HKQAA Sustainability Rating and Research

Methodology

In 2023, The HKQAA SRR is reorganised to capture both general and industry-specific criteria across three aspects: Environmental (Env), Social (Soc) and Governance (Gov). The Soc aspect includes five subjects, namely Human Rights (Soc-HR), Labour Practices (Soc-LP), Fair Operating Practices (Soc-FOP), Consumer Issues (Soc-CI), and Community Involvement and Development (Soc-CID). These subjects, along with Env and Gov, make up the seven Aspect Subjects.

A company’s level of maturity in managing the respective practices under the Aspect Subjects is measured against a Plan-Do-Check-Act management approach. Additionally, Accountability principles are applied to reflect the company’s inclusivity, materiality and responsiveness in achieving sustainability, as well as their governing accountability and completeness demonstrated in the reported data. The HKQAA SRR also takes into account Country and Industry risks, considering the company’s operating location(s) and industry operation to give a more comprehensive rating of their sustainability performance. The final scores and ratings are compiled in association with the Media Watch (MW) on-going monitoring.

Assessment Process

The following diagram shows process flow of the assessment:

Step 1: Feedbacks from the company

At the beginning of each year Hang Seng Indexes Company Limited (Hang Seng Indexes) notifies HKQAA of the eligible listed companies for carrying out the annual research and rating exercise. HKQAA sends out the questionnaires to individual companies for completion. Substantial information with supporting evidence should be provided to HKQAA by the suggested deadline. The authorized person of the company can submit the completed questionnaire either by email or by uploading it to the dedicated platform through My Account functions.

Step 2: Preliminary assessment

HKQAA’s Assessment Team (AT) conducts web-based research through various channels, including i) the company’s public domain website; ii) the company’s annual reports and/or sustainability/CSR/ESG reports; and iii) the company news from media, among others. The preliminary assessment is based on the information submitted in the questionnaire (if any) and the web-based research.

Step 3: Scores and ratings compilation

The final results are based on the web-based research results, feedback from the company (if any), accountability rating, country/industry risk ratings and Media Watch (MW) rating. The Annual Sustainability Rating Report containing the final scores and ratings, as reviewed by the HKQAA Scoring and Rating Committee, is submitted every year to Hang Seng Indexes to consider the selection of constituent companies for the "Hang Seng Corporate Sustainability Index Series".

Step 4: Individual sustainability performance reports

A questionnaire respondent is issued a free one-page report to provide the scores and rating of the company and other benchmarking data of the research for reference. HKQAA Sustainability Performance Reports are offered to individual assessed companies to gain a detailed understanding of their sustainability performance strengths and weaknesses for continuous improvement. The report includes scores and detailed analysis of the sustainability performance with regard to each aspect and its practices, as well as the management system demonstrated in companies’ reported data.