The journey towards becoming a sustainability-focused company has become more crucial and complex than ever, especially as sustainability reporting becomes mandatory for listed companies. For Palasino Holdings Limited, a middle capitalization listed company (mid-cap), our public listing in Hong Kong last year was not just a financial milestone but a transformational opportunity to embed sustainability principles into our core strategy.
This journey has brought valuable lessons, from navigating the dual demands of the European Union’s (EU) Corporate Sustainability Reporting Directive (CSRD) and Hong Kong Stock Exchange (HKEX) environmental, social and governance (ESG) requirements, to overcoming the challenges of integrating sustainability across multiple jurisdictions.
Building a foundation for sustainability reporting
The HKEX has raised the bar on ESG disclosures over the years, with new guidance setting clearer disclosure expectations. This presented a significant challenge for mid-caps like us, who were busy preparing the necessary information for a public listing while providing additional ESG data. Compounded by COVID-19 disruptions and key management turnover in our hotel segment, these experiences highlighted the critical importance of robust data management and governance.
Given that most of our operating units are located in Europe under different EU jurisdictions, the Palasino Group, a.s. took a proactive approach to ESG reporting, aligning it with the rigorous European CSRD/European Sustainability Reporting Standards (ESRS) sustainability standards for the 2023/24 fiscal year. We implemented a comprehensive data collection system, drawing information from our accounting systems as well as external sources, and organizing it according to pre-set schemas and templates. This preparation work not only eased the transition to meet the HKEX mandatory ESG reporting requirement post-listing, but it also taught us valuable lessons. Early planning for data collection, equipping senior staff to access the relevant information, and ensuring the continued availability and updates of pertinent data are invaluable in building a strong foundation for ESG reporting and beyond. These strategies can help navigate complex reporting landscapes, especially for midcaps operating across multiple jurisdictions.
Embracing best practices through collaboration
Shortly after our listing in March 2024, the Group faced the significant challenge of preparing both our first annual report and ESG report by the 31 July 2024 deadline – just four months after going public. This was further compounded by the higher European reporting requirements, as our major operating subsidiary is located in the Czech Republic, where the ESG reporting deadline is one year after the financial year-end. Adding another layer of complexity, we also needed to submit our ESG data to Far East Consortium International Limited, our parent organization, for their ESG report.
Navigating the varying timelines and requirements has been a significant undertaking. While the European reporting timeline provided us with more time, the overall complexity of the process required careful planning and coordination. After weighing the pros and cons, we decided to collaborate with different ESG consultants for our Hong Kong and European operations. This allowed us to issue two separate ESG reports to meet the different requirements. Collaborating with external consultants who possess the relevant skillsets has been crucial in supporting our local and overseas ESG reporting developments, in line with the International Sustainability Standards Board (ISSB) and HKEX’s guidance on “Available skills, capabilities and resources”.
Palasino is a diversified hotel, gaming and leisure group with operations in the Czech Republic, Germany, and Austria. As the Group’s business includes gambling operations, our commitment to sustainability also includes a robust responsible gaming policy and legal compliance. The Group prioritizes customer’s well-being through employee training to recognize and support individuals facing potential risks of gambling problems, integration with government-related exclusion systems and collaborating with non-profits and government authorities. This ensures that our gaming operations address the “social” pillar of ESG, an often less discussed but a crucial element, as found in IFRS/HKFRS S1. In doing so, the Group ensures its operations aligns with social sustainability goals.
Aligning with global sustainability standards and exploring integration
The Hong Kong government’s plan to align local sustainability reporting requirements with the ISSB Standards no later than 2028 for listed publicly accountable entities (PAEs) marks a significant shift towards harmonizing global sustainability reporting.
The Group is proactively planning to meet these changes, driven by our subsidiary’s need to meet the European CSRD/ESRS standards. Beyond meeting regulatory requirements, we recognize the need to consider climate and sustainability-related issues in our business decision-making and risk-management processes. As such, we are exploring the possibility of combining our separate ESG reports for Hong Kong and Europe into a single, harmonized disclosure that aligns with the ISSB Standards.
An opportunity to lead change
At the Group, we view the evolving ESG landscape not as a challenge but as an opportunity for mid-caps to lead meaningful change. For instance, we have begun implementing new technologies that reduce energy consumption and lower our carbon footprint. With a strong determination to continue this progress, we aim to adopt further innovations that significantly minimize our environmental impact. By working together with regulators, industry peers, and other stakeholders, we are confident in our ability to navigate these evolving requirements and create long-term value for our shareholders and the communities in which we operate.
