1. Why is ESG assessment necessary?

ESG assessment is crucial for both listed companies and non-listed companies with sustainability awareness. This rating not only helps companies identify their shortcomings in environmental, social, and governance aspects but also brings potential advantages to companies:

  • Enhancing Corporate Image: Companies with good ESG performance are often seen as more socially responsible, which helps enhance trust among the public and consumers.
  • Attracting Investors: Investors increasingly value a company’s ESG performance, and outstanding ESG performance becomes a key factor in attracting more investment.
  • Increasing Collaboration Opportunities: A good ESG rating helps companies attract more partners and build solid partnerships with enterprises.
  • Enhancing Market Competitiveness: Companies with outstanding ESG performance often have a competitive advantage in fiercely competitive market environments.
  • Brand Promotion Tool: Companies with good ESG performance can use this as an important marketing point to demonstrate their sense of responsibility and commitment to sustainable development.
  • Addressing Future Trends: With global emphasis on sustainable development, ESG has become an inevitable trend in corporate operations. Conducting ESG rating and improvements in advance helps companies stay ahead in future development.

Therefore, ESG performance rating is not only a process of identifying and improving shortcomings but also an important strategy to enhance overall corporate value and market position.

2. What is the proportion of Environmental (E), Social (S), and Governance (G) in the assessment?

The questionnaire does not specify the specific percentage for each part of the environment, social, or governance. It aims to provide a comprehensive and interconnected rating, especially suitable for the logistics industry and operations involving logistics services.

3. What aspects does the report cover?

The report will reveal the following three main aspects:

  • Overall ESG Performance Rating Compared to Peers: Providing an overview of a company’s performance in ESG and comparing it with other companies in the same industry.
  • Detailed Analysis of Five Specific Areas of ESG Performance:
    • ESG Business Practices of the Company
    • ESG Performance and Risks of Suppliers and Customers
    • ESG Considerations in Logistics Operations
    • Corporate Governance Structure and ESG Performance
    • Comprehensive ESG Waste Management in Logistics Operations
  • Significant Shortcomings in the Top Ten Influential Factors During the Year: Identifying the top ten ESG aspects that had the greatest impact on the company’s assessment during the current year.

4. Are there sample reports available for reference?

After becoming an ESG member, you will receive an account and password to access the system and view sample reports and other related resources.

5. When can the assessment begin?

After becoming an ESG member, you will receive an account and password to access the system to start filling out the assessment questionnaire.

6. Can answers/inputs be saved and exited during the assessment process?

Yes, data and information inputs can be saved and exited at any stage before final submission. Once the questionnaire is completed and submitted, no further changes are allowed.

7. How to score in ESG assessment?

In ESG assessment, as long as a company completes actions related to environmental, social, or governance aspects, regardless of its size, these actions will be scored in the questionnaire. Following this principle, companies will receive corresponding scores.

8. How to achieve a good rating?

Companies should encourage employees to participate in ESG accreditation courses and receive relevant training. Through these courses, employees will learn more about ESG knowledge, enhancing their understanding and awareness of ESG. In daily operations, they will pay more attention to ESG practices, which not only helps improve the company’s ESG performance but also enhances its rating.

9. What constitutes a good rating?

ESG ratings are based on the aggregated ratings of all applicants in a given year, and a good rating may vary over time and market demand. Generally, achieving a “B” grade or above is considered standard.

10. How is confidentiality ensured in assessment?

The Hong Kong Logistics Association (HKLA) does not disclose assessment results to third parties. ESGSCM reports belong solely to the rated organizations. Additionally, rated companies are not allowed to disclose such reports to other ESG rating agencies. To strictly enforce privacy policies, the ESGSCM audit team operates independently and does not directly engage in any logistics business.

11. Is HKLA’s ESG accreditation related to assessment?

HKLA’s accreditation is a certification program designed to raise employees’ awareness of ESG and ultimately enable them to become qualified trainers. This is related to assessment, as the goal of the training is to improve the company’s ESG performance by enhancing employees’ understanding and application of ESG principles. Through training, employees will increase their awareness of ESG and learn how to apply these principles in their daily business operations. This not only helps improve the company’s ESG rating but also enhances employees’ professional skills and career development. Additionally, companies can demonstrate their commitment to ESG and practices through employees’ training outcomes, further enhancing corporate image and market competitiveness.

12. What are the contents of HKLA’s training?

HKLA’s training is divided into three levels, each with its specific objectives and contents:

  • Level 1 – Awareness Training: This level aims to raise employees’ awareness of ESG, providing them with a basic understanding of ESG. Training includes the use of simulated rating models to familiarize employees with the basic process of ESGSCM assessment. Additionally, employees will increase their awareness of ESG, further understanding its importance in business.
  • Level 2 – Supervisor Training: This level provides supervisors with deeper learning opportunities, involving an in-depth learning process of ESGSCM assessment. Supervisors need to oversee the implementation process to ensure the adoption of ESG principles and practices. Additionally, they need to understand how to address specific challenges in ESG practices and develop and implement corresponding solutions.
  • Level 3 – Trainer Preparation: This level is designed for individuals preparing to become trainers. Trainers need to prepare to handle issues, assist in solving strategic issues in ESGSCM, and provide training for junior staff to develop their problem-solving skills in ESG practices and formulate ESG strategic plans.

13. Standing of the HKLA’s ESG assessment report

This is a unique ESGSCM rating in Hong Kong and no other equivalent organization like HKLA capable to carry out such rating report. The report will reveal ESG performance so as to having confidence to join the group of ESG players. The standing is arisen from the professional Audit Team and the accreditation Board (Board members are prominent experts in the fields of environment, social and governance). On the other hand, ESG personnel handling ESG supply chain management is trained under an accreditation program which has Level 1 to Level 3 and to be made available for public in upcoming September 2024 under the Government subsidy program (MATF).

14. Subsidiary Companies

There is no difference between mother company and its subsidiary company in the rating exercise. If the mother company is doing the rating and its subsidiary companies can be one of the suppliers or customers in terms of service or products. In that case it is the same as the assessment of 1st Tier or 2nd Tier suppliers or customers. In fact, company is a legal person so rating exercise will be subject to an independent rating assessment.

15. Selection of Suppliers/Customers by 80/20 Rules

It is a general rule in selecting the key suppliers or customers in 1st or 2nd Tiers by a simple concept 80/20.

  1. For customer selection, it refers to 80% income or contribution coming from 20% of customers; and selection those 20% for your assessment but if more than one key customer, second round of 80/20 applied.
  2. For supplier selection, it refers to 80% service or products supplied by 20% of suppliers; and selection those 20% for your assessment but if more than one key customer, second round of 80/20 applied.

Eventually selecting one key representative for the suppliers and customers in the rating exercise.

16.  What is the deadline for submitting the ESG questionnaire after paying the 2024 ESG rating assessment fee?

The deadline for submitting the ESG questionnaire for this year is November 30, 2024.

17. After paying the ESG rating assessment fee, how many times can a company conduct an ESG assessment? If this payment only allows for one assessment, how much does it cost to conduct another assessment?

You can conduct an ESG assessment at any time before the final submission deadline and can save and modify your questionnaire responses at any time (but changes cannot be made after submission). The standard price for the next year’s assessment is HKD 50,000.

18. If a company misses the upcoming submission deadline (i.e., November 30), what will the next deadline be?

If you miss the deadline (i.e., November 30), there will be no second chance.

19. In filling out the questionnaire, if we have a policy, such as “switching from fuel vehicles to electric vehicles,” can it be divided into two questions to score? Additionally, in examples like air conditioning, where we have achieved energy-saving and emission-reduction goals from different perspectives, can we describe them separately and receive scores?

Yes, for a policy or action, as long as you can explain it for different purposes, you can divide it into two questions and receive scores in each section, but the results must clearly explain the purposes. If these purposes are not clearly distinguished, such statements cannot be made.

20.  For one question, a maximum of 10 scoring items can be submitted. Will HKLA score based on these 10 items, or can more than 10 items be submitted?

For each question, a maximum of 10 scoring items can be submitted, and HKLA will evaluate the score you can receive based on these items. If more than 10 items are submitted, these additional items will not be considered. Therefore, it is recommended to select the most relevant items based on scoring priority to achieve the best score.

To learn more about HKLA’s ESG rating and certification program, please contact: esg@hkla.org.hk.