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HKQAA - HSBC CSR Index

2012 Report

November 2012

Jointly initiated by:

All Rights Reserved of 66

Table of Contents Page

Executive Summary 4

Part One - Introduction 10

1.1 About the Hong Kong Quality Assurance Agency (HKQAA) 10

1.2 About The Hongkong and Shanghai Banking Corporation Limited (HSBC) 11

1.3 About ISO 26000 Guidance on Social Responsibility 11

1.4 Recent Trends in Social Responsibility 12

1.5 The Initiation of the HKQAA - HSBC CSR Index 13

Part Two – HKQAA - HSBC CSR Index – Hong Kong CSR Advocate Index 14

2.1 The Hong Kong CSR Advocate Index 14

2.2 The 45 CSR Practices 14

2.3 Scoring Approach 18

2.4 Benchmarking Process 20

2.5 Information Security and Confidentiality 20

2.6 Quality Assurance 20

2.7 Participating Organisations 21

2.8 Summary and Recommendations 22

2.8.1 Seven Core Subjects and the Trends 22

2.8.2 Comparing Private and Public Listed Companies 29

2.8.3 Comparing the Manufacturing, Service and Construction Sectors 30

2.8.4 Highest Average Score Identified in Particular CSR Practices 31

2.8.5 Lowest Average Score Identified in Particular CSR Practices 32

2.8.6 Analysis of Seven CSR Core Subjects - Organisational Governance 33

2.8.7 Analysis of Seven CSR Core Subjects - Human Rights 34

2.8.8 Analysis of Seven CSR Core Subjects - Labour Practices 35

2.8.9 Analysis of Seven CSR Core Subjects - The Environment 36

2.8.10 Analysis of Seven CSR Core Subjects - Fair Operating Practices 37

2.8.11 Analysis of Seven CSR Core Subjects - Consumer Issues 38

2.8.12 Analysis of Seven CSR Core Subjects - Community Involvement and

Development 39

2.8.13 Carbon and Energy Management Advocate Sub-Index 40


Table of Contents (continued) Page

Part Three – HKQAA - HSBC CSR Index – Hong Kong 100 CSR Index 41

3.1 The Hong Kong 100 CSR Index 41

3.2 CSR Disclosure Indicators 41

3.3 Methodology 42

3.4 Information Security and Confidentiality 42

3.5 Quality Assurance 42

3.6 The 100 Selected Companies from 14 Industrial Sectors 43

3.7 Summary and Recommendations 44

3.8 Detailed Findings for Respective Sectors 46

Part Four – HKQAA - HSBC CSR Index – Sustainable Procurement

Research on Major Buying Offices

54

4.1 Introduction 54

4.2 Overview of BS 8903: 2010 and the Flexible Framework 55

4.3 Methodology 57

4.4 Level Rating Criteria 58

4.5 Summary of Common Practices of Selected Buying Offices in Sustainable

Procurement

59

4.5.1 People 59

4.5.2 Policy, Strategy and Communications 60

4.5.3 Procurement Process 61

4.5.4 Engaging Supplies 62

4.5.5 Measurement and Results 63

4.6 Conclusion and Recommendations 64

4.7 References 66


Executive Summary

The Hong Kong Quality Assurance Agency (HKQAA) has always been the advocate for

environmental management, sustainability and corporate social responsibility (CSR). The

Hongkong and Shanghai Banking Corporation Limited (HSBC) is a leading global financial

services organisation that is committed to promoting CSR in society. With the mission of

enhancing Hong Kong organisations’ competitiveness and commitment towards

sustainability, the HKQAA cooperated with HSBC to launch the HKQAA-HSBC CSR Index.

The HKQAA-HSBC CSR Index consists of two series of indices, the Hong Kong CSR

Advocate Index and the Hong Kong 100 CSR Index. The base year for analysis is 2009.

Hong Kong CSR Advocate Index

The Hong Kong CSR Advocate Index is an annual voluntary benchmarking project.

Twenty-five organisations participated in the pilot programme in 2009, 27 participated in

2010, 23 participated in 2011 and 25 participated in 2012. The project aims to promote the

application of the ISO 26000 Guidance and help the participating organisations learn of their

CSR maturity.

The guidance of ISO 26000 was consolidated into 45 recommended CSR practices under

seven core subjects. There are five scoring categories representing the level of maturity of

respective CSR practices, as follows: 1 – Starting Phase; 2 – Forming Phase;

3 – Implementing Phase; 4 – Confirming Phase; and 5 – Improving Phase.

HKQAA professionals conducted on-site verification to i) interview representatives of the

participating organisations to review the system setting; ii) validate the factual evidence of

the implementation practices; and iii) confirm the scores of the respective 45 CSR practices

based on the defined scoring criteria.

Furthermore, the “Carbon and Energy Management Advocate Sub-Index” under the

umbrella of the HKQAA-HSBC CSR Advocate Index has been added since 2011 with the

aim of providing more specific and in-depth analysis and opinions of the performance of the

Index related to carbon and energy management, which has become rather imperative

locally and globally. Such enrichment of the Index provides a new perspective for enhancing

the publicity of the Index as a whole.

In summary, the Hong Kong CSR Advocate Index, which represents the overall average

score of the participating organisations, was 4.64, 4.62, 4.57 and 4.53 in 2012, 2011, 2010

and 2009 respectively. However, it should be remembered that the organisations

participating this year are slightly different from those participating in previous years. The

average scores of the seven core subjects for the four years are summarised in the chart

below. As illustrated, the scores rose slightly this year, demonstrating an improvement in

the overall performance of CSR.


The scores also indicated that most of the organisations have generally implemented

mature systems to manage CSR-related issues. At the same time, some new joiners

capitalised on the characteristics of the Index to benchmark their performance against the

trends to facilitate the promotion of a CSR culture within their organisations. The overall

results demonstrated that the importance of CSR has been gradually recognised. Some

good practices are outlined in this report.

The scores reveal that Labour Practices and Consumer Issues are the subjects that most

organisations have effective mechanisms to address the recommended practices.

4.52

4.55

4.58

4.61

4.66

4.76

4.80

4.43

4.50

4.61

4.59

4.53

4.80

4.87

4.44

4.59

4.56

4.73

4.50

4.79

4.77

4.35

4.40

4.52

4.65

4.29

4.61

4.70

3.50 4.00 4.50 5.00

The Environment

Community Involvement and

Development

Organisational Governance

Human Rights

Fair Operating Practices

Consumer Issues

Labour Practices

Average Score of CSR Seven Core Subjects

Average score in 2009





Labour Practices

Labour Practices scored highest among the seven core subjects. Participating

organisations in general were showing great concern for labour needs, such as

occupational health and safety, labour relations, staff training and development, among

others. This demonstrates that organisations were paying more attention to establishing

healthy labour management. More participating organisations were carrying out measures

to ensure compliance with the Minimum Wage Law compared to last year. In addition, more

organisations have implemented more programmes to enhance the productivity,

employability and capacity of employees.

Consumer Issues

Similar to previous years, addressing consumers’ expectations and needs has always been

a major focus of participating organisations. The participating organisations were more

conscious of the potential impacts that the services and/or products might have on

consumer health, society and the environment throughout their lifecycle when considering

the development of services and products. Among the participating organisations, the ISO

9001 certified quality management system is commonly adopted in order to establish

mature customer service management systems. Participating organisations are actively

enhancing consumers’ awareness of sustainable consumption by providing instructions and

education to consumers.

The Environment

It is found that participating organisations are more aware of environmental issues. The

environment has been a core issue in corporate strategies in most of the participating

organisations. More participating organisations have conducted carbon and energy audits

to quantify the amount of carbon emissions. One of the participating organisations has

received ISO 50001 Energy Management System certification. In addition, some of the

participating organisations conducted surveys to gather stakeholder feedback with respect

to their environmental performance. Some of them have also implemented programmes to

promote an environmental caring culture among their employees.

Community Involvement and Development

The participating organisations have shown continuous efforts in supporting the community

and volunteerism. Philanthropy has been the most common approach towards community

development. Some participating organisations have committed to infrastructure

development in the areas where they operate. Programmes frequently pursued were those

providing care and assistance to vulnerable groups and those promoting healthy lifestyles in

the communities. Some of the participating organisations promote support for heritage

conservation, but this is not yet a popular approach.



The performance of Organisational Governance has been steadily maintained. Most of the

participating organisations have made social responsibility an integral part of their

companies’ policies, strategies and operations. CSR awareness programmes are

commonly found in participating organisations. The participating organisations are more

aware of the amendments of laws, ordinances, rules, regulations and relevant international

norms. Codes of conduct or ethics as well as staff guidebooks or manuals are commonly

adopted within the organisations to define the organisations’ standards of behaviour.

Human Rights

Most of the participating organisations have developed well-established systems to prevent

engagement of child labour or forced labour. Similar to last year, participating organisations

were well aware of the discrimination issues. Working opportunities for vulnerable groups

and minorities were provided. Many of the participating organisations had established

different approaches of communication channels with stakeholders of their organisation in

which they allow the stakeholders to express their views, particularly in situations of

disagreement with the organisations’ decisions.


Most of the participating organisations have developed programmes in relation to corruption

prevention and property rights protection. There are more practices to incorporate social,

ethical and environmental criteria into the purchasing, contracting and distributing policies.

Similar to previous years, more participating organisations sourced fair trade products, raw

materials and engaged accredited fair trade companies and social enterprises. More

participating organisations established plans to prepare for the upcoming Competition Law.

Carbon and Energy Management Advocate Sub-Index

The overall average score of the Carbon and Energy Management Sub-Index is 4.16 out of

5. The overall average score is lower than the score of last year. Some of the participating

organisations were under the Implementing Phase and the Confirming Phase for the CSR

practices of the Carbon and Energy Management Advocate Sub-Index, despite the

participating organisations giving a good performance in “The Environment”. The overall

result indicated that the maturity level of the participating organisations varied from

organisation to organisation.

All participating organisations have conducted an energy review to measure the energy use

of their operational processes and have established criteria for effective operation and

maintenance of significant energy use. In addition, 21 out of 25 participating organisations

participating organisations consider energy performance improvement opportunities while

developing new projects. However, participating organisations should implement more

measures to reduce greenhouse gas (GHG) emissions associated with their activities,

products and services.


Hong Kong 100 CSR Index – Executive Summary

The Hong Kong 100 CSR Index is a research project regarding organisations’ disclosure of

CSR issues. One hundred organisations from 14 sectors in Hong Kong were selected for

analysis. The project aims to outline the CSR behaviour of Hong Kong organisations by

studying the CSR disclosures made by the sampled organisations. With reference to ISO

26000, a set of 16 CSR indicators was developed to study and quantify the CSR disclosures

made by the sampled organisations. The research is conducted on a yearly basis.

The research is based on the CSR disclosures made by the selected organisations, which

includes their websites, policies, reports and other publicly available information. A score of

“1” will be assigned if an organisation has implemented activities and practices in relation to

a CSR Disclosure Indicator. On the contrary, a score of “0” will be assigned if such relevant

activities are not found in the organisations’ disclosed information. The proportion of “1”

scores indicates the presence of relevant activities and practices, out of the 16 CSR

Disclosure Indicators, forms the Index.

In summary, the Hong Kong 100 CSR Index in 2012 is 65, while that in 2011, 2010 and

2009 were 67, 66 and 63 respectively. This shows that the level of CSR disclosure among

various sectors remains stable. The Public Services sector has demonstrated a high degree

of transparency for CSR programmes. Like last year, the Manufacturing sector generally

provides only limited information about CSR programmes.

It is worth noting that improvements have only been found in the “Contribution to

Community Development and Consumer Education”. Support for charity programmes and

participation in community services are common ways for organisations to demonstrate

their CSR commitment. The integration of CSR in organisational policy and staff

development and training has the highest score among the 16 indicators. This

demonstrates that organisations’ commitments to CSR and contribution to staff

development are becoming important elements in the operation of business.

Like last year, most organisations are proactive in disclosing their social performance,

specifically their contribution to community development. This indicator has the second

highest score among the 16 indicators again in 2012. Meanwhile, these organisations may

consider enhancing their disclosures about Stakeholder Engagement Programmes, which

have ranked low in this research since 2009.


Eighty per cent of the selected

organisations have disclosed their

Corporate Governance Programmes

and their performance in Community

Development. However, more efforts

should be put on Supporting

Education or Cultural Development,

as a significant deterioration in the

overall performance is noted.

Similar to previous years, the

disclosure on Consumer Issues

remains at a low level, with only 19

organisations disclosing their

dedication to the Complaint and

Dispute Handling Programme and 51


performance on Consumer

Education. It is important to note that

with calls from the population for

higher-level protection of consumer

rights, people tend to consume

goods and services provided by

organisations that have high

transparency in addressing and

responding to consumer issues.

The performance of disclosure of the

environmental performance of

buildings remains steady compared

to 2011. Most of the organisations

have paid attention to climate change and sustainable resource management. They have

established environmental policies or have implemented pollution prevention and recycling

programmes. However, organisations are advised to establish energy management

systems as a tool to facilitate quantification and communication of their achievements in

energy performance. Therefore, organisations are advised to establish an energy

management policy as a tool to enhance transparency and quantify their reduction targets

of carbon emissions.

The detailed analysis of the HKQAA-HSBC CSR Index will be uploaded to the HKQAA

website by the end of 2012.

19

40

51

58

61

62

63

67

71

72

73

80

80

82

83

83

22

40

49

61

64

64

64

70

84

77

77

76

84

87

85

87

34

57

52

70

60

63

68

65

66

69

72

86

80

89

82

77

21

49

49

73

56

63

73

60

69

77

62

82

72

51

86

67

0 20 40 60 80 100

Complaint and Dispute Handling Programme

Disclosure of Human Rights Issues

Consumer Education

Stakeholder Engagement Programme

Climate Change Mitigation Programme

Promotion of CSR in the Sphere of Inf luence

Sustainable Resource Usage Management Programme

Occupational Health and Safety Management Programme

Supporting Educational or Cultural Development

Disclosure of Environmental Performance

Pollution Prevention Programme

Contribution to Community Development

Corporate Governance Programme

Disclosure of Social Performance

Staf f Development and Training

Integration of CSR in organisational policy

Average Score of Respective CSR Disclosure Indicators

Average Score 2009

Average Score 2010

Average Score 2011

Average Score 2012


Part One – Introduction

1.1 About the Hong Kong Quality Assurance Agency (HKQAA)

The Hong Kong Quality Assurance Agency (HKQAA), a non-profit independent Conformity

Assessment Body (CAB), was established by the Hong Kong Government Industry

Department in 1989. The HKQAA mission is to promote management excellence to the

industry and to deliver world-class, value-added assessment, certification, benchmarking,

verification and training services.

To keep pace with the global direction and the changes in customer needs, the HKQAA is

relentless in exploring new opportunities for serving the market. In the past 20 years, not only

has the HKQAA increased the number of certificates significantly, but it has also strengthened

the credibility of its services. The HKQAA holds many accreditations for auditing quality,

environmental, occupational health and safety, and information security management

systems, including accreditations from the United Kingdom Accreditation Service (UK), the

Hong Kong Accreditation Service (Hong Kong) and the China National Accreditation Service

(China). For ethical auditing, the HKQAA is accredited by SAAS for SA 8000, which is

recognised by BSCI, among others, and is approved for social auditing by Tesco (UK).

With over 4,000 certificates spanning various industries and accounting for more than 50% of

the market share, the HKQAA is a leading CAB in Hong Kong, serving client organisations in

Hong Kong, mainland China and other Asian countries. The headquarters of the HKQAA is

located in Hong Kong. The HKQAA also has offices in Beijing, Guangzhou, Shanghai and

Suzhou, as well as a representative office in the United States.

The HKQAA has been an advocate for promoting environmental management, sustainability

and corporate social responsibility (CSR) over the past decade. A few years ago, the HKQAA

started to provide professional verification services for carbon emissions for major public

utilities in Hong Kong. HKQAA also invited the Global Reporting Initiatives (GRI) and the

Chairman of the ISO Working Group of ISO 26000, Dr Jorge E. R. Cajazeira, to Hong Kong to

bring in the latest information about the international development of sustainability and CSR.


1.2 About The Hongkong and Shanghai Banking Corporation Limited (HSBC)

The Hongkong and Shanghai Banking Corporation Limited is a founding and a principal

member of the HSBC Group, and, with around 7,200 offices in 85 countries and territories

and assets of US$2,556 billion as of 2011, is one of the world’s largest banking and financial

services organisations.

The importance of running a sustainable business for the long term has been highlighted by

the global financial crisis. At HSBC, a sustainable business means achieving profits for its

shareholders, underpinned by good governance, long-lasting customer relationships and

highly committed staff delivering the corporate strategy and managing the social and

environmental impact of the business.

The partnership with the HKQAA in developing the HKQAA-HSBC CSR Index is another

important demonstration of HSBC’s commitment to promoting better corporate and

organisational sustainability in the society.

1.3 About ISO 26000 Guidance on Social Responsibility

ISO 26000 Guidance on Social Responsibility is an international standard developed by the

ISO Technical Management Board Working Group on Social Responsibility. Experts from

more than 90 countries and 40 international or broadly based regional organisations have

contributed to developing this new international standard. The ISO 26000 was officially

released as an International Standard on 1 November 2010. This international standard

provides complete guidance for all types of organisations on the understanding and

implementation of important issues related to social responsibility. There are seven core

subjects, namely organisational governance, human rights, labour practices, the environment,

fair operating practices, consumer issues, and community involvement and development.


1.4 Recent Trends in Social Responsibility

Under the trend of globalisation, there is an increasing concern about the responsibility for

labour practices and environmental, consumer and other public issues. Organisations,

including private companies, government and non-government organisations need to be

more aware of their impact on the whole of society, since their stakeholders are very much

concerned about their performance towards society and the environment. After the

economic crisis in 2008, the measurement of organisational performance is no longer

confined to their profitability, but also to their commitment and implementation of various

principles of social responsibility, such as transparency, accountability, ethical behaviour,

respect for stakeholder interests, respect for the rule of law and respect for human rights.

Economic, social and environmental performances are the three bottom lines and metrics

used to measure the organisation’s ability to continue operating successfully.

As quoted by Ms Vivian Lau, Deputy Director-General of Trade and Industry, at the HKQAA

Symposium 2008, “The launching of the CSR Index in today’s Symposium is most timely, as

CSR becomes a growing concern of local and overseas buyers and brands. In creating

economic prosperity, enterprises increasingly need to rethink their social responsibility

alongside their business activities. This CSR Index, should I say, is instrumental in

enhancing the competitiveness of Hong Kong enterprises.”

Social responsibility performance has become a major factor influencing an organisation’s

reputation, as well as its ability to attract and retain staff members, customers and investors.


1.5 The Initiation of the HKQAA-HSBC CSR Index

With the mission of enhancing Hong Kong organisations’ competitiveness and commitment

towards sustainability, the HKQAA cooperated with HSBC to launch the index.

As stated by Dr Jorge E. R. Cajazeira, Chairman of the ISO Working Group on Social

Responsibility, regarding the launching of the HKQAA-HSBC CSR Index, “I was very

impressed by the joint HKQAA-HSBC initiative for the CSR Index. I believe that the

application of this methodology will help promote the principles and guidelines of the future

ISO 26000 standards, without violating the intent of the standards that it should not be used

for certification purposes”. The index aims to establish a level playing field for promoting the

application of ISO 26000. It is designed with reference to the ISO 26000 Guidance on Social

Responsibility in order to help organisations enhance their CSR performance. We believe

that this project is able to benefit various stakeholders in our society.

The HKQAA-HSBC CSR Index consists of two series of indices, namely the Hong Kong

CSR Advocate Index and the Hong Kong 100 CSR Index. The base year for future analysis

is 2009.


Part Two The HKQAA - HSBC CSR Index – Hong Kong CSR Advocate Index

2.1 The Hong Kong CSR Advocate Index

The Hong Kong CSR Advocate Index is an annual voluntary benchmarking project. It aims

to promote the application of the ISO 26000:2010 Guidance and help the participating

organisations determine their CSR system maturity. With reference to ISO 26000:2010, a

set of CSR practices and scoring criteria were developed to measure the organisations’

system maturity in CSR performance. For reasons of confidentiality, scoring of the

participating organisations will not be presented to the general public. Nevertheless, the

HKQAA is pleased to share the conclusive analysis of 2012 about the CSR core subjects,

as well as a comparison between private and public listed organisations and a

benchmarking of the manufacturing, service and construction sectors in this report.

2.2 The 45 CSR Practices

The criteria of the Hong Kong CSR Advocate Index were developed based on the guidance

and principles provided by ISO 26000:2010. The guidance of ISO 26000:2010 was

consolidated into 45 recommended CSR practices under seven core subjects as shown

below.

CSR Core

Subjects Recommended CSR Practices

Organisational

Governance

OG1 Organisation should set its direction by making social

responsibility an integral part of its policies, strategies

and operations.

OG2 Organisation should establish programmes to raise

awareness and build competency in social responsibility

in the organisation.

OG3 Organisation should be aware of applicable laws and

regulations, as well as informing those within the

organisation responsible for observing these laws and

regulations to ensure that they are observed.

OG4 Organisation should disclose its policies, decisions and

activities about their known and likely impacts on society

and the environment.

OG5 Organisation should define its standards of ethical

behaviour with reference to available international

norms.


OG6 Organisation should develop governance structures that

help to promote ethical conduct within the organisation

and in its interactions with others.

OG7 Organisation should establish a two-way communication

mechanism for stakeholder interests, as well as

assisting in identifying areas of agreement and

disagreement and negotiating to resolve possible

conflicts.

Human Rights

HR1 Organisation should prevent the abuse of human rights

resulting from the actions of any entities or persons

whose activities are significantly linked to those of the

organisation.

HR2 Organisation should establish a transparent and

independent governance structure to ensure that no

party can interfere with the fair conduct of a particular

grievance process.

HR3 Organisation should provide stakeholders with channels

to freely express their views, even in situations of

disagreement with organisational decisions.

HR4 Organisation should ensure that it does not discriminate

against employees, partners, customers, stakeholders,

members and anyone else that the organisation has any

contact with or can influence.

HR5 Organisation should ensure no engagement with forced

labour or child labour.

Labour

Practices

LP1 Organisation should encourage the organisations in its

supply chain to meet legal labour requirements.

LP2 Organisation should ensure that the conditions of its

work comply with national laws and regulations.

LP3 Organisation should establish dialogue with staff

members to establish healthy labour-management

relations.

LP4 Organisation should implement measures to protect

employees from health risks and adopt an occupational

environment that meets the physiological and

psychological needs of employees.

LP5 Organisation should promote an occupational health

and safety culture for employees and contractors.


LP6 Organisation should implement programmes to

increase the capacity and employability of employees.

The

Environment

EN1 Organisation should implement measures to prevent

pollution and minimise waste.

EN2 Organisation should promote an environmental-caring

culture to employees and contractors.

EN3 Organisation should implement resource efficiency

measures to reduce its use of energy, water and other

materials.

EN4 Organisation should implement measures to reduce

Greenhouse Gas (GHG) emissions associated with its

activities, products and services.

EN4.1 Organisation should demonstrate its commitment via

policy, strategy, improvement objectives and targets,

resource allocation, among others. to support the

energy management system and to continually

improve its effectiveness.

EN4.2 Organisation should develop, record and maintain an

energy review and establish an energy baseline.

EN4.3 Organisation should establish criteria for effective

operation and maintenance of significant energy use.

EN4.4

Organisation should consider energy performance

improvement opportunities in the design of new,

modified and renovated facilities, equipment, systems

and processes, and support the purchase of energy

efficient products and services.

EN4.5 Organisation should implement measures to reduce

Greenhouse Gas (GHG) emissions associated with its

activities, products and services.

EN5 Organisation should identify potentially adverse

impacts on the ecosystem and take measures to

eliminate or minimise these impacts.

FO1 Organisation should develop and implement

programmes to prevent corruption.


Fair

Operating

Practices

FO2 Organisation should prevent engaging in

anti-competitive behaviour.

FO3 Organisation should incorporate social, ethical,

environmental and gender equality criteria in its

purchasing, distributing and contracting policies.

FO4 Organisation should develop and implement

programmes to protect property rights.

Consumer

Issues

CI1 Organisation should ensure no unfair or misleading

marketing and information is delivered to customers or

consumers.

CI2 Organisation should ensure that consumers are aware

of their rights and responsibilities when products and

services are delivered.

CI3 Organisation should ensure that its products and

services will not be inherently harmful to consumers'

health.

CI4 Organisation shall provide customers with socially and

environmentally beneficial products and services that

are able to reduce respective adverse impacts

throughout their lifecycle.

CI5 Organisation should review complaints and take action

to prevent recurrence.

CI6 Organisation should implement measures to resolve

disputes and enhance customer satisfaction.

CI7 Organisation should implement measures to protect

consumers’ data and privacy.

CI8 Organisation should educate customers or consumers

in order to enhance their understanding of the product

and awareness of sustainable consumption.

Community

Involvement

And

Development

CID1 Organisation should help to conserve and protect

heritage, especially where the organisation's operation

has an impact on it.

CID2 Organisation should contribute to programmes that

provide assistance or other necessities to vulnerable

and low-income groups.


CID3 Organisation should participate in skills development

for the organisations in its supply chain in the

community in which they operate.

CID4 Organisation should encourage healthy lifestyles in the

community.

CID5 Organisation should contribute to the development of

the community in which they operate.

2.3 Scoring Approach

The following scoring approach is applied to evaluate the organisation’s system maturity in

its CSR performance. There are five scoring categories representing the level of maturity of

the recommended CSR practices: 1 – Starting Phase; 2 – Forming Phase; 3 – Implementing

Phase; 4 – Confirming Phase; and 5 – Improving Phase.

HKQAA professionals conducted on-site verification to i) interview the representatives of the

participating organisations to review the system settings; ii) validate the factual evidence of

the implementation practices; and iii) confirm the scores of the respective 45 CSR practices

based on the defined scoring criteria*. The detailed scoring criteria of the 45 CSR practices

have been defined in the HKQAA-HSBC Scoring Handbook.

Scoring Category General Scoring Criteria

1 – Starting Phase Organisation does not take steps to develop programmes

or control measures to realise the recommended practice.

2 – Forming Phase

(i) The programmes or control measures are under

development; or

(ii) The programmes or control measures have been

established but without full implementation; or

(iii) The programmes or control measures are implemented

on an ad-hoc basis that lack advance planning.

3 – Implementing Phase

Organisation has established programmes or control

measures to realise the recommended practice.

The programmes or control measures have been fully

implemented with advance planning.


4 – Confirming Phase



The programmes or control measures have been fully


Information gathering or risk analysis is conducted to gather

relevant information to confirm the effectiveness of the

implemented practice.

Stakeholders are invited to engage in the programmes.

5 – Improving Phase



The programme or control measures have been fully


Information gathering or risk analysis is conducted to gather

relevant information to confirm the effectiveness of the

implemented practice.

Stakeholders are invited to engage in the programmes.

There is a review of the implemented programmes for

identifying improvement areas.

* The average score of each subject is calculated based on the “rounded down” averages

(to two significant figures) of the participating organisations.


2.4 Benchmarking Process

Step 1: Self-evaluation

The participating organisation conducted a self-evaluation based on the scoring criteria for

the 40 recommended CSR practices using a self-assessment scoring sheet with supporting

evidence for HKQAA’s review and comments.

Step 2: On-site Verification

The HKQAA conducted an on-site verification of the objective evidence, reached an

agreement with the participating organisation about the scores for individual recommended

CSR practices and communicated with the organisation’s representative to identify further

improvement areas.

Step 3: Verification Reporting

The HKQAA prepared a report to confirm the scores for the 45 recommended CSR

practices and provided recommendations for improving the organisation’s systems to

pursue better CSR performance.

Step 4: Benchmarking Reporting

The scores for individual organisations were analysed. Based on the analysis, the HKQAA

prepared a report to benchmark the organisation’s scores against other participating

organisations.

2.5 Information Security and Confidentiality

All of the information collected in the verification exercise, including the agreed scores of

recommended CSR practices, was stored in the HKQAA’s dedicated computer system and

the HKQAA has kept it strictly confidential. Comprehensive information security procedures

were implemented to protect the information related to the participating organisations.

2.6 Quality Assurance

Internal quality assurance procedures were implemented to ensure quality of the verification,

research and analysis processes.


2.7 Participating Organisations

Twenty-five organisations including educational institutions, government departments,

private and public listed companies from the manufacturing, construction and service

sectors participated in the programme in 2012, namely:

- Alliance Construction Materials Limited

- Analogue Group of Companies

- Café De Coral Holdings Limited

- Canon Hong Kong Company Limited

- Chun Lee Engineering Company Limited

- David Decoration Limited

- Driltech Ground Engineering Limited

- EGL Tours Company Limited

- Fuji Xerox (Hong Kong) Limited

- Hang Seng School of Commerce and Hang

Seng Management Colleague Limited

- Hong Kong Trade Development Council

- Housing Department

- Hsin Chong Construction Group Limited

- Jumbo Orient Contracting Limited

- Leo Paper Group (Hong Kong) Limited

- Many Wells Property Agent Limited

- MTR Corporation Limited

- Shun Yuen Construction Company Limited

- Synergis Management Services Limited

- The Link Management Limited

- Tim Lee Construction Company Limited

- Tong Kee Engineering Limited

- Tsuen Lee Metals and Plastics Toys

Company Limited

- WKK Technology Limited

- Yau Lee Construction Company Limited

Distribution of the Participating Organisations

The participating organisations comprise 17

private companies, 6 public listed

companies (or their subsidiary companies),

one government department and one

educational institution.

Out of the 25 participating organisations,

there are 9 companies from the Service

Sector, 10 companies from the Construction

or Engineering Services Sector and 4

companies from the Manufacturing Sector;

one is an educational institution and one is a

government department.

Private Company

Public Listed Company

Government and Education Institution

Distribution of Participated Organisation by the nature of the organisation Government

and Education Institution

Services

Manufacturing

Construction & Engineering Services

Distribution of Participated Organisation by the Industrial Sector


2.8 Summary and Recommendations

2.8.1 Seven Core Subjects and the Trends

Consumer Issues

Most of the participating

organisations have established the

ISO 9001 Quality Management

System and they use it as an

effective tool for ensuring customer

satisfaction and managing

complaints and service quality. From

a practical point of view, most of the

participating organisations devote a

lot of resources to raise consumer

awareness of sustainable

consumption by providing instruction

and education to consumers.

It is obvious that continuous effort

has been exerted by the participating

organisations through deploying

extensive resources for the

development of innovative products

introducing the use of socially- and

environmentally-beneficial materials

and adoption of cleaner and greener

production methods, despite the fact

that scores of this indicator decreased when compared to 2011.

4.80

4.52

4.80

4.92

4.56

4.72

4.96

4.79

4.70

4.61

4.83

4.96

4.78

4.87

4.91

4.74

4.69

4.70

4.81

4.96

4.74

4.78

4.85

4.81

4.28

4.72

4.80

4.96

4.30

4.57

4.64

4.60

3.0 3.5 4.0 4.5 5.0

CI8

CI7

CI6

CI5

CI4

CI3

CI2

CI1

Average Score for Consumer Issues






Human Rights

Similar to previous years, the

participating organisations were

aware of the discrimination issues.

The participating organisations have

developed their unique systems to

prevent the existence of child labour

or forced labour in their operations.


organisations have set up various

communication channels with

stakeholders to address the issues of

human rights, and stakeholders are

free to express or report any issues

regarding the violation of human

rights in participating organisations’

operations.

Participating organisations were also

paying more attention to comply with

current legal requirements,

especially after the launch of the Minimum Wage Law in Hong Kong. However, many of the

participating organisations should consider adopting systematic risk assessment for

evaluating the potential impact of abuse of human rights resulting from their operations.

4.92

4.64

4.64

4.60

4.24

4.91

4.74

4.78

4.65

3.87

4.93

4.67

4.85

4.81

4.41

4.84

4.44

4.88

4.64

4.44

3.0 3.5 4.0 4.5 5.0

HR5

HR4

HR3

HR2

HR1

Average Score for Human Rights






Labour Practices

Similar to previous years, Labour

Practices has been the best

performing indicator in the 2012

index. Participating organisations in

general were showing great concern

for labour needs, such as

occupational health and safety, staff

training and development, and

labour relations, among others. Most

of the participating organisations

carried out measures to ensure

compliance with the Minimum Wage

Law, including the development of a

Code of Conduct for suppliers and

sub-contractors. Meetings with

vendors, suppliers and sub-

contractors were arranged by the

participating organisations to

communicate the Minimum Wage

Law.

In addition, most of the participating

organisations have implemented the

Occupational Health and Safety

Management System and have

become OHSAS 18001 certified. Programmes aiming for increasing the capacity and

employability of employees are being implemented. This shows that the participating

organisations are willing to put more effort and resources into staff development and treat

their employees as the valuable asset of the organisation.

4.92

4.80

4.76

4.80

4.84

4.68

4.96

5.00

4.83

4.83

4.87

4.74

4.96

4.69

4.81

4.81

4.81

4.52

4.76

4.68

4.72

4.68

4.92

4.44

3.0 3.5 4.0 4.5 5.0

LP6

LP5

LP4

LP3

LP2

LP1

Average Score for Labour Practices







Participating organisations employed

legal consultants to evaluate the

organisation’s existing operating

practices in order to prevent their

engagement in anti-competitive

behaviour. Measures for preventing

anti-competitive behaviours and

practices to incorporate social,

ethical, environmental and gender

equality criteria in purchasing

activities are found in some of the

participating organisations.


organisations continue to implement

programmes to pursue corruption

prevention and the protection of

property rights. More participating

organisations were sourcing fair

trade products and raw materials,

and engaging accredited fair trade

companies and social enterprises. Some participating organisations incorporated social,

ethical, environmental and gender equality criteria in supplier and contractor contracts.

4.56

4.68

4.71

4.68

4.61

4.35

4.35

4.83

4.59

4.19

4.58

4.61

4.64

4.08

4.00

4.44

3.0 3.5 4.0 4.5 5.0

FOP4

FOP3

FOP2

FOP1

Average Score for Fair Operating Practices






The Environment


organisations are more aware of the

environmental issues and the

environment has become a common

element in the organisations’

corporate policies and strategies.

This is supported by the fact that

many of the participating

organisations are implementing

programmes to promote the

environmental caring culture to

vendors, subcontractors and

employees. Environmental

awareness programmes, as well as

waste minimisation programmes,

have been implemented in most of

the participating organisations.

However, a systematic approach to

managing greenhouse gas

emissions was not found to be widely adopted in 2012, as was the case in 2011, except at

those organisations that had implemented the ISO 14001 Environmental Management

System in order to manage environmental issues systematically.

4.52

4.16

4.68

4.60

4.64

4.70

4.04

4.30

4.35

4.78

4.43

3.96

4.56

4.54

4.70

4.09

3.80

4.48

4.56

4.80

3.0 3.5 4.0 4.5 5.0

EN5

EN4

EN3

EN2

EN1

Average Score for The Environment







The participating organisations have

shown continuous efforts in

supporting the community and

volunteerism. This is confirmed by

the fact that nearly all of the

participating organisations have

participated and supported charity

programmes. In general,

philanthropy is the common

approach towards community

development. Some participating

organisations committed to

infrastructure development in the

areas where they operate. Donation

and fund-raising activities were also

undertaken by the participating

organisations.

Programmes were implemented by

the participating organisations to

provide care and assistance to vulnerable groups. However, heritage conservation and

community skills development have always been poorly performing areas that could be

further strengthened. Ongoing programmes addressing these issues should be

implemented as well.

4.48

4.44

4.71

4.72

4.40

4.61

4.52

4.39

4.74

4.22

4.56

4.74

4.48

4.74

4.44

4.36

4.56

4.32

4.60

4.17

3.0 3.5 4.0 4.5 5.0

CID5

CID4

CID3

CID2

CID1

Average Score for Community Involvement and Development







Well-established governance

structures are commonly found in

most of the participating

organisations. With the adoption of

these structures, participating

organisations can further promote

and assure ethical conduct within the

organisation and in its interaction

with others. Two-way communication

mechanisms with internal and

external stakeholders have been

developed. Most of the participating

organisations have set directions by

making social responsibility an

integral part of their policies,

strategies and operations.

The participating organisations

continue to scrutinise their

compliance status with the

applicable laws and regulations, as

well as with relevant international

norms. Two-way stakeholder

communication mechanisms have

been well developed and

implemented. However, not all

organisations have a practice of disclosing their CSR policies and performance. Structural

CSR training programmes were not apparent in most of the participating organisations.

4.72

4.76

4.68

4.32

4.80

4.28

4.48

4.78

4.61

4.70

4.39

4.78

4.43

4.57

4.85

4.44

4.56

4.41

4.63

4.37

4.63

4.72

4.56

4.52

4.16

4.72

4.20

4.76

3.0 3.5 4.0 4.5 5.0

OG7

OG6

OG5

OG4

OG3

OG2

OG1

Average Score for Organisational Governance






2.8.2 Comparing Private and Public Listed Companies

Similar to the results of 2009, 2010

and 2011, among the participating

organisations, CSR performance of

the public-listed companies is

relatively more mature than that of

the private companies, particularly in

aspects related to Labour Practices,

Fair Operating Practices, Community

Involvement and Development and

The Environment. This is explained

by the fact that CSR has been well

addressed in public-listed companies

over many years.

The maturity of the practices related

to Consumer Issues and Human

Rights of private companies

out-performed the public-listed

companies. Moreover, the maturity of

the practices related to

Organisational Governance and Human Rights are comparable.

4.60

4.65

4.79

4.55

4.83

4.57

4.57

4.51

4.78

4.58

4.48

4.78

4.6

4.56

3.0 3.5 4.0 4.5 5.0


Consumer Issues


The Environment

Labour Practices

Human Rights


Average Score of CSR Seven Core Subjects for Private and Public Listed Companies

Private Companies - Average Score in 2012

Public Listed Companies - Average Score in 2012


2.8.3 Comparing the Manufacturing, Service and Construction Sectors

As indicated from the comparison

between the different sectors,

participating organisations from the

Manufacturing Sector attained higher

maturity levels than the other sectors

in 2012, particularly on The

Environment and Consumer Issues.

The average scores of the three

sectors are very similar in Labour

Practices and Fair Operating

Practices. The participating

organisations from the

Manufacturing Sector on average

scored highest in all seven CSR core

subjects, while participating

organisations from the Construction

Sector appeared the least mature. It

is noticeable that participating

organisations from the Construction

Sector scored relatively low in The

Environment and Community Involvement and Development.

4.75

4.91

4.67

4.93

4.83

4.70

4.61

4.67

4.76

4.61

4.46

4.74

4.60

4.59

4.28

4.64

4.63

4.31

4.80

4.50

4.47

3.0 3.5 4.0 4.5 5.0


Consumer Issues


The Environment

Labor Practices

Human Rights

Organizational Governance

Average Score of CSR Seven Core Subjects for Different Sectors

Average Score of 2012 for Construction Sector

Average Score of 2012 for Service Sector

Average Score of 2012 for Manufacturing Sector


2.8.4 Highest Average Score Identified in Particular CSR Practices

Most of the CSR practices under the

scope of Labour Practices and

Consumer Issues achieved a mature

level. Most of the participating

organisations demonstrated mature

mechanisms in preventing child

labour or forced labour and

executing programmes to increase

the capacity and employability of

employees. In addition, participating

organisations have paid a lot of

attention to ensuring that conditions

of work comply with national laws

and regulations.

More participating organisations are

deploying resources to ensure that

their consumers are aware of their

rights and responsibilities when

products and services are delivered.

They also implement difference measures to handle complaints and take proper action to

prevent recurrence.

4.84

4.92

4.92

4.92

4.96

3.0 3.5 4.0 4.5 5.0

(LP2) Organisation should ensure that the condition of work comply with national laws and regulations.

(HR5) Organisation should ensure no engagement with forced labour

and child labour.

(LP6) Organisation should implement programme to increase the capacity and employability of

employees.

(CI5) Organisation should review complaints and take action to

prevent recurrence.

(CI2) Organisation should ensure that consumers are aware of their

rights and responsibilities when

products and services are delivered.

Highest Average Score Identifiedin Particular CSR Practices


2.8.5 Lowest Average Score Identified in Particular CSR Practices

The performance of Community

Involvement and Development is

comparatively less mature than in other

core subjects in 2012, particularly in

areas related to conservation and

heritage protection. Similar to previous

years, the reduction of greenhouse gas

(GHG) emissions is also relatively less

mature among the 45 practices of the

index. As this is seemingly one of the

most critical issues around the world,

further enhancement has become

imperative.

Preventing the potential for abuse of

human rights resulting from the

performance of the supply chain should

be addressed to a higher degree.

Meanwhile, participating organisations should also consider establishing different

programmes to raise awareness and build competency for social responsibility in the

organisations, as well as disclosing their decisions and policies that might have an impact

on society and the environment.

4.22

4.24

4.28

4.40

4.40

3.0 3.5 4.0 4.5 5.0

(EN4) Organisation should implement measures to reduce greenhouse gases (GHG)

emissions associated with its activities,

products and services.

(HR1) Organisation should prevent the potential for abuse of human rights resulting f rom the actions of others entities or persons

whose activities are signif icantly linked to those of the organisation.

(OG2) Organisation should establish program for raising awareness and building

competency for social responsibility in the

organisation.

(OG2) Organisation should disclose its policies, decisions and activities for which it is

responsible, including the known and likely

impacts on society and the environment.

(CID1) Organisation should help conserve and protect heritage, especially where the

organisation's operations have an impact on it.

Lowest Average Score Identifiedin Particular CSR Practices


2.8.6 Analysis of Seven CSR Core Subjects - Organisational Governance

Most of the participating organisations have established two-way communication

processes with stakeholders between the organisations and their stakeholders’ interest

and assist in identifying areas of agreement and disagreement and in negotiation to

resolve possible conflicts. This signifies such attributes of the participating organisations

as transparency, openness and complying with the law, which will maintain the good

reputation of the organisation, which appears to be a key success factor for sustaining

business in a rapidly changing business environment.

However, a few participating organisations are not yet in the Planning Phase (score 2) for

setting their direction by making social responsibility an integral part of its policies,

strategies and operation, as well as establishing a programme for raising awareness and

building competency for social responsibility in the organisation.

Good Practices Observed

Some organisations have developed corporate social responsibility guidelines and

handbooks for their staff. A CSR Committee was formed and conducted regular reviews

of the organisations’ CSR performance. Some organisations developed corporate social

responsibility guidelines and handbooks for their staff. A CSR Committee has been

formed and it conducts regular reviews of the organisations’ CSR performance. The

guidebook, which indicates the latest changes/amendments in legal legislation that are

important to staff members, will be circulated. In addition, there will be regular updates of

the codes of practice and policy manual, among others. Most of the participating

organisations seek continuous improvement opportunities by conducting

self-assessment and attaining external awards or certifications such as ISO 9001, ISO

14000 and OSHAS 18001.

15811

14

551

21

31

14641

17

8

20

41

1951

1 2 3 4 5 6

Score

Organisation should set its direction by making social responsibility an

integral part of its policies, strategies and operations.

Organisation should establish programs to raise awareness and build

competency in social responsibility in the organization.

Organisation should be aware of applicable laws and regulations, as well

as informing those within the organization responsible for observing these

laws and regulations to ensure that they are observed.

Organisation should disclose its policies, decisions and activities about

their known and likely impacts on society and the environment.

Organisation should define its standards of ethical behavior with

reference to available international norms.

Organisation should develop governance structures that help to promote

ethical conduct within the organization and in its interactions with others.

Organisation should establish a two-way communication mechanism over

stakeholders’ interests, as well as assisting in identifying areas of

agreement and disagreement and in negotiation to resolve possible

conflicts.

Number of participated organizations in each cluster


2.8.7 Analysis of Seven CSR Core Subjects - Human Rights

Analysis revealed that the promotion of human rights was found in the approach

organisations used in preventing the employment of child and forced labour. Almost all of

the participating organisations were endeavouring to avoid engagement of forced labour

and child labour in their businesses. Participating organisations are, to a very large

extent, obeying the legal requirements explicitly laid down by the government.

However, systematic risk assessment for evaluating the potential impact on abuse of

human rights resulting from supply chain performance was not generally conducted. In

addition, some participating organisations are in the Implementing Phase (score 3) of

providing prevention for abuse of human rights resulting from the actions of other entities

or persons whose activities are significantly linked to those of the organisations.


Well-established systems were in place to prevent engagement of child labour or forced

labour. Some of the participating organisations performed a systematic risk analysis of

the impact of human rights on their operations as a whole (including the activities in the

supply chain).

One of the participating organisations implements environmental activities with

consideration of human rights issues: the organisation purchases “low-carbon lunch

sets” from a restaurant that employs people in recovery of mental illness. It also

purchases gifts and bakery made by people with intellectual disabilities. These well

demonstrated the support offered to vulnerable groups.

1357

1681

1852

1933

232

1 2 3 4 5 6

Score

Organisation should prevent the abuse of human rights resulting from

the actions of any entities or persons whose activities are significantly

linked to those of the organization.

Organisation should establish a transparent and independent

governance structure to ensure that no party can interfere with the fair

conduct of a particular grievance process.

Organisation should provide stakeholders with channels to freely

express their views, even in situations of disagreement with

organizational decisions.

Organisation should ensure that it does not discriminate against

employees, partners, customers, stakeholders, members and anyone

else that the organization has any contact with or can influence.

Organisation should ensure no engagement with forced labor and

child labor.


2.8.8 Analysis of Seven CSR Core Subjects - Labour Practices

Comparatively, Labour Practices is the most mature amongst the seven core subjects.

Comprehensive staff development programmes, health and safety management

systems and structured legal compliance mechanisms are commonly found in the

participating organisations. Most of the participating organisations maintained continuous

dialogue with their staff, establishing a healthy labour-management relationship. Many of

them have implemented programmes to increase the capacity and employability of

employees.

Even though participating organisations are paying more attention to the conditions of

work to ensure compliance with national laws and regulations such as the Minimum

Wage Law, has been in effect in Hong Kong since 1 May 2011, as in previous years,

supply chain management is an area worthy of further enhancement. Not all participating

organisations impose CSR issues in their supply chain requirements. It is not common

for participating organisations to address employees’ psychological needs.


In response to labour development trends, one of the participating organisations has

established its own academy to enhance staff knowledge and support the existing staff to

get their bachelor degree. On the one hand, this improves the knowledge and skills of

work for the staff, and on the other hand, it builds up the loyalty of staff towards the

organisation. Moreover, apart from working knowledge, some of the participating

organisations provide rounded staff training in areas such as computer application

programmes and business etiquette, among others.

1942

214

205

2041

2131

232

1 2 3 4 5 6

Score

Labor Practices

Organisation should encourage the organizations in its supply chain

to meet labor legal requirement.

Organisation should ensure that the conditions of its work comply

with national laws and regulations.

Organisation should establish dialogue with staff members to

establish healthy labor-management relations.

Organisation should implement measures to protect employees from

health risks and adapt an occupational environment that meets the

physiological and psychological needs of employees.

Organisation should promote an occupational health and safety

culture to employees and contractors.

Organisation should implement programs to increase the capacity

and employability of employees.


2.8.9 Analysis of Seven CSR Core Subjects - The Environment

Note: The score of CSR Practice item EN4 of all participating organisation will be rounded off to the nearest integer

Similar to previous years, it has been observed that the environment has become a

major topic in corporate policies and strategies. More participating organisations actively

address the concept of resource efficiency and promote an environmentally friendly

culture. Some of them implemented campaigns and measures to encourage energy

savings as well as reduce the emission of greenhouse gases. Stakeholder feedback on

the organisations’ environmental behaviour was gathered by surveys and interviews.

It is obvious that the performance of the participating organisations’ has improved, as

there are only a few organisations in the Implementing Phase (score 3). Many of the

participating organisations continue to implement measures to prevent pollution and

minimise waste and establish energy saving measures to reduce electricity consumption.

Normally, those that have received ISO 14001 and ISO 50001 certification have

developed a systematic approach for identifying and managing carbon emissions.


Some of the participating organisations demonstrated a strong commitment and

involvement in environmental protection by means of organising many “green” events

such as recycling programmes, low carbon/carbonless activities. Some of the

participating organisations have implemented the ISO 50001 Energy Management

System in order to facilitate the reduction of energy usage. One of the participating

organisations has dedicated its efforts to the environmental issues of buildings. It applied

a green building assessment scheme in Hong Kong and achieved the highest level of

requirement for its constructions. In addition, many building and structural materials used

in the constructions were locally produced.

1771

1762

1861

12661

1663

1 2 3 4 5 6

Score

Organisation should implement measures to prevent pollution and

minimize waste.

Organisation should promote an environmental-caring culture to

employees and contractors.

Organisation should implement resource efficiency measures to reduce

its use of energy, water and other materials.

Organisation should implement measures to reduce Greenhouse Gases

(GHG) emissions associated with its activities, products and services.

Organisation should identify potential adverse impacts on the ecosystem

and take measures to eliminate or minimize these impacts.


1942

1851

1861

1672

1 2 3 4 5 6

Score


Organisation should develop and implement programs to prevent corruption.

Organisation should prevent engaging in anti-competitive behavior.

Organisation should incorporate social, ethical, environmental and gender equality criteria in its purchasing, distributing and contracting policies.

Organisation should develop and implement programs to protect property rights.

2.8.10 Analysis of Seven CSR Core Subjects - Fair Operating Practices

Note: This practice is not applicable to some participating organisations, so the average score is calculated with a base less than 25

Similar to the previous year, the performance of property rights protection and corruption

prevention are relatively less mature. Those organisations that have scored high in the

protection of property rights have established precise procedures, defined guidelines and

issued codes of conduct to address these aspects.

More participating organisations have incorporated social, ethical, environmental and

gender equality criteria in their purchasing distributing and contracting policies. The

majority of the participating organisations has developed and implemented programmes

to prevent corruption, particularly when working with governmental bodies.

Compared to previous years, more participating organisations are less mature when

addressing the importance of the prevention of anti-competitive behaviour. However, it is

anticipated that more organisations will address this issue when the Competition Law is

in force. Stakeholders’ education on preventing engagement in anti-competitive

behaviour for internal and external stakeholders will become popular.


Participating organisations continue to implement programmes to pursue corruption

prevention and the protection of property rights. For instance, when commissioning

outside vendors or artists to work on a production whereby intellectual property is

involved, strict rules and guidelines such as prohibiting the usage of unauthorised

software and purchasing only genuine reference materials, among others, will be

adopted. Some of the participating organisations employed legal consultants to evaluate

the organisation’s existing operating practices in order to prevent engaging in

anti-competitive behaviour.


2.8.11 Analysis of Seven CSR Core Subjects - Consumer Issues


Similar to previous years, the main focus of the participating organisations is to address

consumers’ expectations and needs. Participating organisations are actively enhancing

consumers’ awareness of sustainable consumption by providing instruction and

education to consumers. Due to increasing concerns of the organisations’

responsiveness on social responsibility issues, more consumer engagement

programmes were implemented.

There are a few participating organisations that are still in the Planning Phase and

Implementing Phase (score 2 and 3 respectively) for developing socially and

environmentally beneficial products and services and implementing measures to protect

consumers’ data and privacy. The participating organisations should pay more attention

to these areas.


Some of the participating organisations developed comprehensive quality control

systems. Some participating organisations deploy resources to monitor their customer

relationship management database. All personal data of clients contained in the IT

equipment will be destroyed prior to the disposal of IT equipment to protect customers’

data and privacy.

In addition, when delivering marketing messages to stakeholders, organisations will

apply both Chinese and English, as well as other languages that are applicable to the

recipients. In case that the target audience may be prone to use one particular language,

the participating organisations will also offer a simple translation in another language.

20

31

24

1

18

7

18

421

23

2

21

31

16

711

205

1 2 3 4 5 6

Score

Consumer Issues

Organisation should ensure no unfair or misleading marketing and

information is delivered to customers or consumers.

Organisation should ensure that consumers are aware of their rights and

responsibilities when products and services are delivered.

Organisation should ensure that its products and services will not be

inherently harmful to consumers' health.

Organisation shall provide customers with socially and environmentally

beneficial products and services that are able to reduce respective

adverse impacts throughout their life cycle.

Organisation should review complaints and take action to prevent

recurrence.

Organisation should implement measures to resolve dispute and

enhance customer satisfaction.

Organisation should implement measures to protect consumers’ data

and privacy.

Organisation should educate customers or consumers in order to

enhance their understanding of the product and awareness of

sustainable consumption.


2.8.12 Analysis of Seven CSR Core Subjects - Community Involvement and

Development


The overall result of this subject in 2012 indicates a downward trend compared to the

score in 2011. It was found that to conserve and protect heritage is a relatively least

mature practice among the others under this core element. However, philanthropy is a

common practice towards community development and vulnerable group assistance and

caring programmes were in place. Promotion of healthy lifestyles was also being

emphasised by most of the participating organisations.

In general, most of the participating organisations have shown continuous efforts in

supporting the community and volunteerism. It is noticeable that even although most of

the participating organisations have been promoting healthy lifestyles, the maturity of this

practice is relatively low. Some of the participating organisations promote healthy a

lifestyle on an ad-hoc basis, while some of them have implemented comprehensive

fitness programmes to various stakeholders in the community.


Some participating organisations supported the development of the community where

they operate. Some examples of good practices observed from the participating

organisations were organising various trade fairs and activities for minority groups in

Hong Kong. Some promote a healthy lifestyle by organising conferences and exhibitions

of Chinese medicine, as well as providing training courses for students to promote a

healthy diet. Most of the participating organisations are very willing to support community

development or events that enhance community development by means of a donation of

money and materials.

15631

187

177

1582

16621

1 2 3 4 5 6

Score


Organisation should help to conserve and protect heritage,

especially where the organization's operation has an impact

on.

Organisation should contribute to programs that provide

assistance or other necessities to vulnerable and low-income

groups.

Organisation should participate in skills development for the

organizations in its supply chain of the community in which

they operate.

Organisation should encourage healthy lifestyles in the

community.

Organisation should contribute to the development of the

community in which they operate.


2.8.13 Carbon and Energy Management Advocate Sub-Index

The overall average score of the Carbon and Energy Management Sub-Index is 4.16 out of

5, which is lower than the score in 2011. The overall performance of the Carbon and Energy

Management Advocate Sub-Index is comparatively less mature and the maturity level

varies from organisation to organisation.

Some of the participating organisations demonstrated their commitment via established

policy, strategy, improvement objectives and targets, and resource allocation, among others,

to support the energy management systems and continually improve effectiveness.

However, participating organisations are recommended to consider making reference to

international guidelines such as the GHG protocol and ISO 14064 to systematically quantify

and verify the organisational levels and project levels of GHG emissions inventories related

to energy consumption.

Most of the participating organisations established criteria for effective operations and

maintenance of significant energy use; 21 out of 25 organisations have conducted energy

reviews to measure the energy use of their operational processes. Although the majority of

participating organisations has implemented measures to reduce greenhouse gas (GHG)

emissions associated with their activities, products and services out of their management

commitment to foster a greener and cleaner environment, similar to previous years, less

than half of them have reviewed the implemented programmes to identify improvement

areas. Participation in GHG reduction initiatives such as the “Carbon Less” scheme, ISO

14001 and ISO 50001 could be a first step to systematically quantify and identify

opportunities to reduce carbon footprints.

14641

1294

14551

1447

115711

0 1 2 3 4 5 6

Score

Organization should demonstrate its commitment via policy,

strategy, improvement objectives & targets, resources allocation,

etc. to support the energy management system and to continually

improve its effectiveness.

Organization should develop record and maintain an energy

review and establish an energy baseline.

Organization should establish criteria for effective operation and

maintenance of significant energy uses.

Organization should consider energy performance improvement

opportunities in the design of new, modified and renovated

facilities, equipment, systems and processes, and support the

purchase of energy efficient products and services.

Organization should implement measures to reduce Greenhouse

Gases (GHG) emissions associated with its activities, products

and services.


Part Three HKQAA - HSBC CSR Index – Hong Kong 100 CSR Index

3.1 The Hong Kong 100 CSR Index

The Hong Kong 100 CSR Index is a research project regarding an organisation’s disclosure

of its CSR issues. One hundred organisations from 14 industrial sectors in Hong Kong were

sampled for analysis. The CSR activities and behaviour of the Hong Kong organisations will

significantly affect the overall CSR image of the Hong Kong business sector.

The project aims to outline the CSR behaviour of Hong Kong organisations based on the

study of CSR disclosure made by the sampled organisations. Foreign investors and buyers

can refer to the Hong Kong 100 CSR Index in their decision-making. With reference to ISO

26000, a set of CSR indicators was developed to study and quantify CSR disclosure by the

selected organisations. The research is conducted on a yearly basis.

HKQAA is pleased to share the research results, including the CSR indicators, comparison

between private and public-listed companies and benchmarking of the 14 sectors.

Organisations in Hong Kong can make use of this research to identify improvement

opportunities. This index can also facilitate future research with city-to-city comparisons.

3.2 CSR Disclosure Indicators

Based on the guidance and principles provided by ISO 26000, 16 CSR Disclosure

Indicators are defined in the Hong Kong 100 CSR Index.

CSR Core Subjects CSR Disclosure Indicators

Organisational

Governance

Integration of CSR in Organisational Policy





Human Rights Disclosure of Human Rights Issues

Labour Practices


Staff Development and Training

The Environment


Sustainable Resources Usage Management Programme



Fair Operating Practices Promotion of CSR in the Sphere of Influence

Consumer Issues


Consumer Education Programme

Community Involvement

and Development

Support for Educational or Cultural Development


3.3 Methodology

The research is based on the level of CSR disclosure made by the selected organisations,

which includes their websites, policies and reports, as well as other publicly available

information. A score of “1” will be assigned to the organisation if it has implemented

activities and practices in relation to a respective CSR Disclosure Indicator. On the contrary,

a score of “0” will be assigned if relevant information is not found in the information

disclosed by the organisation.

The proportion of “1” scores, which indicates the presence of relevant activities and

practices, out of the 16 indicators will form the Index. A fact-based scoring method was

adopted. Personal judgement on the effectiveness of the implemented CSR activities will

not be involved in the scoring process. By analysing the distribution of the CSR Disclosure

Score, we will be able to outline the CSR behaviour of Hong Kong organisations.

3.4 Information Security and Confidentiality

All of the information collected in the research will be kept in the HKQAA’s dedicated

database and the HKQAA will keep it strictly confidential. Proper information security

procedures are in place to protect the information of the participating organisations.

3.5 Quality Assurance

Internal quality assurance procedures were implemented to ensure the quality of the

research and analysis process.


3.6 The 100 Selected Companies from 14 Industrial Sectors

One hundred companies were selected from 14 industrial sectors, including 55 publicly

listed companies, 33 private companies, 7 public bodies and 5 governmental departments.

The 14 industrial sectors are:

- Catering

- Construction and Engineering

- Conglomerates

- Education

- Financial

- Government

- Manufacturing

- Property Development and Property Management

- Public Bodies

- Public Services

- Retail

- Telecommunications

- Hotel and Tourism

- Trading and Logistics


3.7 Summary and Recommendations

The level of CSR disclosure among

the various sectors remains stable

but with slight recession. The Public

Services sector has demonstrated a

high degree of transparency for CSR

programmes. Like last year, the

Manufacturing sector generally

provides only limited information

about their CSR programmes.

It is worth noting that improvements

have only been found in the

Contribution to Community

Development and Consumer

Education. Support for charity

programmes and participation in

community services are common

ways for organisations to

demonstrate their CSR commitment.

The integration of CSR in

organisational policy and staff

development and training have the

highest score among the 16

indicators. This demonstrates that

the organisations’ commitment to

CSR and contribution to staff

development are becoming

important elements in the operation

of business.

Like last year, most organisations

are proactive in disclosing their social performance, specifically their contribution to

Community Development. This indicator has the third highest score among the 16 indicators

again in 2012. Meanwhile, these organisations may consider enhancing their disclosures

about the Stakeholder Engagement Programme, which has ranked low in this research

since 2009.

Eighty per cent of the selected organisations have disclosed their Corporate Governance

Programmes and their performance in Community Development. However, more efforts

should be put on Supporting Education or Cultural Development, as this has seen a

significant deterioration in overall performance.

19

40

51

58

61

62

63

67

71

72

73

80

80

82

83

83

22

40

49

61

64

64

64

70

84

77

77

76

84

87

85

87

34

57

52

70

60

63

68

65

66

69

72

86

80

89

82

77

21

49

49

73

56

63

73

60

69

77

62

82

72

51

86

67

0 20 40 60 80 100


Disclosure of Human Rights Issues

Consumer Education



Promotion of CSR in the Sphere of Inf luence

Sustainable Resource Usage Management Programme


Supporting Educational or Cultural Development






Staf f Development and Training

Integration of CSR in organisational policy

Average Score of Respective CSR Disclosure Indicators

Average Score 2009

Average Score 2010

Average Score 2011

Average Score 2012


Similar to previous years, disclosure

on Consumer Issues remains at a

low level, in which there are only 19


dedication to Complaint and Dispute

Handling Programme and 51


performance to Consumer Education.

It is important to note that with the

calls from the population for a higher

level of protection of consumer rights,

people will tend to consume goods

and services provided by

organisations that have high

transparency in addressing and

responding to Consumer Issues.

The performance of disclosure of the

environmental performance of

buildings remains steady compared

to 2011. Most of the organisations

have paid attention to climate

change and sustainable resource

management. They have established environmental policies or have implemented pollution

prevention and recycling programmes. However, organisations are advised to establish

energy management systems as a tool to facilitate quantification and communication of their

achievements in energy performance. Therefore, organisations are advised to establish an

energy management policy as a tool to enhance transparency and quantify their reduction

targets of carbon emissions.

It is noticeable that there is a significant difference between the maximum and minimum

scores in some sectors. One of the remarkable examples is the Manufacturing sector. The

difference between the maximum and minimum score is 81. This demonstrates that the

maturity level of CSR disclosure among these manufacturing companies varies significantly.

It is believed that for those organisations that scored low in the disclosure of CSR should

review and update their policies and achievements more regularly by referring to the best

practices in social responsibility like ISO 26000. They should place more emphasis on it to

allow the general public to understand their contribution to the community.

6

0

44

56

19

25

25

44

38

63

31

63

81

44

75

81

81

88

88

88

88

94

94

94

94

94

94

94

0 20 40 60 80 100

Construction & Engineering

Manufacturing

Trading and Logistics

Catering

Retail

Government

Public Bodies

Property Development and Property Management

Hotel and Tourism

Public Services

Financial

Conglomerates

Education

Telecommunications

Maximum and Minimun ScoreMaximum Score

Minimum Score


3.8 Detailed Findings of Respective Sectors

Public Services

“The leading sector continues to reveal the highest transparency in its social responsibility

programmes.”

Compared to last year, the average

score of Public Service shows a

small increase. Most indicators, such

as the Corporate Governance

Programme and Staff Development

and Training, among others, have

remained more or less stable.

In general, organisations in this

sector provide sufficient and updated

information about their CSR

performance. Most of them disclose

their CSR or sustainability report and

periodically update their

performance in environmental and

social aspects through different

public channels. Most organisations

in this sector give rounded disclosure

in Organisational Governance, in

which all of the organisations

disclose their efforts in corporate

governance and integration of CSR

into organisational policies, as well

as disclose their social and

environmental performance.

Many of these organisations have implemented CSR programmes, including pollution

prevention, consumer education, contribution to community development and sustainable

resource use. All organisations have disclosed their performance in occupational health

and safety management and execution of staff development. Some have continued to

implement programmes to mitigate climate change, including a reduction of energy

consumption and installation of energy-efficient lighting. However, the general public can

find little information about complaint and dispute handling and human rights issues.

Organisations should consider improving their transparency on these issues.

40

54

56

58

59

61

65

65

66

66

67

76

79

85

43

49

63

73

59

66

71

89

73

68

58

66

79

83

40

56

58

70

53

60

78

88

68

74

52

63

81

89

33

50

36

45

54

72

68

66

48

66

60

87

79

89

0 20 40 60 80 100

Manufacturing

Construction & Engineering

Public Bodies

Government

Retail

Tourism and Hotels

Telecommunications

Education


Financial

Catering


Conglomerates

Public Services

Average Score of Respective Sectors

Average Score 2009

Average Score 2010

Average Score 2011

Average Score 2012


Telecommunications

“Insufficient disclosure of consumer issues for most of the companies.”

Most of the telecommunications companies do not provide any disclosure in the way that

they handle complaints and disputes or the details of consumer education programmes. It

is obvious that their performance cannot satisfy the demand for better quality services

requested by the customers of telecommunications services.

On the other hand, telecommunications companies disclosed their corporate governance

performance in detail. They have disclosed in detail their CSR strategies for formulating,

managing and promulgating their CSR policy and initiatives at the corporate level. Most of

them continue to disclose various CSR programmes related to community involvement and

development. They are working actively in the promotion of CSR in their sphere of

influence, sustainable resource use and pollution prevention. However, most of the

companies are inactive in responding to climate change and stakeholder engagement.

Only a few of them have developed a set of communications policies to gather stakeholder

opinions and product feedback, among others.

Financial

“Comprehensive disclosure of their efforts in staff development and training are found.”

Compared to the previous year, the disclosures of staff training and development have

increased. Training for business negotiation skills, leadership development and problem

solving, among others, was provided to their employees. In addition, the majority of

organisations continues to disclose CSR information related to social performance,

especially their contributions to community development. As indicated in the disclosed

information, most of the financial institutions have been working on climate change

mitigation programmes as well as sustainable resources usage management programmes.

Even though all of the financial institutions disclosed their comprehensive corporate

governance programme, only a few organisations have addressed their policies and

procedures of complaint and dispute handling, consumer education, disclosure of human

rights issues and stakeholder engagement programmes.


Government

“Organisations are actively promoting CSR in the sphere of influence.”

All of the organisations have disclosed their performance of promoting of CSR in their

sphere of influence. They provided different kinds of consumer education programme to the

general public so as to allow the public to understand their services. Most of the

organisations have done well in the disclosure of their integration of CSR into organisational

policies and the development of occupational health and safety management programmes.

Some of the government departments disclosed in detail their programmes on

environmental performance, climate change mitigation, sustainable resource use, pollution

prevention and staff training. However, detailed policies and procedures in complaint and

dispute handling were not sufficient. Stakeholder engagement programmes are not

commonly found in these organisations. The government should place more emphasis on

the disclosure of human rights issues, as it is a model for all organisations and corporations

in Hong Kong.


“Disclosure of programmes addressing consumer issues is yet to improve.”

Compared to last year, organisations have disclosed more about their environmental and

social performance and promotion of CSR in their sphere of influence. All of the

organisations in this index have disclosed their active performance in pollution prevention

as well as the integration of CSR into their corporate policies. Organisations in general have

disclosed to a certain extent their support for supporting education and cultural development,

waste reduction and energy-saving programmes, and act on programmes that address the

impacts and issues of climate change.

However, some organisations did not disclose any details of their programmes or policies

concerning occupational health and safety and issues relating to human rights. Their

transparency about corporate governance programmes should be further enhanced.

Moreover, organisations should place more effort on the disclosure of complaint and dispute

handling procedures, as well as provide more consumer education.



“The disclosure of engagement in human rights should be further enhanced.”

There are significant improvements in the disclosure of CSR practices for most of the

companies in the property development and property management sector. The disclosure of

the integration of CSR into corporate policies, disclosure of social performance, promotion

of CSR in the sphere of influence, supporting education and cultural development and

contribution to community development are very encouraging. To some extent, this

demonstrates to the public that organisations in this sector are actively reacting on CSR.

However, organisations should also pay attention to the disclosure of CSR programmes

related to staff development and training, as well as issues relating to human rights. They

should also place more effort on consumer education, complaint and dispute handling and

stakeholder engagement programmes, as there are insufficient disclosures of these CSR

practices.

Construction and Engineering

“There is insufficient disclosure of engagement with stakeholders and consumer issues.”

It is encouraging to see that organisations in the construction and engineering sectors show

substantial improvement in their disclosure of CSR programmes related to staff

development and training, as well as sustainable resource use. Most organisations have

disclosed details of their programmes or policies concerning social performance,

occupational health and safety, contribution to and participation in voluntary services and

social investment, and pollution prevention.

However, most of the organisations have only to a small extent disclosed their

environmental performance and their programme and policies in consumer education,

complaint and dispute handling, the promotion of CSR in the sphere of influence, climate

change mitigation programme, stakeholder engagement programme and human rights

issues.


Conglomerates

“The disclosure performance has been kept as good as last year.”

Most of the organisations have demonstrated their maturity in CSR through the disclosure

of implementation of various CSR programmes that include the programmes for preventing

pollution, staff development, occupational health and safety management, stakeholder

engagement, carbon emission control, sustainable resource management, corporate

governance, consumer (the community) education and contribution to the community

development. Some organisations have released its CSR or sustainability report to disclose

its social and environmental performance. Most of these CSR practices are integrated into

the organisations’ policies.

However, it is suggested that the organisations should also unveil their human rights

policies. Policies about discrimination and equal opportunities in employment are typical

examples that the organisations could disclose. At this moment, the general public can only

find a small amount of information about complaint and dispute handling, and the

transparency of this CSR issue needs further enhancement.

Education

“The regress of the overall disclosure performance of the organisations is significant.”

This sector has the highest decline in average scores among all 14 sectors. Insufficient

disclosure was found in the implementation of climate change mitigation programmes,

disclosure of human rights issues, the integration of CSR in an organisation’s policies,

complaint and dispute handling, and consumer education programmes.

Despite the drop in the overall score of this sector, most of the organisations have

demonstrated their active response to CSR in terms of disclosure of environmental and

social performance. The organisations have developed a corporate governance mechanism,

which allows the management to evaluate their organisations’ operations. In addition, the

organisations actively react on sustainable resources management.


Hotel and Tourism

“The disclosures of environmental performance are remarkable.”

The disclosed information reveals that some organisations have exercised certain CSR

programmes including support to education and cultural development, stakeholder

engagement and consumer education. Improvement was found in the contribution of

community development. Meanwhile, most of the organisations have addressed and

integrated social responsibility issues into organisational policies.

Outstanding performance has been maintained in the disclosure of social performance and

staff training and development. However, some organisations are seldom disclosing their

policies and performance in complaint and dispute handling, climate change mitigation,

occupational health and safety, human rights and details of their corporate governance

measures.

Public Bodies

“Organisations should work hard on the promotion of CSR in the sphere of influence.”

For most of the public bodies, detailed information about corporate governance could be

identified from the websites, sustainability reports and CSR reports of the selected

organisations. Some of them have disclosed information about their promotion of CSR in

the sphere of influence, human rights and staff development. The disclosure of education

and cultural development programme, contribution to community development, corporate

governance and the integration of CSR into the organisations’ policies are encouraging.

However, there is a lack of information about their promotion of CSR in the sphere of their

influence. Limited information about their programmes for stakeholder engagement,

occupational health and safety, sustainable resource usage, climate change mitigation, and

their disclosure related to human rights issues can be found. In addition, proactive reporting

of environmental performance is not common in this sector.


Retail

“Organisations are active in disclosing their environmental and social performance.”

The organisations have disclosed to some extent their social performance, corporate

governance, stakeholder engagement and staff development and training. Most of them

have also released details of their integration of CSR into corporate policies, contributions to

education and cultural development, pollution prevention and sustainable resource usage

management.

However, their transparency about complaint and dispute handling, promotion of CSR in the

sphere of influence, climate change mitigation and occupational health and safety

measures should be further improved, as there is insufficient information of disclosure. In

addition, organisations in this sector should pay more attention to the measures of

occupational health and safety, as the operations generally involve more manpower

compared to other industries.

Catering

“Disclosures of various environmental programmes are timely and sufficient.”

Most of the organisations in this sector have disclosed and updated their social and

environmental performance timely and regularly. Most of them have disclosed details of

their plans and programmes on environmental performance, including pollution prevention,

sustainable resources usage management and climate change mitigation. The disclosure of

their contribution to community development, as well as the efforts spent on staff training

and development, were sufficient.

Some of them have also disclosed to some extent other CSR programmes and activities,

including stakeholder engagement programmes, educational programmes for customers

and support for education and culture. However, their transparency about climate change

mitigation, complaint and dispute handling programmes, promotion of CSR in their sphere

of influence, sustainable resource use and corporate governance programmes requires

improvement.


Manufacturing

“The disclosures of measures addressing consumer issues are far from enough.”

Some of the organisations disclosed information about their integration of CSR and

corporate policies, environmental performance, sustainable resource usage and consumer

education. They have also disclosed their support to community development programmes

and community services, consumer education, sustainable resource use, governance

programme, pollution prevention and occupational health and safety.

However, proactive disclosure of CSR-related information is not common practice in this

sector. Organisations are seldom disclosing their policies on human rights issues. In

addition, stakeholders would probably have difficulty in knowing their programmes in

relation to their contribution to consumer education and complaint and dispute handling. It is

noticeable that disclosure of information about consumer issues has been insufficient since

2009.


Part Four The HKQAA-HSBC CSR Index – Sustainable Procurement

Research on Major Buying Offices

4.1 Introduction

Procurement activities can make a significant contribution to the achievement of an

organisation’s social responsibility goal by extending its influence to and ensuring that

suppliers, contractors, and the goods and services bought achieve optimum environmental,

social and economic performance.

The Hong Kong Quality Assurance Agency (HKQAA) conducted “Sustainable Procurement

Research on Major Buying Offices”, jointly commissioned by the HKQAA and The

Hongkong and Shanghai Banking Corporation Limited (HSBC), as part of the

HKQAA-HSBC CSR Index initiative with the view to understanding better the current

common practices in sustainable procurement in the Hong Kong business community at

large.

The main reason for choosing buying offices as the target group for study is owing to their

specialisation in procurement activities and the international presence that their buying

practices represent, providing important indicators for analysing the global trend in

sustainable procurement.

The study was conducted between September and November 2012. This document

outlines the research methodology, findings and recommendations for the study.

The objectives of this study are to find out the following.

- To identify the key sustainable procurement practices commonly adopted by sizable

international buying offices in Hong Kong and Shenzhen;

- To benchmark the research results with reference to the international guidelines of

BS 8903:2010 – Principles and Framework for Procuring Sustainably – Guide and

the Flexible Framework.


4.2 Overview of BS 8903: 2010 and the Flexible Framework

4.2.1 BS 8903:2010 – Principles and Framework for Procuring Sustainably – Guide

BS 8903:2010 Principles and Framework for Procuring Sustainably – Guide was launched

in August 2010 by British Standards and is the world's first standard for sustainable supply

chain management. BS 8903 provides guidance to organisations irrespective of size and

type on adopting and embedding sustainable supply chain management principles and

practices. It covers all stages of supply chain management and is applicable across industry

and the public, private and third sectors. It includes guidance on measurement to help

organisations assess the extent and effectiveness of their sustainable procurement policy.

Sustainable procurement is defined as purchasing goods that are really needed and buying

items or services whose production, use and disposal both minimise negative impacts and

encourage positive outcomes for the environment, economy and society.

When integrating sustainability into the procurement process, four key aims should be

addressed.

- minimising demand for resources (e.g. by reducing purchases, using

resource-efficient products and considering end of life);

- minimising any negative impacts of goods, works or services across their lifecycle

and through the supply chain (e.g. impacts on health and air quality);

- ensuring that fair contract prices and terms are applied and respected, and that

minimum ethical, human rights and employment standards are met;

- providing opportunities for small and medium business and voluntary sector

organisations, and also supporting jobs, diversity, training and skills development.

The guide provides an overview on sustainable supply chain management and the key

elements, which are classified as “fundamentals”, “procurement process” and “enablers”

and cover the following activities.

Fundamentals Procurement Process Enablers

Organisational policy Identify the business need Leadership and

governance

Procurement policy and

strategy Define the sourcing strategy People

Identify suppliers and

tender

Risk and opportunity

assessment

Evaluate and award Engagement


Implement Measurement

Manage performance and

relationship

Review and learn

It also suggests a tool, the Flexible Framework, as an assessment tool for an organisation to

understand its current positioning and to provide a clear route to improving its performance.

4.2.2 Flexible Framework

The Flexible Framework is a widely used self-assessment mechanism developed by the

business-led Sustainable Procurement Task Force in the UK. The membership of the Task

Force was drawn from business – both major suppliers to government and representatives

of best private sector practice; non-governmental organisations; trade unions; professional

bodies; and major public sector procurers etc. The Flexible Framework was established

according to the studies and surveys conducted by the Task Force.

The Flexible Framework allows organisations to measure and monitor their progress on

sustainable procurement over time. It is a maturity matrix that details the phases of

progression an organisation can follow to achieve leadership in sustainable supply chain

management.

It is used to identify the five key themes of People; Policy, Strategy and Communications;

Procurement Process; Engaging Suppliers; and Measurement and Results. In effect, these

are the key behavioural and operational change programmes that need to be delivered in

each organisation to deliver sustainable procurement. While the focus of this framework is

sustainable procurement, the areas identified represent the basics of good procurement.


4.3 Methodology

The study was conducted in two stages; the first stage was Desk Research, and this was

followed by In-depth Interviews.

First Stage – Desk Research

During the Desk Research stage of the study, the major documents reviewed are shown

below.

- BS 8903:2010 – Principles and Framework for Procuring Sustainably – Guide

- Flexible Framework

- Sustainable Procurement in Government: Guidance to the Flexible Framework

Comprehensive research based on publicly available information, including sustainability

reports, home pages and press reports, was conducted. The research was related to the

sustainable procurement practices of eight selected international buying offices. They were

selected to provide a wide spectrum of organisations with different characteristics in terms

of size, products procured and country of origin. The eight selected buying offices are

large-medium sized with thousands of employees worldwide. The main sales markets are in

North America and Europe. The products procured range from garments and toys to

department store and supermarket merchandise.

Second Stage – In-depth Interviews

During the In-depth Interview stage of the study, in-person interviews were carried out with

two selected organisations.

At the same time, the suppliers and competitors of some of the selected buying offices were

interviewed to provide supplementary information. The suppliers interviewed were mainly

selected from the following sectors.

- Supermarket

- Supply Chain Management

- Garments

- Toys

The overall levels of those buying offices were identified based on the results obtained in

the two stages. Recommendations are made based on the findings.


The original purpose of the Flexible Framework was designed for self-assessment and thus

insufficient information could be obtained for five levels of maturity, due to the relatively

limited information obtained through our research. Therefore, we simplified the five levels of

the Flexible Framework to three levels of performance.

In our case, Level 1 – Foundation combines the Flexible Framework’s “Level 1 –

Foundation” and “Level 2 – Embed”; Level 2 – Practice is on the basis of “Level 3 –

Practice” from the Flexible Framework; Level 3 – Lead combines the Flexible Framework’s

“Level 4 – Enhance” and “Level 5 – Lead”.

Despite the limitations of the research methodology, the levels of performance indicated still

serve as a quick and easy indicator for readers to understand the buyers’ sustainable

procurement maturity situation at a glance.

Limitations

The study is based on research and survey. Information was mainly collected from publicly

available information. As a result, some information regarding practices related to internal

operations, such as those covering people management, procurement and engaging

suppliers, might not be sufficiently available in the public domain.

Nevertheless, the above-mentioned limitations do not affect the findings of the study, which

sufficiently provides an overall picture of sustainable procurement practices commonly

adopted in the field of international buying offices.

4.4 Level Rating Criteria

The resulting findings for eight companies were assessed against the Flexible Framework.

A traffic light system was used to show the level of compliance in each area, as explained

below.

Rating Assessment Description

Level achieved

On route to achieving the Level; partially achieved

Not achieved; work underway, more to do

For each company, areas of policy, strategy and communication, people, procurement

process, engaging suppliers as well as monitoring and evaluation will be assessed in three

levels.


Level 1 – Foundation means that the company achieves the basic requirement commonly

adopted in the industries.

Level 2 – Practice means that the company introduces more than most organisations have

done.

Level 3 – Lead means that what the company has achieved places it in a leading role in the

relevant industry.

4.5 Summary of Common Practices of selected Buying Offices in Sustainable

Procurement

4.5.1 People

Level 1 – Foundation

- Basic training is provided to the specific procurement staff only.

- Legal requirements such as REACH, WEEE and RoHS are covered in the training.

- Customer requirements such as certification of Customs-Trade Partnership Against

Terrorism (C-TPAT) are also included in the training.

Level 2 – Practice

- Training that is more comprehensive is provided to the procurement team and other

staff engaging with suppliers (for example, the quality control team).

- Social responsibility and the environment are covered in the training. The social

responsibility training includes fair employment practices and workforce welfare,

while the environmental training includes measures of environmental protection and

the 3Rs: “recycle-reuse-reduce”.

- Targeted refresher training is provided once there are updates of policy or standards

related to sustainable and corporate social responsibility (CSR) procurement.

Level 3 – Lead

- Incentive programmes include the acknowledgement of accomplishment, for

example: a performance related bonus or a thank you letter from senior

management provided to staff members who practice sustainable and CSR

procurement.


4.5.2 Policy, Strategy and Communications


- A Sustainability and CSR Procurement Policy has been established and is endorsed

by the top management of the organisation.

- The policy is actively communicated to the staff within the organisation and the key

suppliers.


- The scope of the Code of Conduct established by the organisation extends to

sub-suppliers (i.e. second and third tiers), such as suppliers of raw material.

- Not only is the policy communicated to staff within the organisation, but also key

suppliers and stakeholders are informed.

- The sustainable strategy as well as the goals are set by the top management. For

example: “To create zero waste” and “To sell products that sustain people and the

environment”.

Level 3 – Lead

- A Code of Conduct programme is being introduced, and the case for best practice is

shared among industry peers.

- The considerations of all three pillars of sustainability, i.e. the economic, social and

environmental, are captured in the policy.


- The Sustainable Procurement strategy could be integrated with other management

systems of the organisation, such as ISO 14001 Environmental Management

System.

4.5.3 Procurement Process


- The procurement process could strictly comply with WEEE, RoHS and REACH

legislation.

- The procurement process is committed to the 10 Principles of the United Nations

Global Compact covering a set of core values in the areas of human rights, labour

standards, the environment and anti-corruption.


- The key sustainability and CSR risks such as fair employment practices (for

example, fair wage and working hours) are monitored during the procurement

process.

- Detailed sustainability risks are assessed for those high impact contracts, for

example the considerations of production capacity and the processes of quality

control in the selection process of potential suppliers.

Level 3 – Lead

- Those suppliers with sustainable technologies and processes for products would be

selected.


- Eco-design is considered and applied during the product development processes,

such as the use of FSC paper and the use of cotton made in Africa.

- The idea of community development is promoted. For example, the Fair Trade

Programme to improve farming practices and yields, and the Women Empowerment

Programme.

4.5.4 Engaging suppliers


- Two-way communications with the suppliers, such as regular meetings, are

undertaken.


- The organisations encourage and work with suppliers to reduce waste such as

plastic packaging for the purchased goods.

- Specific supplier development programmes are introduced for key suppliers, for

example working with targeted suppliers annually to improve the standard of social

responsibility and the quality level.

Level 3 – Lead

- The sustainability audits, consisting of social responsibility, environmental,

productivity and supply chain improvement programmes, are introduced to suppliers

and conducted.


- The suppliers are requested to attain the organisation’s sustainable goals and

objectives, for example promoting workforce welfare and the reduction of

greenhouse gas emissions.

- The idea of sustainable products is promoted to suppliers, for example, the use of

the EU Eco-label.

4.5.5 Measurement and Results


- The assessment of suppliers for sustainability performance, including social

responsibility and the environment, are conducted regularly.


- The assessment results are evaluated and used as a reference for future orders.

- The assessment results are benchmarked among peer groups of suppliers.

Level 3 – Lead

- Awards or penalties are introduced to suppliers, for example, termination of contract,

punishment or fine.


In summary, all eight buying offices selected could reach the fundamental level in all

aspects and in particular attain Level 2 performance in “Measurement and Results”. This

may be because these buyers have introduced different international assessment

programmes or standards, e.g. SA 8000, ICTI CARE Process (International Council of Toy

Industries CARE Process) to drive performance in this area.

The relative lag behind performance found in the Level 3 of “People” may be affected by the

limited information disclosed by the buying offices in the public domain.

The levels of performance indicated only serve as a quick and easy indicator for readers to

understand the buyers’ sustainable procurement maturity situation at a glance. Readers

should pay more attention to the common practices adopted by these international buyers,

which will give a clue to the global trend in sustainable procurement development and, more

importantly, throw light on the formulation of an organisation’s own sustainable procurement

policies and plans.

4.6 Conclusions and Recommendations

With reference to BS 8903:2010 – Principles and Framework for Procuring Sustainably –

Guide and Sustainable Procurement in Government: Guidance to the Flexible Framework,

eight selected international buying offices are evaluated in the areas related to policy,

strategy and communication, people, procurement process, engaging suppliers as well as

monitoring and evaluation.

The overall performance of those companies is benchmarked into three levels: Level 1 –

Foundation; Level 2 – Practice; and Level 3 – Lead.


The overall performance of most selected buying offices is classified as Level 2 – Practice.

There are certain recommended practices prescribed in the ‘Sustainable Procurement in

Government: Guidance to the Flexible Framework’ that organisations may adopt in order to

advancing to higher level of maturity.

- To embed sustainable procurement in the recruitment of new staff as well as

capacity building and development of existing staff;

- To review and enhance the Sustainable Procurement strategy, in particular

recognizing the potential of new technologies;

- To link strategy to Environmental Management System and include in overall

corporate strategy;

- To carry out detailed sustainability risks assessment for high impact contracts;

- To put project / contract sustainability governance in place;

- To apply a Life-Cycle approach to cost/impact assessment;

- To set Key Performance Indicators with key suppliers;

- To reward or penalize based on performance relevant to the contract;

- To integrate measures into a balanced score card approach reflecting both input and

output;

- To undertake comparative assessment among peer organisations;

- To report benefits from sustainable procurement, for example, through a

sustainability report;


- To share best practices with other organisations;

Thanks to the robust international social responsibility programmes and standards available,

the development in social responsibility is mature and comprehensive based on the findings.

Whereas, the current environmental practices adopted are mainly related to legal

compliance and good practices in the areas of waste management and environmental

protection. Organisations could further improve in the areas such as adopting a systematic

approach to environmental management, energy management and carbon emissions

reduction.

Finally, the findings did not indicate any correlation between the level of performance

achieved and the demographics of the buying office, including its size, country of origin or

the products being procured. It is down to the discretion and determination of the buying

office to drive the direction and extent of its sustainable procurement activities to strike a

balance in its social, economic and environmental performance.

According to BS 8903:2010, a sustainable policy as well as the strategies to achieve it is the

foundation of the system of sustainable procurement in an organisation. Without setting the

policy, the organisations cannot set priorities and the level of resources input for initiating

the activities. For organisations that have set a sustainable policy and where the strategies

are established or being introduced, the culture, technology and infrastructure of the

organisation and the judgement of top-level management definitely count when determining

how far the organisation will achieve sustainable procurement. All in all, sustainable

procurement should be made an integral part of the core management system of an

organisation to make it a success.

4.7 References

BSI, 2010. BS 8903:2010 – Principles and Framework for Procuring Sustainably – Guide

The Department for Environment, Food and Rural Affairs, UK, 2009. The Flexible

Framework (abstracted by The Sustainable Procurement National Action Plan, Procuring

the Future)

The Department for Environment, Food and Rural Affairs, UK, 2012. Sustainable

Procurement in Government: Guidance to the Flexible Framework

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© 2012 Hong Kong Quality Assurance Agency The Hong Kong Quality Assurance Agency owns the copyright and other intellectual property rights in this report. All rights of the Hong Kong Quality Assurance Agency are hereby reserved. No part of this document may be reproduced or transmitted in any form or by any means, including photocopying and recording, without the written permission of the Hong Kong Quality Assurance Agency. Such written permission must also be obtained before any part of this document is stored in a retrieval system of any nature.

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