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Jul 07, 2022

CLP Group discusses shift to double-materiality reporting

Power business won best ESG materiality reporting at IR Magazine Awards – China 2021

While the material topics didn’t change much between CLP’s 2020 and 2021 sustainability reports, the way the company discussed the key issues underwent a sizable shift, according to Hendrik Rosenthal, director of group sustainability at the Hong Kong-based power business.

For the 2021 report, CLP deployed a double-materiality approach, explains Rosenthal in a video interview with IR Magazine (scroll down for video). ‘What’s relevant from an enterprise value perspective?’ he says. ‘That’s what investors would usually like to know. And then what’s relevant in terms of where we have impacts? And how do we manage those impacts?’

Rosenthal, whose company won best ESG materiality reporting (large cap) at the IR Magazine Awards – China 2021, also describes how CLP divides ESG information between different reports.

The annual report, which is more a focus for the buy side, covers areas like how CLP can transition to a low-carbon world, meet its net-zero commitment and take advantage of emerging business opportunities, he says.

The sustainability report, meanwhile, looks at impacts the company is having in areas like the environment, communities and customers, he adds: ‘How do we impact them? And what sort of programs and initiatives do we have in place to cater to that?’

Reporting advice

Later in the interview, Rosenthal offers advice to IR professionals and sustainability teams aiming to improve their ESG reporting practices.

‘Fundamentally, it’s really about understanding how we create value through this process of disclosure to the company,’ he says. ‘What do we learn from this? And how can this help us be better prepared for a changing operating environment?

‘That should be the starting point for any organization. We don’t just do reports for the sake of ticking a few boxes and meeting some sort of standard or requirement because the stock exchange or some other regulator asked for it. It should be a helpful annual exercise of reflection.’

The IR Magazine Awards – China 2021 included two sections of awards. The awards-by-nomination section saw companies send in entries about different areas of IR practice, including best ESG materiality reporting, with the winners picked by a panel of expert judges.

The awards-by-research section was based on a survey of hundreds of portfolio managers, buy-side analysts and sell-side analysts that cover Asian companies. Prizes included best overall IR, best IR officer and best IR by senior management. To learn more about our survey results, please see the IR Magazine Perception Study – Asia 2021.