Skyline of Hong Kong is seen from the Peak in Hong Kong on May, 26, 2021. (PAUL YOUNG / BLOOMBERG)

A majority of companies on the Chinese mainland and in Hong Kong plan to step up ESG-related investment over the next five years, a report showed on Monday. 

In a survey of senior executives, as many as 89 percent said their organizations plan to increase investment in environmental, social and governance-related programs and initiatives over the next five years, according to a joint research paper from accounting and consultancy firm PwC and the Hong Kong Trade Development Council. 

Fifty-six percent of the respondents said their ESG investments will rise significantly or considerably, as per the report entitled “ESG Investing: Challenges and Opportunities for Hong Kong".

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ESG investing is an approach that incorporates environmental, social and governance factors for long-term investment and sustainability.   

"The strong financial commitment… highlights the fundamental belief in the importance of ESG to business strategy,” said Elton Yeung, vice chairman of PwC China, as he presented the report at the 15th Asian Financial Forum, or AFF. 

As companies deploy this investment, they will be looking for sustained outcomes from their spend. Hong Kong as a whole will benefit from this positive impact.

Elton Yeung, Vice chairman, PwC China 

Organized by the government of the Hong Kong Special Administrative Region and the HKTDC, the forum is being held online on Jan 10-11 under the theme “Navigating the Next Normal towards a Sustainable Future”. China Daily is a premium media sponsor of the event.  

After surveying 105 senior executives on the Chinese mainland and in Hong Kong in December, the report found that while ESG is being considered by almost every business, the big focus is on the social and governance elements.  

The ESG strategic decision-making is also still primarily being driven through a compliance lens rather than value-added activities, the report said. 

“As companies deploy this investment, they will be looking for sustained outcomes from their spend. Hong Kong as a whole will benefit from this positive impact,” said Yeung, adding that the city’s mature financial market, international experience and professional services industry makes Hong Kong very competitive in supporting the growth of ESG investing.  

Updating tax policies and subsidy schemes were among the top priorities that respondents thought Hong Kong should work on to encourage more ESG and sustainable investing, Yeung said. 

More than half of the respondents also said the government should provide guidance on how to identify ESG projects, or publish a list of ESG or sustainable financial products to increase the visibility of such products.  

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Noting Hong Kong’s position as the green finance center in the Guangdong-Hong Kong-Macao Greater Bay Area and efforts like the launch of the Greater Bay Area Green Finance Alliance in 2020, Yeung said Hong Kong has been instrumental in advancing the ESG agenda.  

Experts at the AFF also discussed the opportunities arising from ESG-related investment and sustainability in a panel session. 

Henry Shi, a member of executive committee of Haitong International Securities Group, said the ESG finance market in China has been growing in recent years.  

For example, data from the People’s Bank of China, the central bank, showed that green loans and green bonds in the country totalled $1.8 trillion and $125 billion, respectively, by the end of 2020, ranking as the world’s largest and second-largest.  

In the city of Hong Kong, there were a total of 104 green bond issuances in 2021, raising $35 billion, said Shi. 

“The shift to a better way of long-term interest actually affects all of us because carbonization and global warming affect all of us,” said Saker Nusseibeh, CEO of the international business of US-based global asset manager Federated Hermes, noting that the pandemic is a lesson to all human beings.  

“The business and investment community have a role to play because that is the opportunity for the shift to the green economy,” said Nusseibeh.