Prof. Mike LAI Kee-hung, Co-Director of the Research Centre for Environmental, Social, and Governance Advancement, Associate Dean (Academic Support) of the Faculty of Business, Acting Head of the Department of Logistics and Maritime Studies, and Chair Professor of Shipping and Logistics at The Hong Kong Polytechnic University, recently penned an article for HK01, titled “Bidding Farewell to the ‘More is Better’ Myth – Mastering the Art of Accurate ESG Disclosure”, in which he explores issues related to green finance and ESG disclosure.
Prof. Lai notes that, in recent years, green finance and ESG information disclosure have become global trends, with enterprises generally believing that greater transparency attracts more investors. However, his research team’s study of listed manufacturing companies in China found that the relationship between ESG disclosure transparency and corporate risk follows a U-shape curve: moderate disclosure helps reduce share price volatility, but excessive disclosure increases risk. Disclosing an appropriate amount of ESG information can alleviate information asymmetry, boost investor confidence and reduce the impact of unexpected events on share prices. Conversely, over-disclosure of commercially sensitive information may enable competitors to copy business practices, thereby weakening a company’s advantages and increasing its risk exposure. The research also indicates that artificial intelligence and intellectual property protection can mitigate the risks associated with excessive disclosure and enhance corporate competitiveness.
Prof. Lai believes that the priorities of institutional investors also affect the impact of ESG disclosure on risk, and that enterprises should adjust their disclosure strategies according to market conditions. For Hong Kong’s small and medium-sized enterprises, accurately disclosing information about the most distinctive and improvable ESG aspects, alongside technological and patent planning, can help enhance bargaining power and secure green loans. At the policy level, the government should emphasise the quality and relevance of disclosures, encourage enterprises to make good use of artificial intelligence tools, and improve the efficiency and accuracy of reporting. ESG disclosure should be seen as a strategic tool for enterprises to manage risk and strengthen competitiveness, rather than merely a compliance burden.
Online coverage:
HK01 - https://polyu.me/4bZibB7
| Research Units | Research Centre for Environmental, Social, and Governance Advancement |
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