Assessing corporate contributions to a better world through ESG Management
Since the term ESG was first coined in 2004, the reporting frameworks used within environmental social and governance management have become increasingly accepted by corporations and codified by regulators.
Of course, more responsible and ethical approaches to ESG factors have been advocated long before the turn of the millennium. ESG’s environmental criteria reflect the way in which companies interact with the planet. Its social criteria cover the nature of their relationships with their employees, suppliers, customers, and the communities they operate within. While corporate governance concerns leadership issues, such as internal controls and shareholder rights.
Although it is not yet the case in the U.S. or on the Mainland, in recent years some jurisdictions, for example in Europe, have imposed a mandatory requirement on businesses to disclose their ESG performance. Investors are now increasingly relying on a firm’s ESG performances before deciding where to place their capital.
“Companies have come to realise that ESG factors are as important as financial factors, if not more so,” explains Professor Shi Shanshan of Lingnan University’s Faculty of Business, Director of Taught Postgraduate Programmes Office. “The common consensus is that good corporate governance will be beneficial to the owners (i.e., shareholders),” however, firms may be more reluctant to invest in solutions to environmental problems, as this may be detrimental to their bottom line. “But more and more I think firms are starting to realise that although, in the short-term there could be some additional costs, in the long-run those ESG factors concerning broad stakeholder commitment will bring value to the firm, especially by reducing the cost of financing and enhancing risk management.”
Given the current significant, and lamented, talent shortage in this field, the Department of Accountancy of the Faculty of Business has launched a new Master of Science in Environmental, Social, and Governance Management (MScESGM) programme with first student intake in September 2023.
Lingnan’s ESG Management programme
This programme aims to give students a solid understanding, and a deep appreciation, of the issues around sustainability and ESG. It will teach them about ESG regulations, and how to analyse and solve ESG-related challenges faced by organisations across the globe. Throughout the programme, students will have the support of mentors, hear up-to-the-minute insights from industry experts, and undertake company visits. “We want students to be equipped with not only theory and knowledge, but also practical skills,” says Prof Kenny Lin, Professor of the Department of Accountancy.
The MScESGM will have five required courses, and a number of elective options. The five core courses are: Economics of Environmental, Social, and Governance; Sustainable Financial Management; ESG Accounting and Disclosure; Ethics, Law, and Policy for Environmental, Social, and Governance, and; ESG Management and Strategies. While the elective courses students will get to choose from, are: Sustainability in Hong Kong and Mainland China; ESG Practices in Business; ESG Investing; Green Innovation and Entrepreneurship; ESG in Marketing; ESG and Big Data, and; Sustainable Supply Chain Management.
The ESG Accounting and Disclosure course, for example, covers commonly adopted ESG reporting frameworks and looks at voluntary and mandatory disclosure items. During this core course, professionals working in this field will share with students the methods they use, the types of standards they follow and the nature of the challenges and issues they face in ESG reporting and disclosure. While in the ESG Practices in Business course, students will analyse real-world cases and share their understanding and viewpoints in class via individual or group presentations.
Programme participants will also benefit from studying in Hong Kong. The city is one of the world’s great financial centres, and these days the global investment community is keenly aware of the importance of ESG. In addition, the HKSAR government has recently announced that it will provide support for deepening the pool of ESG talent in Hong Kong and promoting the city as a hub for ‘Green Finance’. What’s more, Hong Kong is uniquely located, geographically and commercially, in relation to the huge Mainland market, and investors there are gaining a strengthened understanding of ESG.
Many of the Lingnan faculty who will teach on the MScESGM programme have relevant professional qualifications alongside their academic credentials. Prof Shi herself is a certified CPA in both the United States and Hong Kong and a Chartered Global Management Accountant. The ESG-related research areas faculty specialise in include capital markets, behavioural accounting, corporate social responsibility, ethics, and corporate governance. For example, Prof Wu Feng of the Department of Accountancy conducts extensive research in the areas of accounting disclosure, sustainability and environment, and behavioral finance. Prof Lin studies the relationship among corporate social responsibility, institutional environment, and tax avoidance. Both scholars have published their studies in top academic journals. Research informs teaching. Already, thirty -five undergraduate business courses and six taught postgraduate courses in the Faculty of Business have relevant ESG topics.
ESG-related careers and further qualifications
According to HSBC’s Sustainable Finance and Investing Survey 2021, more than 40% of institutional investors in Asia say they are being held back from ESG-related commitment because of a shortage of expertise in the field. And this demand is only likely to grow. “I think more and more jurisdictions will start to implement very comprehensive ESG frameworks and disclosure requirements for companies to follow, so the talent needs will only intensify further,” says Prof Shi.
She suggests prospective employers for graduates from the programme include finance companies, banks, asset engagement companies, think tanks, government departments, social enterprises, and consulting firms. While the roles they may be aiming for, come with titles such as ESG analyst, ESG consultant, ESG officer and Chief Sustainability Officer.
Professional qualifications in this field are still being established, but certificates in, for example, ESG investing are now being issued by recognised bodies such as the CFA Institute. The MScESGM programme can put graduates on the road to gaining such accreditation.