• Overall average score up by11.13 per cent
• Top 20 companies up by 5.29per cent
• Mainland Chinese companiesshow continuous improvement in business sustainability

HONG KONG, CHINA - Media OutReach - 25 July 2018 - The Chinese University of Hong Kong (CUHK) Business School's Centrefor Business Sustainability (CBS)announced today results of the 3^rd Hong Kong Business SustainabilityIndex (HKBSI), where leading companies in Hong Kong have shown increasing concerns for corporate social responsibility (CSR)and business sustainability.

Established in March this year, CBS is a jointeffort of Department of Government and Public Administration and Department ofManagement at CUHK. The Centre will continue the sustainabilityindex projects initiated by Prof.Carlos Lo, when he set up the Sustainability Management ResearchCentre (SMRC) at The Hong Kong Polytechnic University (PolyU) in May 2013, withthe support of The Hong Kong Council of Social Service and the Hong KongProductivity Council as strategic partners. As one of the major initiatives, HKBSI aspires to inspire companies inHong Kong to adopt CSR as a progressive business model for them to achievebusiness sustainability.

Compared to the results of the 2^nd HKBSIreleased in 2016, the overall average score of the 50 constituent companies ofthe Hang Seng Index (HSI) as at 6 June 2017 in the 3^rd HKBSI was50.82 (out of 100 points), an increase of 11.13 per cent, whereas the averagescore of the top 20 Index companies has recorded 72.46 (out of 100 points), upby 5.29 per cent.

Both the overall average score and that of the top20 Index companies have registered an increase for two consecutive rounds ofHKBSI. In comparison with that of the 1st HKBSI, which was launched in December2015, the overall average score of the 3rd HKBSI registered an increase of21.72 per cent (from 41.75 points in the 1st HKBSI). For the top 20 HKBSI Indexcompanies, the mean score of this round has recorded a significant improvement of26.57 per cent (from 57.25 points in the 1st HKBSI).

Prof. Carlos Lo, Director of CBS, explainedthat the assessment of HKBSI is based on the unique "Values -- Process -- Impact" (VPI) model, which wasdeveloped by SMRC and launched in 2015. He highlighted the progressiveadvancement in the performance of business sustainability over the past threerounds of HKBSI. However, he pointed out that in this latest round, despite anincrease in the overall average score, the standard deviation was also visiblylarge (21.5 points), reflecting a huge performance gap between the top andbottom companies. For the top companies with over 80 points, their overallperformance in sustainability attained the level of "pace-setter" andwas comparable to international standard. But for those companies scored belowthe overall average score, they were still in the stage of "explorer"and have yet to set a clear CSR orientation and a proper management framework.

Among the assessment aspects of VPI, in comparison with the results ofthe 2^nd HKBSI, "Values" has registered the highest scoreof 62.40 points and the highest growth of 16.57 per cent in the 3^rdround. "Process-Management" (58.48 points) and "Process-Practice"(56.22 points) have also performed well, recording 6.72 per cent and 8.72 per cent riserespectively. The average score of "Impact"(32.59 points) has chalked up an impressive increase of 14.33 per cent; yet, "Impact" has remained as theweakest area across the board.

Prof. Lo attributed the high score in "Values" to the companies'increasing adoption of conceptual frameworks related to business sustainabilityand CSR, as well as their greater concern for various stakeholders. It showsthat companies have increasingly approached their CSR activities in a strategicmanner, with defined priorities aligned with their business drivers, thusenabling the companies to leverage their strengths for achieving better impacton the beneficiaries.

On "Impact"of the VPI model, the weakest areathat companies performed, Prof. Lo said many companies are still implementingCSR on project-driven basis. Although many have begun to take"Impact" more seriously, they still lack the ability to measure, bothqualitatively and quantitatively, the results and impacts of their CSRpractices and activities. He said evaluation and review of these practices arestill relatively less developed in many companies, and it will be important forthem to apply measurable Key Impact Indicators and comparable data related toCSR management. Such evaluations are useful for companies in not only improvingtheir internal governance, but also strengthening their externalaccountability.

Currently, more thanhalf (52 per cent) of the HSI constituent companies are non-Hong Kong basedcompanies, comprising of H-shares, red chips and other mainland Chinese firmslisted in Hong Kong. The overall average score of these companies in the 3^rdHKBSI recorded a 20.36 per cent rise to 42.33 (out of 100 points) when comparedto that of the 1^st HKBSI, showing a continuous improvement in the performanceof business sustainability.

"This is an encouraging trend, indeed",expressed by Prof. Lo, given that most of these non-local companies are Chinesefirms, which are late comers of CSR with limited knowledge on businesssustainability. It is expected that this group of companies will continue tomake noticeable improvement in their CSR management and performance as theirlearning curve steadily progresses. On the whole, the rising trend of their CSRperformance indicates a lift of the quality of corporate management, which inreturn, will positively impact their competitive advantage and hence investmentvalue.

HKBSI aims atencouraging companies in Hong Kong to adopt CSR as a progressive business modelfor them to achieve business sustainability. Putting a spotlight on the largestcompanies as a leading force, fifty HSI constituent companieswere invited to complete an online assessment questionnaire concerning theirCSR performance for the financial year ended in 2015/16, based on publiclyavailable information. Each company was assessed in three major areas, namelyCSR Values, CSR Process (comprising CSR management and practices) and CSRImpact against seven stakeholder groups, as well as the company's contributionsto economic, social and environmental sustainability. As the Technical Partnerof the project, SGS Hong Kong Limited conducted sample check and verificationof the information provided by individual companies.

Since 2015, SMRC at PolyU has compiled theHKBSI and announced the results on an annual basis in order to timely informboth the local and the international business communities the on-goingdevelopment and performance of the Hang Seng Index's constituent companies onbusiness sustainability. CBS will continue such meaningful project to promoteCSR and business sustainability in both local and regional business communitiesin the wake of the move of Prof. Carlos Lo from PolyU to CUHK. The compilationof the 4^th HKBSI is now under preparation and the results will beannounced toward the end of this year.

"We hope that participating companies canmake full use of HKBSI assessment and individual company reports, which reflecttheir CSR performance and level of sustainability, as a comprehensive andholistic tool to review their annual business sustainability achievements, andto identify ways for improving the weaker areas in their CSR practices andimpacts," said Prof. Lo.

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About CUHK Business School

CUHKBusiness School comprises two schools -- Accountancy and Hotel andTourism Management -- and four departments -- Decision Sciences andManagerial Economics, Finance, Management and Marketing. Establishedin Hong Kong in 1963, it is the first business school to offer BBA, MBA andExecutive MBA programmes in the region. Today, the Schooloffers 8 undergraduate programmes and 20graduate programmes including MBA, EMBA,Master, MSc, MPhil and Ph.D.

Inthe Financial Times Global MBA Ranking 2018,CUHK MBA is ranked 43^rd. In FT's 2017 EMBA ranking, CUHK EMBA is ranked 32^ndin the world. CUHK Business School has the largest number of business alumni (34,000+)among universities/business schools in Hong Kong -- many of whom are keybusiness leaders. The School currently has about 4,400undergraduate and postgraduate students and Professor Kalok Chan is the Dean ofCUHK Business School.

More information is available at www.bschool.cuhk.edu.hkor by connecting with CUHK Business Schoolon Facebook: www.facebook.com/cuhkbschooland LinkedIn: www.linkedin.com/school/3923680/.

Appendix 1

The Hong Kong BusinessSustainability Index -- Average Score

Appendix 2

Scores byVPI Model -- 3^rd HKBSI vs 2^nd HKBSI

Appendix 3

The3^rd Hong Kong Business Sustainability Index Company List (inalphabetical order)

*Top 20 Companies inthe 3^rd Hong Kong Business Sustainability Index