue models, government regulations, management composition, etc. In this episode of PRGNPresents, we talk about why it is important to prioritize a company’s needs, risks, and future opportunities according to its unique situation and derive a set of achievable goals in the dynamic environment.

In ESG investor relations, we prepare the corporate players to meet investors confidently in ESG storytelling, such as transparency enhancement, progress in reaching different milestones leading to their ESG goals and identifying ESG challenges concerning investors.

In short, the assurance to shareholders is that their ESG investment today will not only generate short-term returns but also pave the way for long-term success.