KPMG analysis: New coronary pneumonia outbreak may help technology companies adopt ESG strategy

Source: KPMG 2020-06-01

Hong Kong – KPMG analysis on May 19, 2020 shows that driven by the current new coronary pneumonia epidemic, regulatory requirements, and investor expectations, technology companies are increasingly focusing on environmental, social, and corporate governance (ESG) routine work.

The KPMG Technology Industry Innovation Survey 2020 interviewed more than 800 global technology industry leaders from 12 countries, including 110 Chinese respondents. The survey shows that technology companies have realized the importance of incorporating ESG factors into their operations, and 86% of respondents also indicated that the industry needs to develop more codes and guidelines for sustainable development. However, currently only 26% of technology companies have clearly incorporated ESG factors into strategic planning.

At the same time, 34% of respondents believe that climate change has a major impact on the company's investment and financing. KPMG expects that stakeholders will not only evaluate from the direction of financial performance, but will look at the performance of companies in responding to the epidemic and the company's overall performance from the ESG perspective.

Wu Bainian, Partner, KPMG China Sustainable Financial Affairs Hong Kong, said: "Now people are relying on technology like never before. As technology becomes more and more connected to our lives, technology companies have a social responsibility to seriously consider how their business practices are The society has a positive or negative impact. We have reached the critical point where ESG factors have received much attention. Superficial ESG reports are no longer enough. Investors, bankers and customers are asking companies to improve their ESG routines, and they will increasingly demand Technology companies are responsible for their business practices. For technology company leaders, it is imperative to integrate ESG factors into decision-making and operating models. "

In addition to the new coronary pneumonia epidemic, other factors such as climate change and social inequality will have a long-term impact on technology companies, prompting them to adopt long-term and stable sustainable development ESG practices. The reasons why ESG is so important for technology companies include:

First of all, many indexes and research companies analyze and rate companies, with the purpose of providing investors with ESG ratings and reports to understand how companies manage ESG issues. In addition, investors will also review the ESG rating of the target company when evaluating potential acquisition transactions.

Secondly, customers not only require technology companies to provide products or services with competitive prices and quality, but also increasingly require these companies to improve their ESG performance. Today, anyone can use social media to expose incidents related to ESG ’s poor performance or bad business practices, and these incidents may have been spread around the world before the company responded, which has seriously damaged the company ’s reputation.

In addition, companies have sufficient resources, and the effectiveness of sustainable development work can be geometrically different from individual strength, so they are more responsible for becoming good corporate citizens, which is also affected by investors, customers, regulatory agencies, and employees. And the identification of business leaders.

Finally, environmental and social changes will continue to affect the business environment. Unpredictable events such as the New Coronary Pneumonia epidemic, climate change, and network vulnerabilities have led to the interruption of operations or the leakage of customer and company information, which has caused significant losses to companies. Therefore, companies with the ability to adapt to environmental and social risks have better conditions than their peers who lack this ability to stand out from the competition.

Anson Bailey, KPMG China ’s Hong Kong technology, media and telecommunications owner management partner, said: “As more technology and telecommunications companies consider adopting meaningful and innovative methods, we can see that companies have generally become more focused Promote sustainable development practices, and integrate ESG initiatives into its overall digital transformation strategy, and give priority to investing in technological improvements to reduce or monitor the company's energy usage, carbon footprint and waste levels. "

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KPMG analysis: New coronary pneumonia outbreak may help technology companies adopt ESG strategy

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