Linking Corporate Social Capital to HKQAA Sustainability Rating and Research (SRR) for Hang Seng Corporate Sustainability Index Series (Index Series)

 

1.0 Introduction

 

ISO 26000 is an international standard which defines what social responsibility means for organisations. Companies should consider social needs and expectations while doing business. It divides social responsibility into seven core subjects. According to the GD’s framework design, these seven core subjects of social responsibility are the starting point for the company to build up their own CSC.

Since 2014, HKQAA has undertaken scoring and rating services on selected Hong Kong and mainland Chinese listed companies on behalf of Hang Seng Index Co. Ltd. Every year more than 600 listed companies are assessed using the HKQAA SRR assessment model, which is based on ISO 26000, thus providing a seamless interface between the CSC management approach and HKQAA SRR.

 

2.0 HKQAA SRR Scoring for the Index Series

 

HKQAA sustainability rating and research (HKQAA SRR) is designed to rate a
company’s system maturity and risks with regard to sustainability performance. A fact-based scoring approach is applied to rating the company’s ability to manage its sustainability performance and risk. In order for the scoring to be done in an objective manner, an assessor should use the available implementation evidence to determine the system’s management maturity and relevant risk level. The following sections are extracts from the HKQAA-HSIL Sustainability Rating and Research Scoring Handbook (SRR Handbook) and give an overview of the methodology.  For the full methodology, please refer to the SRR Handbook.

 

HKQAA SRR Assessment Model contains several elements. The sustainability performance of each eligible company will be measured against seven core subjects.

 

Element 1. Seven Core Subjects

Forty recommended practices are consolidated under seven core subjects:

 

Element 2. Practice Types

 

Mandatory practices are those that all the participants shall implement.

 

Desired practices are the mandatory practices assigned to designated industries that have a higher potential impact on these particular issues.

 

Voluntary practices are advanced practices that a company is encouraged to implement. Scores gained for these practices will be considered if they can help improve the subject scores.

 

Element 3. Plan-Do-Check-Act Scoring Approach

 

Information about a company’s performance in managing the practices is collected using a questionnaire.

Performance is rated using a five-point scoring approach.

 

Points

Stage

Description

1 point

Starting Phase

No action taken.

2 points

Forming Phase (Plan)

Actions are under development/established without full implementation/implemented on an ad-hoc basis.

3 points

Implementing Phase (Do)

Actions have been fully implemented with advanced planning intended to realise the recommended practice.

4 points

Confirming Phase (Check)

Data collection and analysis on the actions have been conducted so as to gather relevant information to evaluate the effectiveness of the implemented practice.

5 points

Improving Phase (Act)

There is a review of the implemented actions to identify improvement areas.

 

3.0 CSC Management Approach and HKQAA SRR Assessment Model

 

Both the CSC management approach proposed in the GD and HKQAA SRR assessment model concentrate on the seven core subjects identified in ISO 26000 and use the PDCA approach. The CSC management approach guides companies to establish their CSC mission, develop effective CSC strategies and integrate CSC into their sustainability performance, while at the same time managing the respective practices under the seven subjects to be measured by the HKQAA SRR assessment model.

 

Accountability is one of the major scoring principles in HKQAA SRR. The accountability ratings defined in HKQAA SRR reflect a company’s accountability, inclusivity, materiality and responsiveness in achieving sustainability. Being accountable is an essential quality of a successful company, along with trust, reliability and responsibility. The CSC management approach will certainly help companies to raise their accountability rating.

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