CUHK Business School Announces the 5th Hong Kong Business Sustainability Index and Launches the Greater Bay Area Business Sustainability Index

The Chinese University of Hong Kong (CUHK) Business School’s Centre for Business Sustainability (CBS) announces results of the 5^th Hong Kong Business Sustainability Index (HKBSI) and launches the Greater Bay Area Business Sustainability Index (GBABSI) today.

The HKBSI is aimed at charting the ongoing development and performance of Hang Seng Index constituent companies on business sustainability. Compared to the results of the 4^th HKBSI released last January, the overall average score of the 50 Hang Seng Index (HSI) constituent companies as at 30 July 2019 in the 5th HKBSI was 57.54 (out of 100 points), up by 2.73 percent, whereas the performance of the top 20 companies remained stable with a slight increase of 1.93 percent.

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 2017-18, 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.

For the top 20 HKBSI companies, the mean score of this round recorded an increase of 1.93 percent from 75.57 points in the last round. However, more companies (46%) reached the “Performer” level with an average score of over 60 points. The Hong Kong and China Gas Company Limited and HSBC Holdings plc were at the top level of “Exemplar” with over 90 points. This reflected that these companies’ business sustainability performance has reached an international standard.

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 and launched in 2015 by the Sustainability Management Research Centre. Prof. Lo said, “There has been progressive advancement in the performance of business sustainability over the past five rounds of HKBSI. However, in this round, the change of HSI constituents restricted the increase of the overall average score as companies with a higher average score (58.51 points) were replaced by those with lower scores (37.35 points).”

Within the VPI model, the average score of “Values” and “Impact” remained stable compared with the 4th HKBSI, while “Process-Management” and “Process-Practice” improved slightly with 8.54 percent and 4.75 percent rise respectively. In terms of stakeholder analysis, companies were adopting more proactive CSR strategies by putting more effort on improving their environmental practice (+21.32%). This may be due to the increasing global concern on climate change and pollution.

The First Business Sustainability Index for the Greater Bay Area

To encourage and motivate companies in the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) to adopt CSR as a progressive business model, CBS extended its sustainability index project to cover Hong Kong listed companies with operations in GBA that are eligible for southbound trading under the Stock Connect scheme. With the introduction of the inaugural GBABSI, 67 constituent companies of the Hang Seng Stock Connect Hong Kong Greater Bay Area Index (HSSCBBA) as at 30 July 2019 were invited to complete an online assessment questionnaire with the same scope as HKBSI.

Benchmarking against the 5^th HKBSI results, the overall average score (45.6 points) of the GBABSI companies was lower, but the standard deviation was wider (21.77 points), reflecting a huge performance gap between the top- and bottom-performing companies. The overall performance of the 1^st GBABSI was comparable to that of the 2^nd HKBSI (observation Year 2015).

The performance gap between the top 20 GBABSI companies and the rest was pronounced. The average score of the top 20 companies was 76.64 points and that of the bottom 20 companies was 23.81 points. 43 out of 67 GBABSI companies (64%) scored less than 50 points. As for Hong Kong based and non-Hong Kong based GBABSI companies, the performance gap between them was also wide with an average score of 54.80 points and 36.12 points respectively. Among the assessment aspects of VPI, the GBABSI constituents, particularly those based outside Hong Kong, had much space for improvement in all the four aspects (Value, Management, Practice and Impact), and “Impact” was the weakest area across the board.

Commenting on the results, Prof. Lo explained that HKBSI has been compiled for five rounds, and the requirements were well recognised by HSI constituent companies. Among the GBABSI companies, 18 also took part in the 5^th HKBSI. HKBSI serves to engage companies in seeking continuous improvement of their CSR practices, while GBABSI seeks to arouse awareness in adoption of business sustainability practices among GBA companies.

In 2021, CBS plans to introduce the Greater China Business Sustainability (GCBSI) Index covering 200 listed companies from HSI, FTSE TWSE Taiwan 50 Index, Shenzhen 100 Index and Shanghai Stock Exchange SSE 50 A Share Index. The launch of this consolidated business sustainability index will not only encourage and motivate companies in the region to integrate CSR initiatives into everyday business, but also to serve as a robust indicator for ESG investors in selecting companies with socially responsible corporate behaviour. In addition, the Association of Sustainability Professionals will be established under the aegis of CBS. The association will seek to support corporate sustainability management by promoting the professionalisation of CSR management, including the cultivation of CSR/business sustainability practitioners as professionals, the formulation of a qualification framework for sustainability management, and the performance of qualification accreditation.

5^th HKBSI

Average Scores

	5th HKBSI	4th HKBSI	Changes (5th vs 4th HKBSI)	3rd HKBSI	2nd HKBSI	1st HKBSI	Changes (5th vs 1st HKBSI)
Overall Mean (all companies)	57.64	56.01	+2.73%	50.82	45.73	41.75	+37.82%
Top 20 Mean	77.03	75.57	+1.93%	72.46	68.82	57.25	+34.55%
HK-based Mean	66.22	64.22	+3.11%	60.01	55.44	49.42	+33.99%
Non HK-based Mean	49.53	48.44	+2.25%	42.33	36.02	35.17	+40.83%

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Overall Performance Level

	5th vs 4th HKBSI	5th HKBSI	4th HKBSI	3rd HKBSI	2nd HKBSI	1st HKBSI
90-100 points Exemplar	+1	2 (4%)	1 (2%)	–	–	–
80-89 points Pace-setter	-2	6 (12%)	8 (16%)	5 (10%)	2 (4%)	–
70-79 points Achiever	+2	5 (10%)	3 (6%)	6 (12%)	10 (20%)	–
60-69 points Performer	+2	10 (20%)	8 (16%)	7 (14%)	3 (6%)	8 (16%)
50-59 points Practicer	-6	6 (12%)	12 (24%)	7 (14%)	4 (8%)	12 (24%)
Below 50 points Explorer	+3	21 (42%)	18 (36%)	25 (50%)	31 (62%)	30 (60%)

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Overall VPI Scores

	5th HKBSI	4th HKBSI	Changes (5th vs 4th HKBSI)	3rd HKBSI	2nd HKBSI	1st HKBSI	Changes (4th vs 1st HKBSI)
Values	65.22	66.34	-1.69%	62.40	55.53	54.08	+20.60%
Process – Management	66.60	61.36	+8.54%	58.48	54.80	50.97	+30.67%
Process – Practice	65.31	62.35	+4.75%	56.22	51.71	37.34	+74.90%
Impact	38.62	39.23	-1.55%	32.59	28.51	32.71	+18.07%

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Process-Practice by Stakeholder Analysis

Practice
5th HKBSI			4th HKBSI
Change	Scores	Stakeholders	Stakeholders	Scores
+4.75%	65.31	Overall	Overall	62.53
-9.00%	71.79	Investor	Investor	78.89
+0.74%	66.99	Employee	Employee	66.50
+6.25%	68.81	Customer	Customer	64.76
-11.97%	52.36	Government	Government	69.48
+7.55%	62.50	Community	Community	58.11
+8.81%	61.36	Supplier	Supplier	56.39
+21.32%	67.26	Environment	Environment	55.44

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The Top 10 HKBSI Company Ranking

1. The Hong Kong and China Gas Company Limited

2. HSBC Holdings plc

3. BOC Hong Kong (Holdings) Limited

4. CLP Holdings Limited

5. MTR Corporation Limited

6. Sun Hung Kai Properties Limited

7. Hang Seng Bank Limited

8. New World Development Company Limited

9. Sino Land Co. Ltd.

10. Sands China Ltd.

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1^st GBABSI

Overall VPI Scores – 5^th HKBSI vs 1^st GBABSI

	5th HKBSI	Standard Deviation	1st GBABSI	Standard Deviation
Total	57.54	18.81	45.60	21.77
Values	65.22	16.93	48.30	23.24
Process – Management	66.60	24.79	54.90	28.85
Process – Practice	65.31	21.89	53.36	24.54
Impact	38.62	19.72	29.84	20.95

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Overall Performance Level

	5th HKBSI (50 Companies)		1th GBABSI (67 Companies)
90-100 points Exemplar	2	4%	1 (1 in HKBSI)	1.49%
80-89 points Pace-setter	6	12%	6 (5 in HKBSI)	8.96%
70-79 points Achiever	5	10%	4 (3 in HKBSI)	5.97%
60-69 points Performer	10	20%	9 (4 in HKBSI)	13.43%
50-59 points Practicer	6	12%	4 (1 in HKBSI)	5.97%
Below 50 points Explorer	21	42%	43 (4 in HKBSI)	64.18%

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Overall VPI Scores – 1st GBABSI (HK-based vs Non HK-based Companies)

	HK-based Companies	Non HK-based Companies
Total	54.80	36.12
Values	57.59	38.73
Process – Management	68.18	41.21
Process – Practice	62.48	43.98
Impact	36.35	23.14

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The Top 10 GBABSI Company Ranking

1. The Hong Kong and China Gas Company Limited

2. BOC Hong Kong (Holdings) Limited

3. MTR Corporation Limited

4. Sun Hung Kai Properties Limited

5. Hang Seng Bank Limited

6. New World Development Company Limited

7. China Resources Power Holdings Co. Ltd.

8. Sino Land Co. Ltd.

9. Sands China Ltd.

10. Kerry Properties Ltd.

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Image by 95C from Pixabay