China-Singapore Jingwei, December 21 (Ma Jing, Xue Yufei) In recent years, ESG has set off a boom in China's capital market, and the number of ESG-related reports released by listed companies has continued to increase, and ESG** has also entered the fast lane of development.
Why are they all chasing ESG?On the 21st, at the 2023 China Corporate Governance 50 Forum and the 12th Financial China V Forum, a number of experts, scholars, and business people were interviewed by Sino-Singapore Jingwei, and "creating value", "sustainable development" and "focusing on corporate governance" were the high-frequency words they mentioned.
2023 China Corporate Governance 50 Forum and the 12th Finance China V Forum.
Where does the motivation for disclosure come from?
ESG (Environmental, Social, Governance) is an international sustainable development indicator system proposed by the United Nations Principles for Responsible Investment (UNPRI) in 2004 and has evolved and developed over the years.
According to the ESG Development Report of China's Listed Companies (2023) jointly released by the China Association of Listed Companies and China Securities Index *** on November 16, as of the first half of 2023, 1,767 A-share companies have released ESG reports for 2022, accounting for 3518%。
At the 2023 China Corporate Governance 50 Forum and the 12th Financial China V Forum, Yu Xingxi, Secretary-General of the Beijing Association of Listed Companies, told China-Singapore Jingwei that the ESG concept emerged from the investment industry, and earlier investment institutions found that investing in companies with high levels of corporate governance and environmental protection would have higher returns. Therefore, the practice of ESG concept has gradually become a trend.
According to Su Mei, vice chairman of the Academic Advisory Committee of the China Association of Public Companies, when foreign investors invest in Chinese companies, they will use whether to disclose ESG reports as one of the bases for screening targets. Companies with higher ESG rating scores and ratings are more likely to receive ESG investment.
At the forum, Ji Xiaonan, former chairman of the board of supervisors of key state-owned large enterprises, also told Sino-Singapore Jingwei that practicing the ESG concept is a requirement for enterprises to fulfill their social responsibilities and a common trend of large companies. ESG is not the pursuit of short-term profits, because it involves long-term benefits such as social responsibility and environmental protection, such as this year's extreme weather, which will have an impact on the economy and listed companies.
What can ESG bring to the business?
When ESG practice becomes a trend, how to assess its impact on enterprises?** Xiang Anbo, deputy director of the Enterprise Research Institute of the Development Research Center, said that most studies believe that ESG can create value, but this value creation requires certain conditions and thresholds, and only after certain conditions are met, can costs be hedged. The improvement of ESG information disclosure is a long-term process, such as continuously enriching the ESG evaluation system, cultivating professional rating agencies and talents, improving the regulatory framework and policy guidance, etc., only when the external conditions are met, ESG can change from "responsible investment" to "value investment".
Yuan Ya, assistant general manager and senior economist of China National Petroleum Group Kunlun Capital***, believes that a company's focus on ESG performance will bring long-term value improvement. She mentioned that from the results, investors who invest in companies with high ESG governance have a higher average return than ordinary companies. In addition, the ISSB (International Sustainability Standards Board) requires the integration of financial reporting and sustainability reporting, which is commonly understood to be the link between ESG disclosure and financial information, and it is believed that China will move in this direction in the next step.
Yu Xingxi shared a case. In the early years, a large steel company in Beijing relocated to Hebei, although the cost has increased, due to the use of new technology and new equipment, carbon emissions have decreased, and then meet the EU requirements for carbon emissions of imported products, and smoothly enter the EU market. "The increase in costs may be temporary, but in the long run, there will definitely be benefits, for example, if the employee relationship is handled well, it can mobilize the enthusiasm and creativity of employees," he saidDoing a good job in environmental protection can avoid potential regulatory risks. ”
Su Mei mentioned that ESG has enabled enterprises to change from pursuing economic benefits in the past to pursuing social responsibility, corporate governance, and environmental protection. ESG indicators can be used as indicators of corporate sustainable development, so as to better guide enterprises to do a good job in future strategic planning and development.
More attention should be paid to corporate governance.
ESG is directly related to the sustainable development of companies, of which corporate governance (G) is the foundation. Gao Minghua, executive director and secretary general of the Academic Committee of the China Corporate Governance 50 Forum, said that the survey found that many institutions simply understand ESG as green and low-carbon and social responsibility, or mainly emphasize environmental protection and social responsibility, and seriously ignore corporate governance, and even many of the indicators related to corporate governance are indicators of corporate management, which is not rigorous.
Gao Minghua believes that whether it is environmental protection or social responsibility decision-making, it must comply with the rules of corporate governance, otherwise there is a risk of non-compliance. "Corporate governance in a broad sense includes social responsibility, and more specifically, social responsibility includes environmental protection," he said. So, I don't think the relationship between the three is juxtaposed, but containment. ”
At the forum, Li Wei'an, dean and chair professor of the China Institute of Corporate Governance of Nankai University, said that the literal translation of ESG should be taken out, from the essence of the environment, society and society are macro, the key is corporate governance (G), the real ESG is E and S embedded in G, is "green governance", is "natural green + social green", that is, environmentally and socially friendly.
In terms of corporate governance, Gao Minghua suggested that it is necessary to face up to the difference between the governance level of China's listed companies and the international level in order to find problemsA high degree of respect for the decision-making and supervision rights of small and medium-sized investors, as well as the right to income, is essential to boost investor confidence;Ensure the implementation of the tenure system and contract system of managers, and minimize the intervention of major shareholders and chairmen in the general manager.
In terms of system construction, Yu Xingxi suggested that the regulatory authorities should formulate ESG information disclosure guidelines for listed companies by industry, and the guidelines should refine the indicators, and clarify how these indicators are calculated and the relevant basis. On this basis, all A-share companies should be forced to disclose ESG reports.
Zheng Zhigang, a professor at the School of Finance and Finance of Renmin University of Chinese, reminded that it is necessary to see both the long-term value and the cost of ESG, and ESG should become a spontaneous and voluntary behavior of enterprises, and flexibly adjust according to the development stage and business strategy.
ESG is certainly a continuous development process, and relevant indicators may also emerge from different systems or dynamically adjust with the development process. Fu Haiyang, general manager of Caida** bond financing department, said that ESG development must move forward steadily, and it needs to be valued and practiced by academia, the financial industry and even the whole society in order to have more detailed results.
The 2023 China Corporate Governance 50 Forum and the 12th Finance China V Forum are guided by the China Association of Public Companies and China News Service, hosted by the China Corporate Governance 50 Forum, China-Singapore Jingwei, and the Academic Advisory Committee of the China Association of Public Companies, and co-sponsored by the CITIC Reform and Development Research Association and the School of Economics and Business Administration of Beijing Normal University.
For more information about the report, please contact the author of this article, Ma Jing, email: [email protected]) (China-Singapore Jingwei APP).
The views in this article are for reference only and do not constitute investment advice. )
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