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Introduction to corporate sustainability and its trend in Hong Kong

Introduction to corporate sustainability and its trend in Hong Kong. Prof. Stephen Cheung School of Business Hong Kong Baptist University. Contents. corporate sustainability covers the environmental and social performance, employee management and corporate governance of a company

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Introduction to corporate sustainability and its trend in Hong Kong

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  1. Introduction to corporate sustainability and its trend in Hong Kong Prof. Stephen Cheung School of Business Hong Kong Baptist University

  2. Contents • corporate sustainability covers the environmental and social performance, employee management and corporate governance of a company • Corporate social responsibilities (CSR) and corporate governance (CG) • CG in Hong Kong • CSR in Hong Kong • Drivers for Organizations • Role of Government • Obstacles in running socially responsible businesses

  3. Why should we care? • Old ideas of doing business • Profit maximization • Concern on shareholders interest • Today’s new standard • NOT only pay tax and comply with national regulations • Sustainable development • Consider interest of all stakeholders and are expected to take greater responsibilities in running a business • Corporate social responsibilities (CSR)

  4. International trends • Major trends in international business in recent years • Business’s contribution to sustainable development • Related to basic business activities • Impacts on stakeholders: • Social; • Economic; and • Environmental • Create additional value and strategic advantage

  5. CG and CSR in Hong Kong Corporate Governance Scorecard Project • Survey results based on publicly available information • HSI, HSHKCI, HSCCI, and HSCEI constituent stocks • 2002: 168 companies are covered • 2005: 174 companies are covered

  6. Objectives of Corporate Scorecard for Hong Kong Listed Companies Our objective

  7. Research Methodologies • Avoids subjectivity bias • Not dependent on companies’ willingness • Written request was sent to individual companies. Only a few companies supplied us with full information

  8. Consistency • Each company was rated by two different research assistants • The overall results were cross-checked by the research team

  9. Scorecard Followed The Five OECD Corporate Governance Principle • OECD is internationally recognized • HKEx guidelines comprehensively covered • 174 public companies surveyed

  10. Correlation=0.05, Significant at 1% level Positive Correlation between Corporate Governance Index and Company Valuation Market to Book Ratio

  11. Improvement of CGI by Sections

  12. Criteria for CSR • Employee pension benefits • Staff development • Environmental policy • Customer and supplier relationships • Philanthropy

  13. Drivers for Organizations • Enhance image and reputation • Increase shareholders value • Reduce business risk • Legislative requirements • Customer loyalty • Employee loyalty • Improve business operation • Control of legal risks

  14. Obstacles in Running Responsible Businesses • Management practice • Increasing cost? • Monitoring and enforcement • Sustainable development

  15. Role of Government • Tax initiatives • Contribution to compliance expertise • Moral suasion

  16. Incentives • CG, CSR index • Brand name • CG, CSR investment fund • Investment communities • Education →發財立品

  17. ~ END ~

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