In an exclusive interview with Earth.Org, Pascale Laborde, Global Chief Sustainability Officer at Hong Kong-based global health and nutrition company H&H Group, delves deep into what ESG means to the company and how they approach the challenge of navigating the ESG requirements of multiple countries.

In today’s international market, one would be hard-pressed to find a company not taking a direct approach to their sustainability commitments. After all, the modern consumer has become significantly more aware of how they spend their money and where, often taking into consideration the ethical nature of their purchases, and how their money is being used when it changes hands. For example, Capgemini Research Institute’s annual consumer trends report ‘What Matters to Today’s Consumer’ found that 41% of respondents were willing to pay more for a product they believe was made sustainably.

Though sustainability has become a requirement for some on par with quality, it is not only the consumer demand for eco-friendly products that is shaping the industry into what it is today but also government mandates. 

Since 2006, when the term ESG (Environment, Social and Governance) first found its roots in a United Nations report titled ‘Who Cares Wins’, governments of countries across the globe have updated their laws to adhere to a more sustainable framework, setting the stage for a greener market. 

You might also like: ESG Investing in 2023: A Rising Trend Amid Greenwashing Concerns

More recently, the term ESG has largely become associated with corporate transparency in a sustainable market. In fact, law in ten countries including Switzerland, the UK, Japan, Hong Kong, Canada, and the European Union, requires what is known today as ESG reporting. Some of the largest investment firms in the world, like BlackRock Inc., for example, have made ESG reporting an integral part of their daily business operations.

H&H Group, a global health and nutrition company headquartered in Hong Kong, is one such company required by law to report on their ESG commitments. However, what differs for them is the fact that they are an international company, with locations across Mainland China, Australia, New Zealand, Europe, North America and Asia, as well as a second head office in the UK. This makes their reporting significantly more challenging to accomplish. 

In an exclusive interview with Earth.Org, Pascale Laborde, Global Chief Sustainability Officer for H&H Group, delves deep into what ESG means to them, and how they approach the challenge of navigating the ESG requirements of multiple countries.

“As a global company, H&H Group views ESG reporting as an essential tool to demonstrate our commitment to sustainable and responsible business practices,” said Laborde. 

“We recognise that our stakeholders, including investors and consumers, expect us to operate in a way that minimises negative impacts on the environment and society while delivering long-term value.”

Without established frameworks, however, it can become difficult to determine exactly how ESG reporting should take place. Thankfully, standards have been set by organisations such as the Global Reporting Initiative (GRI), which provides ESG reporting frameworks for over 10,000 companies across 100 countries. According to 2022 research from KPMG, the GRI is considered the most widely used sustainability reporting standard in the world. 

That being said, some countries have their own rules, which may or may not coincide with that of the GRI’s. In the case of Hong Kong, the Hong Kong Stock Exchange’s (HKEx) Appendix 27 provides guidance on the ESG reporting requirements for companies listed on the Stock Exchange.

“The GRI’s Sustainability Reporting Standards cover a wide range of economic, social, and environmental topics, and are used by companies around the world to report on their sustainability performance.” explained Laborde.

“At H&H, we use both the GRI and HKEx Appendix 27 as part of our ESG reporting framework. We use the GRI’s framework to report on a global level and ensure that we are covering a comprehensive set of topics. We also use the HKEx’s Appendix 27 to ensure that our ESG reporting meets the requirements of the Hong Kong market, where our headquarters is located.”

According to Laborde, ensuring that their ESG reporting is accomplished accurately according to both international and localised requirements is one of their greatest challenges, demanding a two-fold approach (GRI plus any local requirements, such as the HKEx) when dealing with any of their business operations across the world. 

“While we adhere to the GRI standards and HKEx requirements globally, we also comply with other relevant reporting frameworks and regulations,” Laborde explained.

“For instance, our Guangzhou facility meets the local ‘Water Pollutant Discharge Limits’ of Guangdong Province, China. In Australia, we comply with the Modern Slavery Act 2018 by reviewing and updating our Modern Slavery Statement annually.”

 “In addition to this, we work closely with our local teams to ensure that we are aware of any new or changing regulations, and we engage with stakeholders to understand their expectations and concerns.” 

In terms of the reporting itself, Laborde says that complex issues such as greenhouse gas emissions or supply chain management can be a challenge in and of itself, as data can be difficult to obtain and verify. To overcome these obstacles, they implement robust data collection and verification processes, engage with third-party auditors, and invest in technology that ensures accurate and transparent reporting.

“Accuracy and confirmability are crucial aspects of ESG reporting. If mistakes are made, there can be serious consequences, including reputational damage, financial penalties, and legal action. That’s why we take a rigorous approach to data collection, verification, and reporting, ensuring that all information in our reports is accurate and backed up by evidence.” explained Laborde.

As significant as these legal consequences can be, failing to report effectively on ESG requirements can also result in a loss of much-needed investment, simply because today’s investors are looking for more transparent, sustainable companies. 

In a survey by PWC, 79% of participants agreed that the way a company manages ESG risks and opportunities is an important factor in their investment decision making, while 49% of investors expressed a willingness to “divest from companies that aren’t taking sufficient action on ESG issues.” Furthermore, 59% said a lack of action on ESG issues would likely cause them to vote against executive pay agreement, and a third said that they had already taken this action.

With investors, consumers, and governments demanding a more transparent and sustainable market, effective ESG reporting would appear to be an essential component of the modern business strategy. Though the waters can be difficult to navigate, adhering to ESG standards is a necessity, requiring the most accurate understanding of both global and country-specific requirements.

“Effective ESG reporting on a multi-national scale requires a deep understanding of local regulations and frameworks.” said Laborde. 

“Collaboration with stakeholders, a robust data management system, and regular reviews are key to navigating ESG requirements successfully.” 

You might also like: ‘Green’ ESG Investments: The Future of Business?