The concept of green consumption has attracted much attention, and the low-carbon development of the home furnishing industry is highly compatible with ESG, resulting in the high popularity of "green marketing" in the home furnishing industry.
* |Manager Magazine, a subsidiary of Manager Media.
Reporter Ji Sheng.
*** Public Gallery.
The home furnishing industry belongs to the traditional labor-intensive industry, and has the characteristics of high energy consumption and greater pollution, as the so-called gold and silver mountains are not as good as lucid waters and green mountains, with the continuous strengthening of the country's supervision of environmental protection, the traditional high-consumption and low-efficiency industries must be accelerated to upgrade and iterate, otherwise they will be eliminated by the society and cannot achieve sustainable development.
Therefore, for the current leading home furnishing enterprises with market competitiveness, whether from the perspective of economy, corporate strategic development, or industry technological innovation and sustainable development, they should and must always keep up with the ESG concept in order to efficiently combine the company's benefits with social and environmental benefits, so as to achieve high-quality development.
Oppai Home Furnishing (603833.)SH) As a listed company in China's custom home furnishing industry that has exceeded the market value of 100 billion yuan, it can be said that it has full market competitiveness in the home furnishing industry. In 2023, the company independently released the "2022 Environmental, Social and Corporate Governance (ESG) Report" for the first time, aiming to gradually shift from the traditional business value model of "shareholder interests first" to the ESG sustainable development model in the new industrial situation competition through the integration of ESG.
The economic benefits are highlighted
Founded in 1994, Oppai Home Furnishing was listed on the Shanghai ** Stock Exchange in 2017. The company started with custom cabinets, and its business gradually extended to wardrobes, whole home customization, wooden doors, bathrooms, soft decoration, kitchen appliances, metal doors and windows, armored doors, furniture matching, complete home furnishings and other fields, forming a diversified industrial pattern, establishing a double ace category matrix of overall cabinets and wardrobes, with brands such as Oppai, MIFORM, Opali, and Ponis, covering multi-level consumer groups, and is a modern integrated home furnishing service provider integrating R&D, manufacturing and sales in China.
Today, the company has five intelligent production bases in Tianjin, Qingyuan, Wuxi, Chengdu and Wuhan, with a total construction area of more than 2.5 million square meters, more than 7,000 stores worldwide, and its products are sold to 118 countries on 6 continents. With a strong brand and scale advantage, Oppai Home Furnishing continues to create market miracles, and steadily becomes a leading enterprise in the domestic whole-house custom home furnishing industry, and the total production scale of customized home furnishing products ranks first in the industry. When talking about the company's practice of deeper ESG concepts, we should first review the business performance of the past ten years to see whether the company is satisfied with economic development, otherwise, more social responsibility, corporate responsibility, and environmental contribution are impossible to talk about.
From the perspective of income analysis, in recent years, the operating income of Opai Home Furnishing has grown steadily, with an operating income of 47 in 20145.1 billion yuan, Galaxy ** Research Institute expects the company's annual operating income in 2023 to be 2368.4 billion yuan, CAGR (average annual compound growth rate) in the past ten years is 1742%。The operating income in the first three quarters of 2023 was 1656.5 billion yuan, of which cabinets, wardrobes and accessories, bathrooms, and wooden doors achieved revenue of 51 respectively6.4 billion yuan, 887.3 billion yuan, 81.3 billion yuan, 99.6 billion yuan, a year-on-year change of -524%、+1.9%、+12.49%、+6.34%。
From the profit side, the net profit attributable to the parent company increased from 38.5 billion yuan, an increase to 306.6 billion yuan (** value), with a CAGR of 2306%, the net profit attributable to the parent company has achieved rapid growth in the past ten years, and the growth rate is better than the growth rate of operating income, with a cumulative income of about 17.3 billion yuan in ten years, and the economic benefits are obvious. The net profit attributable to the parent company in the first three quarters of 2023 was 231 billion yuan, a year-on-year increase of 1610%, and the operating income in the same period increased by only 1 year-on-year82%。(Figure 1).
From the profitability analysis, the gross profit margin in 2014 was 2823%, with a gross margin of 33 in the first three quarters of 202399%, an increase of nearly 6 percentage points, and the gross profit margin remained at a high level; In terms of net profit margin, the company's net profit margin has basically reached 13% in recent years, and the net profit margin in 2014 was only 811%, an increase of about 5 percentage points; In terms of ROE, it has peaked at 39 since 2016After 45%, the ROE began to gradually decline, and the ROE is expected to be 166%, a new low, the weakening of ROE is mainly affected by the total asset turnover ratio and financial leverage, however, from a numerical point of view, the company's profitability remains at a high level.
Economics has a clear definition of a business – that is, it is aimed at making a profit, and as a shareholder, you also need to focus on return on investment, and ROE performance is remarkable. In terms of cash dividends, since the company's successful listing in 2017, cash dividends have been distributed to shareholders every year, and the dividend payout ratio has increased from around 20% to 40%, with a cumulative cash dividend of about 40600 million yuan, which is twice the scale of the first IPO financing, and the recent financing method has also shifted to convertible bonds to balance the company's development and shareholders' equity.
Looking back on the business performance in the past ten years, it can be found that the company's economic benefits have expanded rapidly, and it has gradually become one of the leading enterprises in the industry, which has also led to the improvement of brand influence. In the context of the country's promotion of green and sustainable development, the company has the ability to deeply practice the concept of ESG development, and independently released the ESG Report for the first time in April 2023. So, how does it work?
According to the Sina Finance APP platform, a total of two rating agencies have made ESG ratings for Opai Home Furnishing this year, and MSCI institutions have given B grades, of which the overall environmental rating is 31 point, 3 points of social responsibility1 point, 5 points in the overall evaluation of governance3 points, the full score of the above details is 10 points;Refinitiv has given a C rating, with a C- rating for the environment, a C- for social responsibility, and a B- for governance. For this reason, this journal selects the 2022 ESG report of Opai Home Furnishing as the research object, and uses the "seven-step thinking" of this journal and the CSI ESG evaluation index system to conduct specific analysis of about 200 indicators in the three dimensions of E (environment), S (society) and G (corporate governance).
Deepen the ESG governance structure
In 2022, Oppai Home Furnishing further established and improved its ESG governance structure, and the original corporate governance structure was composed of four committees under the board of directors, namely the strategy committee, the remuneration and appraisal committee, the nomination committee, and the audit committee, and directly led the two functional departments of the group's president's office and the secretary of the board of directors. In 2022, the company began to gradually integrate into the ESG structure, clarify the functions of each department, and form an ESG governance system as shown in Figure 2, which is divided into strategic decision-making level, strategic management level, and strategy implementation working group, striving to achieve goal-driven linkage between the top and bottom and jointly ensure the effective planning and specific implementation of ESG strategic goals. Specifically, ESG is only an additional empowerment in the traditional management system, and does not subvert the existing governance structure, in the short term, it can give the company time to gradually transition to a new governance system, and the reshaping of the structure is not achieved overnight, but must be adhered to and gradually.
The company attaches great importance to communication with stakeholders, including shareholders, regulators, employees, businessmen, etc., and actively builds a good internal and external communication platform and establishes a transparent and smooth communication mechanism. The 2022 ESG report disclosed that during the reporting period, the company communicated with relevant parties on a number of potential issues related to the environment, society, economy, human rights, etc., summarized 36 applicable issues for material analysis, and finally identified 22 ESG material issues, of which 7 corporate governance issues, 7 environmental governance issues, and 8 social issues, became important reference standards for the company's 2022 ESG report.
As early as 2015, the company launched the "Opai Intelligent Manufacturing 2025" strategy, which is planned to be in-depth to the strategic level of large home furnishing and informatization, to realize the continuous evolution of products from single channel to multi-channel, whole home customization to full-case customization, and focus on the construction of digital factories - that is, Opai Manufacturing 2025 Digital Lighthouse Factory, Oppai Home Furnishing will open up the whole industry through digitalization, and enter the AI factory era of "what you see is what you get, what you feel is what you want, design is manufacturing, and manufacturing is service", taking into account efficiency. Improve the upgrade path of efficiency increase and consumption reduction extending from production to the whole industry.
Secondly, the company adheres to the strategy of green and sustainable development, product research and development "with green as the background color, environmental protection as the cornerstone", regards customer health and safety as the responsibility and pursuit of the enterprise, and constantly meets the new needs of customers for green home. In addition, the information disclosure work has once again won the A-level evaluation of the Shanghai ** Stock Exchange, which is also the fourth consecutive year that the company has won this honor, effectively safeguarding the legitimate rights and interests of shareholders.
The assessment of environmental performance indicators needs to be strengthened
Oppai Home Furnishing adheres to the concept of green environmental protection with sustainable development as the core, implements the EHS management system, passes the ISO14001 environmental system certification and China environmental labeling product certification, and builds its own rigorous green environmental protection system. From the perspective of green production, during the reporting period, the company actively promoted the green factory certification of the five production bases in Tianjin, Wuxi, Qingyuan, Chengdu and Wuhan, and in strict accordance with the requirements for the construction of the green manufacturing system issued by the Ministry of Industry and Information Technology, started to transform from the aspects of facilities, energy consumption, emissions and performance, and accelerated the certification of green factories, such as accelerating investment in photovoltaic projects in terms of energy use.
From the perspective of consumers, according to the "Chinese Consumer Healthy Home Awareness Survey" report, up to 85% of consumers pay attention to health and safety issues when purchasing household products0" strategy, in terms of the control of harmful formaldehyde, the company continues to refresh environmental protection standards, from the popularization of E0 level, advocating the health of formaldehyde-free addition + net aldehyde board 10, to the whole cabinet net aldehyde health 20, and then to the health of today's space net aldehyde 30, with the supply side as the direction of promotion, to promote the transformation and upgrading of the industry in the direction of health and greening.
In terms of resource utilization and carbon reduction, the company's 2022 ESG report only slightly mentions hydropower energy consumption, recycling, pollution prevention and control, and business assessment. Specifically:
Energy consumption increased slightly. Water consumption in 2022 is 17920,000 cubic meters with an intensity of 7972 cubic meters million yuan, an increase of 032 cubic meters million yuan, electricity consumption of 3211110,000 kWh of electricity, the intensity of 14,284 kWh million yuan, an increase of 160 kWh million yuan year-on-year, the comprehensive energy intensity increased slightly, and the comprehensive indicators were not perfect, such as the lack of greenhouse gas emission intensity.
Green packaging, lack of statistics. Oppai Home Furnishing adopts the "4R" concept in terms of material use, that is, Reduce (reduce use), Reuse (reuse), Recycle (recycle), and recovery (** reuse), but the report lacks corresponding performance statistics and cannot evaluate the company's performance contribution in this regard.
Pollution prevention and control needs to be quantified. Regarding cleaner production and pollution prevention, Oppai Home Furnishing strictly controls and complies with the disposal of wastewater, waste gas, noise and solid waste, and conducts real-time monitoring in some production bases to control pollution from the source. However, there is also a lack of relevant performance indicators in the ESG report, and there is no comparison without statistics, and there is no follow-up to talk about specific improvement measures.
Assist in the green transformation and upgrading of the first chain. During the reporting period, Oppai Home Furnishing began to introduce the environmental assessment dimension to screen new suppliers, and the overall consideration of the friendliness of the suppliers to the environment, its screening ratio was 1484%, which needs to be further strengthened.
In addition, there is a lack of indicators such as climate change and environmental opportunities, and the implementation of overall environmental performance statistics is insufficient, resulting in the content basically covering the main details, but still at the level of strategic management, and the follow-up needs to go deep into the level of strategic implementation.
Pay attention to the rights and interests of employees
According to the 2022 ESG report of Oppai Home, the company attaches great importance to the protection of employees' rights and interests. During the reporting period, the total number of employees was 24,527, the company advocated and followed the concept of "people-oriented", continued to improve the employee management system, deepened the democratic management mechanism, and created a fair and warm working environment for employees, specifically from four aspects.
First, provide equal employment opportunities, follow the employment concept of "appointing people on the basis of merit, making the best use of their talents, and being able to go up and down", and build a standardized, professional and diversified career development path for employees;
second, to provide comprehensive basic social welfare;
Third, we should attach importance to safe production and build a dual prevention mechanism for hierarchical management and control of safety risks and investigation and management of potential accidents;
Fourth, build a "double engine" of training + development, and the training cost will exceed 5 million yuan in 2022.
Employee rights and interests involve recruitment, benefits, career development and other links, but the description is not detailed enough, such as the growth curve of employee recruitment in recent years, the care of special groups, the provision and intensity of other benefits in addition to the basic welfare system, the training effect, etc., to solve these problems, ESG executive departments need to spare no effort to count and analyze.
In addition, in terms of social opportunities, Opai Home Furnishing established the "Loving Home Program" in 2014 to focus on difficult families and family sub-health, and then held a series of Loving Home public welfare activities, and set up 5On the 15th Loving Home Day, the Loving Home Public Welfare Association was established to awaken people's own sense of loving their homes and stimulate the happiness and positive energy of the society. For helping the needy, Opai Home Furnishing has carried out many charitable relief activities such as poverty alleviation, elderly care, orphan assistance, and disability assistance, actively engaged in welfare undertakings, and arranged employment for the disabled, people with employment difficulties in poor areas and surrounding villages and towns, and helped rural revitalization. Similarly, the content disclosed in the report still lacks relevant quantitative performance indicators, so it is impossible to assess the actual strength and depth of public welfare.
The CSI ESG evaluation system divides the social dimension into three themes: responsibility management, stakeholders and social opportunities, and the disclosure of social issues in the 2022 ESG report of Oppai Home Furnishing mainly focuses on stakeholders - employees, social opportunities - public welfare. For other topics, such as ** chain, consumers, and corporate dedication, they are not mentioned separately, and the breadth and depth of coverage are insufficient, and in terms of theme induction, the standard line is relatively vague, which also leads to the overall content is not substantial.
On the whole, the improvement direction of Oppai Home's ESG report can be biased towards quantitative performance indicators, cases, etc., especially to make a comparison with the data of previous years, so that there will be a force point in the future development and improvement, and it can also improve the fineness and length of the company's ESG report, and finally participate in the trend of improving the construction of ESG system.