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HKICPA 20th Anniversary CG Awards reflect the changing times and the impact of COVID-19 on corporate disclosures

02 December 2020

(HONG KONG, 2 December 2020) The outbreak of COVID-19 has disrupted the daily business and operations of companies and public sector organizations around the world, putting their corporate governance (CG) and sustainability practices to the test. Celebrating their 20th anniversary, the Hong Kong Institute of Certified Public Accountants (HKICPA)’s Best Corporate Governance Awards (BCGA) continue to set a benchmark for current CG and sustainability standards and best practices in Hong Kong.

“This year has been a year of disruption, due to the ongoing US-China trade dispute and the global COVID-19 pandemic, and it is interesting to note that the Awards were launched in 2000, the year that the dot.com bubble began to burst. Throughout all this time, the importance of good CG has always been clear, as a beacon of stability and a vital investor safeguard,” said Mr. Johnson Kong, President of HKICPA and Chairman of Judging Panel of the Best Corporate Governance Awards 2020.

“Companies and public sector organizations with good CG deeply ingrained are more resilient and are also more likely to be able to weather the storm and recover more quickly once it has passed. The senior management of well-run companies and financiers often observe that companies with good governance can get easier access to funds and, potentially, a lower cost of capital. These are important advantages at times such as these when businesses may be facing liquidity problems” 

“After two decades, this is the end of one phase of the BCGA, and I would like to pause briefly and take this opportunity to congratulate CLP Holdings Ltd. on being the only company to have won a CG award every year, and also a Sustainability and Social Responsibility Reporting (SSR) Award each year since 2011, when these were launched.”  

There is growing evidence nowadays that good ESG policies, strategies and practices have a positive impact on a company’s reputation and ability to attract long-term investment. “Next year, we will be looking to give even greater emphasis in the Awards to sustainability, and how companies and organizations integrate their CG and sustainability,” Mr. Kong continued.
 
As a separate, but related project on corporate disclosure, HKICPA recently conducted a brief desktop research to investigate how local listed companies with financial years ended 31 March 2020 have been dealing with and communicating the impact of COVID-19,  focusing on disclosures in annual reports, and inside information disclosures, etc., issued up until mid-August 2020. We used HKEX’s Listed Issuer Regulation Newsletter, Issue 2, issued in April 2020, which provided guidance on COVID-19-related disclosures, as a benchmark. 

The results reflect that,  generally, in this group of companies,  there was room for improvement in terms of providing more specific information and detailed analyses of the impact of the pandemic on their operations, liquidity and overall financial position; as well as on their strategies for dealing with the pandemic in the short- and longer-term. We would urge them to provide more information in their interim reports, which some December year-end companies are now doing.  It is important for investors to be provided with timely and specific information about the impact of COVID-19 on businesses, and how companies have been addressing the risks and uncertainties, in order to be able to make informed investment decisions”, said Ms. Loren Tang, Chair, Organizing Committee of BCGA 2020.

Turning again to the Awards, about 500 annual reports and around 500 sustainability reports were considered in the initial stage. “Overall, the judges saw some positive signs and decided to give out a record number of 30 awards. A diverse range of candidates reached the final stages, and seven new awardees emerged, including those winning awards for the first time in the SSR or ESG section,” continued Ms. Tang.

For the third year in a row, the judges decided not to give out any diamond awards. While they noted that companies have begun to deal with issues raised by investors, such as succession planning, board refreshment and diversity, the general consensus among the judges was that more could still be done.

The SSR Awards continued to be a major focus. There is increasing awareness of climate change as an ESG issue that could have major implications, and more companies are aligning with international standards on disclosure, including the Global Reporting Initiative and the recommendations of the Task Force on Climate-related Financial Disclosure, in addition to the HKEX ESG Reporting Guide. These are also welcome developments. 

“Most awardees in the SSR section, from all different sectors, highlighted climate resilience as an issue. This issue is also of interest to investors and the Securities and Futures Commission is currently consulting on proposed requirements for fund managers to take climate-related risks into consideration in their investments and to make appropriate disclosures to investors,” said Ms. Wendy Yung, Judge of BCGA 2020. 

“We hope to see ESG reporting continuing to improve and sustainability considerations being integrated into corporate strategies, investment decisions and risk management,” continued Ms. Yung. 

Overall, the judges were pleased to see that sound and clearly-explained CG frameworks, more extensive information on key risks, whistleblowing policies, and the introduction of a board evaluation process, as well as board diversity policies, are commonplace these days.  At the same time, some investor groups have pointed out that, in Hong Kong, independent non-executive directors (INEDs) are often appointed by and seem more accountable to controlling shareholders. These directors typically do not engage with shareholders as often as they would in other markets in the region. HKICPA emphasizes that INEDs need to bring an independent mindset and view to board discussions and strategy oversight, and to be prepared to challenge controlling shareholders and their representatives, where necessary.

Efforts towards board refreshment could also be stepped up. “A number of boards have a substantial proportion of long-tenured INEDs and NEDs, with a high average age; and the percentage of female directors, overall, is still low and quite static in Hong Kong”, noted Ms. Yung. “Generally, we would urge companies to give more weight to the merits of board refreshment and greater diversity, not only in terms of gender, but also age and other factors”, said Ms. Yung.

Other areas where more information could be provided, according to the HKICPA, include the process and findings of board evaluations and internal control reviews, as well as on cross-directorships.  

This 20th anniversary of the BCGA is supported by media sponsors Hong Kong Economic Times, The Standard and ET Net. For more details of the Awards, please visit https://bit.ly/37heOmI.

 

 

List of Awardees

Judges' report

 

香港會計師公會「最佳企業管治大獎」20周年
反映疫情對企業披露的影響 見證社會變遷


(香港,二零二零年十二月二日)新型冠狀病毒疫情爆發,影響環球公私型機構的業務及營運,更為它們的企業管治及可持續發展實務帶來考驗。香港會計師公會主辦的「最佳企業管治大獎」成立20周年,多年來為香港的企業管治及可持續發展水平和最佳實務奠下重要基準。

香港會計師公會會長兼大獎評審團主席江智蛟先生表示:「今年中美貿易關係緊張,加上影響全球的新型冠狀病毒疫情,為大家帶來前所未有的衝擊。『最佳企業管治大獎』於二零零零年設立之時,恰巧碰上科網股泡沫爆破。縱然經歷了各樣變遷,良好企業管治的重要性卻非常清晰明確,更是維持企業穩定及保障投資者利益的關鍵。」

「具有深厚企業管治文化的公司及機構往往應變力強,擁有較有利條件撐過逆境,並於難關過後能更快重回軌道。根據管理良好企業的高層人員及金融家的觀察,實踐良好企業管治的公司通常較順利獲得資金,資本成本亦相對低,能為企業帶來重要優勢,特別是需要流動資金之時。」

「經過了20年,大獎可說是完成了一個重要里程。我藉此機會恭賀唯一一家每年榜上有名的機構 — 中電控股有限公司,它亦自『可持續發展及社會責任報告獎』於二零一一年設立以來每年均獲獎。」

愈來愈多研究顯示,卓越的環境、社會及管治(「ESG」)政策、策略及實務,有利企業的聲譽及吸引長線投資的能力。江先生續說:「來年的大獎將更着重可持續發展方面的表現,以及公司及機構如何融合企業管治與可持續發展。」

最近公會特地額外進行了一項有關企業披露的資料調查,了解於二零二零年三月底年結的本港上市公司如何向持份者匯報及溝通新冠疫情對業務的影響。調查集中有關企業的年報及截至二零二零年八月中前所披露的內幕資料。我們以香港交易所於二零二零年四月出版的第二期《上市發行人監管通訊》內有關疫情相關披露指引作對比。

大獎籌委會主席鄧苑儀女士表示:「調查結果顯示,普遍公司在疫情方面的披露有改善的空間,它們應就疫情對營運、流動資金及整體財務狀況的影響,作更具體明確的披露及詳盡分析,亦要披露應對疫情的中長期策略。我們建議企業在中期報告中提供更多相關資料,部分在十二月底年結的公司亦已在中期報告作出詳細披露。此外,為投資者適時提供疫情對業務影響的具體資訊,以及公司如何應對風險及不確定因素亦十分重要,此舉有助他們作出及時知情的投資決定。」

今年的大獎單在初步甄選階段,大會已審閱了約500份年報,以及約500份可持續發展報告。鄧女士說:「評審團認為整體表現良好,並決定頒發共30個獎項,數目是歷屆之冠。入圍候選的公司及機構來自不同行業,得獎名單上有七家首次獲獎的機構,當中包括首次獲頒『可持續發展及社會責任報告獎』,即ESG相關獎項的得獎者。」

評審團連續第三年決定不頒發鑽石獎。縱使部分公司已開始應投資者的期望,處理繼任規劃、董事適時更替及董事會多元化等事宜,但評審團普遍認為企業的表現仍有進步空間。

「可持續發展及社會責任報告獎」仍為大獎的焦點。社會日漸意識到ESG議題中氣候變化的影響,愈來愈多公司努力實行符合國際準則的披露,包括全球報告倡議組織的準則、氣候相關財務信息披露工作組的建議,以及聯交所的《環境、社會及管治報告指引》。這些都是我們樂見的進步。」

大獎評審團評判容韻儀女士表示:「可持續發展及社會責任報告獎的得獎者來自各行各業,它們都重視應對氣候變化。這亦是投資者關注的議題,證券及期貨事務監察委員會亦正就基金經理管理及披露氣候相關風險的建議規定進行諮詢。」

容女士續說:「我們期望ESG報告能繼續精益求精,並將可持續發展因素納入企業策略、投資決策及風險管理當中。」

整體而言,評審團欣然看到愈來愈多企業及機構設有清晰穩健的企業管治框架、披露更全面的重大風險資訊、制訂舉報政策,以及引入董事會評估程序及多元化政策。此外,有投資者團體亦指出,香港普遍企業的獨立非執行董事由控股股東任命,並傾向對控股股東問責,而這些董事與股東的聯繫,亦不如區內其他市場般緊密。公會強調,獨立非執行董事需要為董事會討論及策略監督,提供獨立觀點及意見,並在需要時對控股股東及其代表的決定提出質疑。

企業亦應加強董事會成員適時更替。容女士說:「許多董事會內有不少任期相對長及年長的獨立非執行董事及非執行董事;而本港女性董事的比例整體仍然偏低且未見改善。因此,我們希望企業應更重視董事更替及董事會多元化,不單注重性別,還要考慮年齡及其他因素。」

公會亦建議企業及機構增強不同範疇的披露,包括董事會評估及內部監控檢討的程序及結果,以及董事相互擔任對方公司董事職務的情況。

「最佳企業管治大獎2020」的傳媒合作夥伴包括香港經濟日報、英文虎報及經濟通。有關大獎的詳情,請瀏覽https://bit.ly/37heOmI

 

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