ACH ESG Index™
powered by Deepsite
ACH ESG Indices as of Dec 2021
ESG Index 225.4
E Index 213.8
S Index 194.0
G index 268.5
*base year 2012 = 100
Why is ESG so important?
ESG investing is the consideration of environmental, social and governance (ESG) factors, alongside financial factors, in the investment decision-making process. Traditional finance focuses on company’s relationship with bondholders and shareholders. Nowadays the focus is more broad. A company should not only benefit the investors, but the society as a whole. It should create social returns, or benefits to the whole society. While everyone agrees that companies should benefit the society, the question is how to measure the return and performance? Unlike net profits, dividend yields and interest payments, social return is less tangible and harder to quantify.
Social conscious investors are setting investment criteria on Environmental, Social and Governance (ESG) standards to screen out companies that are doing good and avoid undesirable companies that are harming the society. Following the ESG criteria to select companies for investment, the investors and fund managers can align their portfolios with their mandates, hope to make a positive impact to our environment and encourage more companies to be responsible to the public. Investors ensure their capitals support their missions to fight for a healthy planet, democracy, human equality, data transparency and professional integrity.
Why ACH ESG Index™ ​?
Powered by Deepsite
To help Hong Kong companies to improve their ESG practices, ACH works with Deepsite to introduce the ACH ESG index to help Hong Kong companies to benchmark their practices with global peers. Deepsite Limited is a Hong Kong start-up that offers an end-to-end AI document processing automation solution (RPA) that captures data from any documents instantly, like supply chain documents or financial reports, reduces turnaround times and the manual effort required, and quickly validates data captured with SAP and other customer systems. Deepsite is an expert in extracting useful information from digital contents. The Index will help Asian companies to catch up with the global ESG standard and best practices.
Methodology
We study the annual reports of Hang Seng Index’s constituents from 2012 onwards. Through sentiment analysis, we quantify their focus and effort in E, S and G related activities. We use 2012 as a base year. By doing so we can track the increase in ESG concern by the index companies. We then combine E, S and Index to create an overall ESG index
Observations
We are glad to report that the overall ESG in Hong Kong has been excellent in the last 10 years (2012-2021). The overall ESG has increased 125.4% in the last 10 years, suggesting that HK companies are following the global trend in focusing more on ESG issues. Inside the Index, E, S and G components have increased 94%, 168% and 98% respectively. It indicates that in Hong Kong Social aspect of ESG received the most attention.
What’s Next
We hope that our ESG ACH Index will help academic researchers to study the ESG development in Hong Kong and suggest way to keep improving the performance of Hong Kong. We will aslo apply our analysis to overseas markets so that we can benchmark Hong Kong to other major financial markets.
ACH assists companies in their ESG journey. We believe that each company has its own unique ESG risks, challenges, and opportunities. We help companies to identify relevant ESG strategy, reporting and calculate the existing ESG scores that will help companies to thrive in the present, and in the future.