亚洲-公用事业行业-亚洲公用事业：ESG的10大问题

Disclosures & Disclaimer This report must be read with the disclosures and the analyst certifications in the Disclosure appendix, and with the Disclaimer, which forms part of it. Issuer of report: The Hongkong and Shanghai Banking Corporation Limited View HSBC Global Research at: https://www.research.hsbc.com  The sector is under increasing scrutiny because of concerns about pollution and global warming  We address 10 key ESG questions which are relevant to the region’s utility companies  Some of our findings are surprising – for example, mainland China runs the most efficient coal power stations in the world In the spotlight. The utilities sector finds itself at the forefront of the debate about climate change. The use of coal has put conventional power companies under increased scrutiny as concerns about pollution and the environment rise. And while the benefits of renewable energy are obvious, company valuations have de-rated over the last five years because of uncertainties about related policies and government subsidies. This report, the latest in a series on how environmental, social and governance (ESG) factors affect sectors in Asia, asks 10 questions about how utility companies fare on key ESG issues. Three surprises. While many investors are familiar with the main themes, some of our findings may come as a surprise. For example, 1) mainland China now runs the most efficient coal power stations in the world and the companies which operate them have also made huge commitments to renewable energy, with installation targets that are even higher than those of dedicated wind power developers; 2) expect to hear a lot more about the threat from sulphur hexafluoride (SF6), a colourless, odourless gas widely used in electricity transmission whose global warming potential is 23,500x higher than that of CO2; and 3) leakage of methane, the main ingredient in natural gas, a clean fuel which emits 50% less CO2 than coal, and the second largest contributor to global warming after CO2, which is potentially an issue for gas utilities. Regional comparison – Hong Kong leads the way, while India lags behind. ESG disclosures enable companies to improve their reputation among investors, demonstrate risk management, and explain their strategic positions. We find that the level of disclosure varies. Our analysis shows that Hong Kong-based utility companies in our coverage have relatively better ESG disclosure practices, while those operating in mainland China are catching up fast. Peers in India lag behind as none of our covered utilities have sufficient disclosure in environmental parameters such as greenhouse gas (GHG) emissions and energy consumption. An integrated approach. We recommend reading this report in conjunction with ESG Integrated: Taking ESG analysis in Asia to the next level (1 June 2020), which launched the series. It explains our preference for looking at ESG on an integrated basis rather than taking a scoring or rating approach (see