Industrials ranks best performing sector in HSBC GBA ESG Index in second quarter 2024
Companies in the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) are stepping up their efforts in reducing their impact to the environment and improving ESG disclosure, according to the 2024 Q2 HSBC GBA ESG Index report, published by HSBC and CECEP Environmental Consulting Group. The improvement in ESG performance across all surveyed sectors in Q2 2024 propelled the GBA ESG Industry Sub-indices to reach a new high of 235.5, marking a 41 per cent year-on-year increase. The GBA ESG Regional Index also rose by 5 per cent year-on-year to 127.78.
The issuance size of green, social, sustainability, and sustainability-linked (GSSS) bonds in Q2 doubled from the previous quarter to RMB49 billion. The industrials, financials, and energy sectors emerged as the major bond issuers, collectively accounting for over 90 per cent of total issuance.
Daniel Chan, Head of Greater Bay Area, HSBC, said: “Sustainable finance has a role to play in the GBA’s low-carbon transition. Our report shows that green bonds remain the dominant instrument in the region’s GSSS bond market, accounting for over 70 per cent of total GSSS bond issuance. Sustainability-linked bonds were also gaining momentum, nearly tripling the issuance size in the previous quarter.”
Liao Yuan, Managing Director and General Manager of CECEP (Hong Kong) Investment Company Limited, said: “Businesses in the GBA are not only working towards reducing carbon emissions, but also enhancing their ESG disclosure. The latest data reveals that the ESG disclosure rate of listed companies in the region reached a new high of 76 per cent in the fiscal year of 2023. As the new sustainability and ESG reporting guidelines of Mainland China and Hong Kong released in the second quarter are largely aligned with international standard, companies in the region will be better-positioned to meet regulatory disclosure requirements across different markets more cost effectively and bolster their international competitiveness.”
Among the eight surveyed sectors1 in the report, the industrials sector, which comprises manufacturing, transportation, and construction, have benefited from strong policy support and stood out as the top-performing industry in ESG in Q2. Apart from being a leading GSSS bond issuer, the sector has also shown improvement in climate change management and ESG disclosure. An increasing number of manufacturers in the region are lowering their environmental impacts through digital transformation, transitioning to renewable energy, reducing product carbon footprints, and cutting down industrial waste disposal at landfills.
Note to editors:
1. The eight key sectors include communication services, consumer discretionary, consumer staples, energy, financials, healthcare, industrials, and real estate.
2. Methodology
Indicators for regional/cities and industry level
| First-level Indicator | Second-level Indicator |
|---|---|
| Environment | Corporate CDP disclosure performance Corporate science-based climate commitments Air quality Energy use efficiency Water use efficiency Electricity use efficiency Public sector’s contribution to environmental protection Urban greenness |
| Economic and Social Development | Economic development Economic contribution of tertiary industry Employment situation Public sector’s contribution to education Innovation and technological advancement |
| Corporate Governance | Activeness of market players Corporate ESG disclosure performance |
| Green and Sustainable Finance | Activeness of market players Investor commitment to sustainable investing Volume of sustainable debt instruments Number of ESG mutual funds |
| Policy | Policies related to sustainable development in the GBA |
Indicators for company level
| First-level Indicator | Second-level Indicator |
|---|---|
| Environmental | Greenhouse gas (GHG) emissions GHG targets Waste management Water management Energy management |
| Social | Employee data Employee development Supply chain management Privacy and data security Philanthropic contribution R&D and innovation |
| Governance | Board accountability for ESG ESG risk management Executive pay linked to ESG Board gender diversity Board independence |
| Green and sustainable Finance | Issuance of GSSS Bonds |
| External Assurance | ESG report external assurance |
(Source: CECEPEC)
Base period and update frequency
- Index base period: The fourth quarter of 2019
- Region/City and Industry-level data: Update quarterly
- Company-level data: Update annually
- Weight adjustment: Adjust annually
Limitations
- The Index is only applicable to the evaluation of the GBA, the cities, industries and companies in the GBA.
- The evaluation of ESG performance retrieved from the quantitative models is based on public data of listed companies, which we do not warrant or guarantee the accuracy and completeness of such disclosures.
- Given the incompleteness of publicly available macroeconomic data, performance evaluation on the GBA, cities, and industries could involve assumptions.
The Hongkong and Shanghai Banking Corporation Limited
The Hongkong and Shanghai Banking Corporation Limited is the founding member of the HSBC Group. HSBC serves customers worldwide from offices in 60 countries and territories. With assets of US$2,975bn at 30 June 2024, HSBC is one of the world’s largest banking and financial services organisations.
CECEP Environmental Consulting Group Limited
CECEP Environmental Consulting Group Limited is a professional sustainability consulting company established by CECEP. We are headquartered in Hong Kong with branch offices in Beijing, Shenzhen and Shanghai. Our partners and clients are found throughout Greater China, Europe, and America, covering national governments, industry associations, mainstream financial institutions and nearly 200 well-known enterprises in and out of China. We are committed to providing bespoke solutions to satisfy the specific sustainability needs for various industries, which include sustainability management consulting, green and sustainable finance consulting, climate change and carbon neutrality consulting with implementation solutions, and others.