The 'legalisation' of corporate social responsibility: Hong Kong experience on ESG reporting

This article examines the international trend to regulate corporate social responsibility (CSR), with focus on the growing stock exchanges requirements for environmental, social, and governance (ESG) reporting. Using the 2015 'comply or explain' ESG reporting requirement of the Hong Kong Stock Exchange (HKEx) as the setting, I find support to the 'competitiveness view' on themotivation for CSR regulation, as opposed to the 'societal governance view' or 'political actor view'. Key insights are drawn from discourse analysis of HKEx's policy communications materials and public consultation submissions from 2011 to 2015. Event studies on the adopters and non-adopters of voluntary ESG reporting find no evidence that mandatory ESG reporting requirements negatively affect shareholder value. Overall the evidence is consistent with the Hong Kong Special Administrative Region (HKSAR) government pursues CSR regulation as a 'value capturing strategy' for long-term competitiveness.