Raising public awareness, enhancing corporate transparency, and promoting efficient regulation necessary for protecting the sustainable-investment environment
Prominent experts and industry insiders in Hong Kong and organizers from China Daily Hong Kong Edition pose for a photo during the inaugural Masterminds gathering. (CALVIN NG / CHINA DAILY)
Editor’s Note: China Daily Hong Kong Edition on Tuesday held the first Masterminds Gathering of Environment, Social, Governance and Greenwashing, marking the beginning of a series of gatherings at which experts and industry insiders can share their insights, discuss the challenges, and address the issues.
With the upsurge in green practices and green bonds, it has become apparent that some firms have been failing to take actions of reducing their greenhouse gas (GHG) emissions, or have been making misleading claims about the environmental benefits of their products or services in order to lure customers. Such activities are known as “greenwashing”. The widespread use of such practices must be addressed, or they will impede progress in combating climate change and will take a heavy toll on the investment environment.
Business leaders and experts who attended China Daily Hong Kong Edition’s Masterminds gathering have proposed various solutions to mitigate greenwashing risks, such as raising public awareness, balancing regulation guidance and providing technology scrutiny. The gathering commenced on a scorching-hot day, reflecting the urgency and significance of the topic at hand.
Guests at the Masterminds gathering engage in lively discussions, demonstrating the potential for different stakeholders from government, business, academia, NGOs and the media to join forces to tackle greenwashing and other damaging gimmicks and shape a sustainable future. (CALVIN NG / CHINA DAILY)
In the global green bond market, about one-third of corporate green bond issuers have had a poorer environmental performance following their initial green bond issuance, according to a report issued by the Hong Kong Monetary Authority in November.
Zhou Li, deputy editor-in-chief of China Daily Group and publisher and editor-in-chief of China Daily Asia Pacific, extended a warm welcome to all the experts, business insiders and investors who gathered for the gathering to address the issue of greenwashing.
He said he hoped the event would help experts learn from each other and work together to find innovative measures to avoid greenwashing threats.
Daniel Cheng, managing director of Dunwell Enviro-Tech (Holdings) Ltd and the event moderator, said “ESG is a common topic for discussion, but more attention must be paid to greenwashing.”
As president of the Hong Kong Environmental Industries Association, Cheng has been in the environmental business for about 30 years. He regards the revolution as a journey, and said that to mitigate greenwashing risks, one needs to start by educating and encouraging employees, families and friends.
(CALVIN NG / CHINA DAILY)
Promotional pitfalls
A recent widely known greenwashing lawsuit involved the fast-fashion brand H&M, which was accused of making misleading claims about its products in order to capitalize on consumer green trends.
Bien Wong, board governor and honorary treasurer at Friends of the Earth (HK), said that over 60 percent of people in the US are willing to pay extra for sustainable products and products with sustainable packaging, so many brands claim their products are sustainable — but the public needs to know the reality behind such promotions.
“We need some incentives and penalties because everything has a price and everything needs a price,” he said.
Lit Ping Low, PwC Asia Pacific ESG climate change partner, believes some of the risks stem from a lack of understanding. “When we say ‘green product’, what does it mean?” she asked.
The key to resolving such problems, she said, is to raise public awareness, and to make sure that management teams, marketing teams and senior management teams understand what they mean when they make specific claims, and to make sure those claims can be supported by evidence.
As an expert in the field, Low has reviewed ESG reports from many companies and has noticed that most of them disclose only the positive aspects of their approach. “There is nothing wrong with talking about challenges. Companies should be able to be transparent and say they are still facing challenges and not doing enough in certain areas, and how they are putting in more efforts to manage their risks,” she said.
Linda Ho, CEO of Green Council, a nonprofit environmental organization and certification body, emphasized the importance of investigating onsite to see if what the companies write in their ESG reports can be factually supported.
Vivi Hu, CEO and co-founder of ESG data and analytics fintech firm YoujiVest Technology, is a firm believer in the importance of technology and sustainability investment, and said that technology and data analysis can help resolve transparency issues in ESG practices.
“Instead of relying on annual ESG reports only, our technology can cross-check their information with real-time performance.”
(CALVIN NG / CHINA DAILY)
Striking a balance
Melanie Kwok, head of sustainability at Sino Group, said there are various ways that companies can strengthen their communications on sustainability, such as reporting on ESG and climate risks, setting sustainability goals, and adhering to the latest local and international ESG requirements.
“As a responsible corporation, Sino Group embraces sustainability through our daily operation. It is important to enhance the transparency of ESG data and disclosure, as well as to work closely with our like-minded partners to communicate ESG (information) in a reliable manner.”
Alexander Chan, head of ESG client strategy Asia Pacific at Invesco, said: “As ESG investments grow, the industry is balancing the risks of greenwashing and ‘greenhushing’ — cases where, even if investors are making green investments, they are cautious not to market them as such. Looking ahead, in addition to regulation, understanding an investor’s underlying processes will be key to evaluating greenwashing risks.”
With the increased regulatory scrutiny, everyone is becoming more cautious because of concerns about greenwashing risks, he said.
He believes the challenge is to strike a balance between principle-based and prescriptive regulations so that one can minimize the risks of greenwashing and also avoid investing too much time and resources into comply with certain regulations.
Jack Lin, president of MioTech, one of Asia’s largest ESG data platforms, raised the issue of “mythology confusion”, as each organization and region has its own set of evaluation mythologies. Transparency empowered by big data technologies is the solution he proposes to solve this issue.
Professor Louis Cheng, Dr S H Ho professor of banking and finance and director of Research Centre for ESG at the Hang Seng University of Hong Kong, said firms should spend more time learning about what ESG information is relevant and material, and what should be disclosed. “More importantly, they should not be afraid to say what they have achieved.”
(CALVIN NG / CHINA DAILY)
Carbon credit frauds
Carbon credits are another big issue of the day. Grace Hui, founder and CEO of Net Zero Asia Ltd, warned companies about the risks of jumping on the bandwagon of carbon credit investing because there are so many fraudulent projects now. She also suggested setting up a new organization to look into common credits.
Hui was a senior executive with Hong Kong Exchanges and Clearing Ltd (HKEX), where she spearheaded regular reviews of HKEX’s Environmental, Social and Governance Reporting Guide, and in 2020, initiated a new business for HKEX in green and sustainable finance and founded HKEX’s Sustainable and Green Exchange.
Joe Pan, co-founder of Carbon Neutral Club Hong Kong, challenged everyone on a personal level to offset their own carbon footprints and start with calculating their own personal carbon footprint. “Companies have consultancies lining up to help them to calculate their carbon footprint and will sell them carbon credits. But what we have seen over the years is that if we get to the individuals who care about their own carbon footprint, they will make better decisions at a corporate level.”
(CALVIN NG / CHINA DAILY)
Top-down training
Jenny Lee, undersecretary-general of the Hong Kong Green Finance Association (HKGFA), noted that greenwashing can sometimes occur unintentionally. She said there are so many regulations coming down the pipe that it can be difficult to make sense of them all, and that people need training. Company executives should ensure some of the basic definitions are understood from the top down, and that the right types of controls and processes are in place, she said.
Jessica Chan, head of sustainability at MTR Corporation Ltd, added it is more important to translate all kinds of guidance into internal requirements for the colleagues. “We have to do it together within the whole organization to move forward,” she said.
She recently formulated a long-term decarbonization road map and carbon reduction targets for MTR, and developed a set of key performance indicators to gauge and drive the company’s performance in a wide range of sustainability aspects.
With an investment background, John Zhang, senior business development director of China Resources Environmental Protection Technology Ltd, shared his observation that professional investors know about greenwashing, but the general public, and decision-makers in other industries, need to be educated, or they will fall into the trap of greenwashing without acknowledging it.
This event is sponsored by Sino Group and The Fullerton Ocean Park Hotel Hong Kong.
(CALVIN NG / CHINA DAILY)
Organizer:
Mr Zhou Li, deputy editor-in-chief, China Daily Group; publisher and editor-in-chief, China Daily Asia Pacific
Moderator:
Professor Daniel Cheng, managing director, Dunwell Enviro-Tech (Holdings) Ltd
Speakers:
Mr Alexander Chan, head of ESG client strategy Asia Pacific, Invesco
Ms Jessica Chan, head of sustainability, MTR Corporation Ltd
Dr Louis Cheng, Dr S H Ho professor of banking and finance; director of Research Centre for ESG; director of Research Institute for Business, Hang Seng University of Hong Kong
Ms Linda Ho, CEO, Green Council
Ms Grace Hui, founder and CEO, Net Zero Asia Ltd
Ms Melanie Kwok, assistant general manager (sustainability), Sino Group
Ms Lit Ping Low, Asia Pacific ESG climate change partner, PwC Mainland China and Hong Kong
Mr Bien Wong, board governor and honorary treasurer, Friends of the Earth (HK)
Guests:
Ms Vivi Hu, co-founder and CEO, YoujiVest Technology
Ms Jenny Lee, undersecretary-general, Hong Kong Green Finance Association
Ms Vivian Lee, group general manager, corporate marketing, communication and sustainability, Sino Group
Mr Jack Lin, president, MioTech
Mr Joe Pan, co-founder, Carbon Neutral Club, Hong Kong
Mr John Zhang, senior business development director, China Resources Environmental Protection Technology Ltd
