With the increasing attention on the “informed market”, ESG information becomes more and more important to investors, who see an organised package of non-financial performance of companies as a powerful auxiliary tool-kit for analysis in making investment decisions. Providing sufficient ESG information not only informs investors in decision-making, but also allows them to gain confidence about the business development of a company in the long-term prospect.

With no doubt that ESG information can be used to inform ESG strategies and optimise business operations, and around 37% of the business leaders in Hong Kong have already integrated ESG issues into their strategic planning. The ascending trend of ESG consciousness reflects that more companies put focus on reviewing and overseeing its development in regulatory framework, identifying gaps, and pricing the risks and opportunities in their businesses. Environmental and social risks are inherently related to the financial risk, policy and legal risk, reputational risk, market risk and technological risk. And this calls for creative, concrete and immediate actions to improve internal governance structures and incorporate environmental innovation, resource usage, human rights, supply chain management and many more issues into business strategies, thereby reducing the whole spectrum of other related risks. Sound ESG practices generate sustainable values for the business and facilitate the resilience building process of organisations in a long run. An excellent ESG performance based on a deep understanding of what ESG constitutes and how to align corporate policies with ESG standards can enhance reputation in the industry, appealing to the growing public expectations around corporate responsibility.

TCFD implications of climate-related risks

Source: Recommendations of the Task Force on Climate-related Financial Disclosures

Environmental and social risks are inherently related to financial risk, policy and legal risk, reputational risk, market risk and technological risk. And this calls for creative, concrete and immediate actions to improve internal governance structures and incorporate environmental innovation, resource usage, human rights, supply chain management and many more issues into business strategies, thereby reducing the whole spectrum of other related risks. Sound ESG practices generate sustainable values for the business and facilitate the resilience building process of organisations in the long run. An excellent ESG performance based on a deep understanding of what ESG constitutes and how to align corporate policies with ESG standards can enhance reputation in the industry, appealing to the growing public expectations around corporate responsibility.

For years after entering the Chinese market, Starbucks struggled to gain the momentum on business expansion. They stumbled upon the answer, however, when they insisted on the implementation of ‘Starbucks China Parent Care Programme’ and chose to offer healthcare benefits to their employees’ family members (a critical illness insurance plan for the parents of its eligible full-time partners). Starbucks defined this project as ‘Redefining health care benefits in China’. The success of the programme was not only shown on the respect for its employees that truly touched the Chinese heart, but also reflected on the skyrocketing growth of sales. Starbucks now has over 2,000 stores in one of the fastest growing markets on the globe. From an ESG perspective, Starbucks’ intention was to address the key concerns of employees, but what inspired the promotion of this practice was the commitment to social welfare and the embodiment of a business purpose that has been entrenched in the industry for decades – reviving ‘a tea house culture’. The impacts of this programme were enormous and broad, the most straightforward one of which was a great incentive for employees to stay and contribute. The emphasis of Starbucks on ‘S’ ushered them to a position leading the fulfilment of corporate social responsibilities in the industry, which in return, has brought Starbucks a golden business opportunity in the market.

CASE STUDY, Starbucks