Is Hong Kong keeping up with Corporate Governance?

Written By: and on FORENSIC ACCOUNTING NEWS

Recent surveys have revealed that 83% of firms in Hong Kong do not reveal their Environmental, Social and Governance (“ESG”) performances and only 46 percent of the Hang Seng Composite Index companies entirely comply with the “Corporate Governance Code” established by the Hong Kong Exchanges and Clearing (“HKEX”).

ESG responsibilities encourage firms to also focus on factors other than the conventional measures of performance such as profitability and liquidity. ESG reports have been gaining popularity as investors wish to invest in businesses that have made significant efforts to protect the environment, reduce social imbalance and strengthen governance. Studies have also shown that firms with consistent ESG performance have a positive correlation with share price and other financial results. Conversely, firms that are not conscious ESG impacts are negatively affected in the market. Examples include, Germany’s Volkswagen and oil giant BP that suffered in fines and market value due to negligent behavior in carrying out ESG measures.

Sustainable investment is not only good for protecting the world for tomorrow’s generations, it can also be a route to superior portfolio returns” – Sebastien Eisinger, Head of investments at Pictet Asset Management.

Surprisingly, Data security and Fraud and misconduct risks reported by HK listed firms rank particularly low at only 6% and 1% respectively of the total reported risks.

How can JLA assist?

Our forensic accounting team comprises of a diverse group of experienced professionals from various backgrounds. If:

  • You need to design, develop, test or update your corporate responsibility structure, framework, reporting systems or processes; and / or
  • require due diligence to be undertaken in respect of new investments

JLA can assess and provide opinion on Corporate Governance / Internal Control review.


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