ESG is an acronym for Environmental, Social, and Governance. ESG indicators measure the sustainability of corporate development from the perspectives of environmental, social and corporate governance.
An ESG report is a publicly available document that discloses environmental, social, and governance data, giving stakeholders insight into how a company is effectively managing its ESG issues.
ESG reporting introduces a layer of transparency around potential risks and opportunities, giving stakeholders confidence that your commitment to sustainability is genuine. With the increasing demand for sustainability information from investors, consumers, employees, and other stakeholders, generating high-quality, reliable, and accurate ESG data has become an important cross-functional task for large and small businesses.
In addition, ESG reports contain information on a company's impact materiality (positive and negative impacts on people, planet, and society) and its financial materiality (how ESG issues affect a company's financial performance, operations, risk profile, etc.). Known as double importance, companies are increasingly expected to do so.
Climate change
Global climate change has stimulated a sound and long-term business awareness of enterprises, and Chinese companies continue to incorporate ESG considerations into their development, and continue to create and release value in society, economy and environment to achieve sustainable development goals.
According to the World Economic Forum's Global Risks Report 2022, in the next 10 years, the top three of the world's top 10 risks will be climate- and environment-related risks: adverse climate action, extreme weather, and biodiversity destruction.
China has set the "3060" goal of carbon peak and carbon neutrality, the EU has legislated to clarify the 2050 carbon neutrality goal, and the United States has returned to the Paris Agreement. Global climate change has stimulated a sense of sound and long-term business awareness.
Stakeholder needs
From internal employees to consumers, customers, and the public, the attention, expectations and requirements of various stakeholders for corporate ESG are increasing, prompting enterprises to integrate ESG and sustainable development concepts into their strategies and operations.
Companies: Good ESG management can help companies better manage internal and external governance, including attracting talents, developing markets, building brand reputation, addressing climate change challenges, and achieving sustainable value and long-term development.
Regulation is gradually improving
At present, various exchanges are strengthening the requirements for the assessment and disclosure of corporate ESG and climate information, further improving the standardization and transparency of information disclosure and evaluation, and promoting the development of ESG.
The disclosure requirements for H-share ESG information have become stricter
The Climate Disclosure Guidelines will be mandatory in 2025.
It is recommended that the disclosure of listed companies comply with the requirements of the Task Force on Climate-related Financial Disclosures (TCFD), which will be mandatory in 2025.
The Corporate Governance Code provides clear information on risk management and oversight.
From January 2022, ESG reports will be published at the same time as the annual award, emphasizing the ESG responsibilities of the board of directors and strengthening internal risk management.
Practical Guidelines for Net Zero Emissions for Businesses" to help manage carbon emissions.
It is designed to help companies understand their carbon emissions and set realistic net-zero targets to avoid risks.
The A-share compliance supervision system is becoming more and more perfect
The Listing Rules included ESG-related clients for the first time.
In January 2022, the Shanghai Stock Exchange and the Shenzhen Stock Exchange updated the Listing Rules to include ESG content for the first time, including the inclusion of ESG requirements in the corporate governance chapter, and the strengthening of ESG disclosure requirements, especially the disclosure of negative events.
Mandatory disclosure of ESG information of the constituent stocks of the STAR 50 Index.
In January 2022, the Shanghai Stock Exchange's Notice on Doing a Good Job in the Disclosure of the 2021 Annual Reports of Listed Companies on the STAR Market requires companies in the STAR 50 Index to disclose ESG reports at the same time as their annual data disclosures.
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ESG report preparation, ESG training, ESG strategic planning.