Hong Kong accounting body calls for more expertise in sustainability practices
More than half of Hang Seng Index's constituent firms have voluntarily published their reports on sustainability performance last year, according to Hong Kong's accounting regulatory body, which called on companies to hone their expertise in the field.
Some 21 per cent of them obtained a 'reasonable' grade from sustainability assurance auditors, while 53 per cent received a 'limited' rating, the Accounting and Financial Reporting Council said in a report on Monday. The rest of them scored 'mixed or other' rating, it added.
Reasonable assurance requires auditors to obtain sufficient evidence to reduce the risk of misstatement to an acceptably low level. In comparison, limited assurance suggests auditors find no clear evidence against the claims by the reporting entity.
The study on market readiness for sustainability reporting and assurance was conducted from May 6 to 23 last year, when the Hang Seng Index had 82 members. The council also separately surveyed listed firms and auditors on their practices and plans.
'These entities cited that the assurance can enhance investor confidence, their sustainability ratings and brand reputation,' the council said. A lack of in-house sustainability reporting expertise was the most pressing issue cited by listed entities, the study concluded.
The council expects to start a public consultation on a regulatory framework on sustainability assurance later this year. The government vowed in March to be among the first jurisdictions to align the local requirements with the International Financial Reporting Standards – Sustainability Disclosure Standards.
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