As one of China's most open and economically vibrant areas, the GBA’s Outline Development Plan for the Guangdong-Hong Kong-Macao Greater Bay Area includes sustainable development concepts such as green development and improving people’s livelihood. HSBC has released the first GBA ESG Index in Q4 2022 to effectively reflect the status and direction of sustainable development in the GBA.
Developed in partnership with China Energy Conservation and Environmental Protection Group (CECEP) Environmental Consulting Group Limited, a consultancy specialising in sustainable management as well as green and sustainable finance, the HSBC GBA ESG Index provides holistic insights into the area’s sustainable development.
The GBA ESG Index uses a combination of macro and micro methodologies and is updated quarterly. As well as the main GBA ESG Regional Index, a number of sub-indices are compiled, including City Sub-indices, Industry Sub-indices and Sub-indices by company size. The GBA ESG Index aims to objectively reflect and track the GBA’s sustainable development and its ESG.
From a macro perspective, we analyse the region, cities and industrial characteristics from five areas: policy, environment, economic and social development, corporate governance, and green and sustainable finance. The ESG performance of companies is evaluated from a micro perspective using the following five first-level indicators: environmental, social, governance, green and sustainable finance, and external assurance. To these an adjustment indicator, ESG reputation, is added which takes negative or controversial ESG events into consideration.
Sustainable finance is crucial for the Greater Bay Area’s low-carbon shift. Green bonds lead the GSSS market, and sustainability-linked bonds are rapidly growing.
In the second quarter of 2024, the Greater Bay Area ESG Regional Index increased by 5% year-on-year, reaching 127.78. Mainland China and Hong Kong have each issued their latest guidelines and requirements for ESG and sustainability reports, which are highly compatible with international standards. This helps companies reduce the costs of preparing ESG-related reports.
Recent data shows that the ESG disclosure rate for listed companies in the Greater Bay Area rose from 73% in the fiscal year 2022 to 76% in the fiscal year 2023, setting a new historical high. From a policy perspective, Mainland China and Hong Kong released updated guidelines for sustainability and ESG reporting for listed companies in the second quarter, which are largely aligned with international standards. This allows companies to meet regulatory disclosure requirements in different markets at a lower cost, thereby enhancing their international competitiveness.
Furthermore, the issuance of GSSS (Green, Social, Sustainable, and Sustainability Performance-Linked) bonds in the Greater Bay Area became more active in the second quarter, with the issuance scale doubling from the first quarter to RMB 49 billion. The industrial, financial, and energy sectors were the top three in issuance scale, accounting for over 90% of the total.
The average value of the Greater Bay Area ESG industry sub-indices grew by 41% year-on-year, reaching 235.50. Among the 8 key industries highlighted in the report, the industrial sector, supported by strong policy measures, performed the best. It not only led in GSSS bond issuance but also showed improvements in climate change management and ESG information disclosure. For example, in the manufacturing sector, which is the focus of this quarter’s report, more companies are reducing their environmental impact and achieving sustainability by promoting digital transformation, using renewable energy, and reducing product carbon footprints.
There is no standard definition of, measurement criteria or methodology for ESG/Sustainability assessments. HSBC does not conduct its own specific due diligence in relation to the methodology adopted by CECEPEC in respect of the study in this document. ESG/Sustainability assessment is an evolving area and new regulations and measurement criteria may come into effect which may affect how a specific criteria such as a geographical area, industry or business sector is categorised or labelled. A criteria such as geographical location, industry or business sector which is considered to fulfil ESG/sustainable criteria today may not meet those criteria at some point in the future.
Today we finance a number of industries that significantly contribute to greenhouse gas emissions. We have a strategy to help our customers to reduce their emissions and to reduce our own. For more information visit www.hsbc.com/sustainability
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