In 2024, the A** field is about to enter a new stage of mandatory disclosure in the issuance of sustainability reports. Although the relevant documents are still being solicited for comments, the discussion of the new rules is still endless in the first week after the Chinese New Year holiday.
The night before Chinese New Year's Eve, under the unified guidance of the China Securities Regulatory Commission, the Shanghai Stock Exchange, the Shenzhen Stock Exchange and the Beijing Stock Exchange respectively issued the Guidelines for Self-Regulatory Supervision of Listed Companies - Sustainable Development Report (Trial Implementation) (Draft for Comments) (hereinafter referred to as the "Guidelines") for public comment.
According to the guidelines, A-share listed companies are encouraged to publish sustainability reports or ESG (environmental, social and governance) reports, and put forward specific requirements for reporting frameworks and disclosure content. During the reporting period, companies that were continuously included in the sample indices of SSE 180, STAR 50, SZSE 100 and ChiNext should disclose their sustainability reports, and other listed companies should disclose their sustainability reports, and encourage other listed companies to make voluntary disclosures. The Beijing Stock Exchange does not impose mandatory disclosure requirements on sustainability reports, and encourages companies to "do what they can".
In particular, it is worth noting that in the previous documents issued by the China Securities Regulatory Commission and the stock exchange, most of the expressions used in social responsibility reporting and environmental information disclosure were used, but the above-mentioned guidelines rarely directly pointed out the encouragement of sustainable development reporting and ESG reporting. Industry insiders believe that although the previous formulation is closely related to ESG, the two are based on different policy contexts. The former is mainly based on the fulfillment of corporate social responsibility, while the latter is proposed under the green financial system, so the impact effect is different.
To be honest, we didn't really know much about ESG reporting before, and a lot of times we thought it was a basket that was good for me and put it in it. But now that there are guidelines, first of all, it is clear that this thing has to be done, and it must be done sooner or later, and it is necessary to increase investment in combination with the actual operation of the enterprise; The second is to clarify what aspects should be focused on to show to the outside world, and communicate with investors and financial institutions more smoothly. A senior executive of a listed company in the A-share energy sector told Yicai.
In line with international and national conditions, ESG information disclosure was standardized for the first time.
According to data released by the China Securities Regulatory Commission, since 2023, more than 1,700 listed companies have disclosed sustainability-related reports, involving one-third of A-share listed companies; More than 3,000 companies, or more than 60 percent, disclosed the measures they have taken to reduce carbon emissions and their effects. Taking the Shanghai Stock Exchange as an example, a total of 1,023 listed companies disclosed their 2022 social responsibility reports, ESG reports or sustainability reports in 2023, with a disclosure rate of 47%.
Despite the sheer volume of reports, there has been constant criticism of the quality of reports in the capital markets. A person from the first department of a listed company told reporters that after the company's sustainable development report was released last year, it received "bad reviews" from some investors. "There are too many ESG evaluation subjects and standards in the market, and regulators, rating agencies, investors, and third-party institutions in different regions have their own dimensions and ratings. Therefore, in the context of the lack of a unified disclosure standard, it is helpless to be questioned about selective disclosure. He said.
The urgent need for unified standards was once the primary consensus of the industry when talking about ESG information disclosure. As the first systematic ESG information disclosure rules for listed companies in China, the industry generally believes that the guidelines will promote the standardization of sustainable information disclosure of A-share listed companies.
What to disclose and how to disclose are the two core issues of concern to the outside world. In this regard, the guidelines make it clear that listed companies set differentiated disclosure requirements for different topics according to the levels of mandatory disclosure, guided disclosure and encouraged disclosure. Some important issues should be disclosed in qualitative and quantitative ways, so as to facilitate horizontal and vertical comparisons between investors and stakeholders. At the same time, the rules set out mitigation measures for quantitative disclosure, and listed companies can make qualitative disclosures and explain the reasons for indicators that are difficult to disclose quantitatively in the first reporting period.
The first financial reporter consulted the guidelines and found that "important issues" are interpreted as issues that have a greater impact on the value of the enterprise (financial materiality), and the performance of the enterprise has a significant impact on the economy, society and the environment (impact materiality), which is determined by the disclosing entity in combination with the characteristics of its own industry and business.
This "dual materiality" principle is aligned with the philosophy of the Global Reporting Initiative (GRI). In addition, the guidelines also put forward four core contents in the disclosure framework: "governance, strategy, impact, risk and opportunity management, and indicators and targets" to analyze and disclose the topics to be disclosed, so that investors and stakeholders can fully understand the actions taken by listed companies to address and manage sustainability-related impacts, risks and opportunities. This is broadly in line with the framework of the International Sustainability Standards Board (ISSB).
It is worth noting that the guidelines not only draw on a number of international experiences, but also adjust them according to national conditions. For example, the guidelines appropriately reduce the difficulty of disclosure of some topics, and do not make mandatory requirements for carbon emissions from upstream and downstream industrial chains, carbon emissions from joint ventures, scenario analysis, etc., so as to promote the transformation of behavior into a focus and not deliberately pursue the perfection of information disclosure, so as to achieve a steady start and gradually promote companies to strengthen disclosure.
At the same time, the guidelines also add a number of content requirements with Chinese characteristics. For example, listed companies are required to disclose the registration and trading of national voluntary greenhouse gas emission reduction projects and certified emission reductions (CCER), the specific situation of supporting rural revitalization during the reporting period, and the amount of overdue payments to small and medium-sized enterprises.
Although it is only a consultation draft, the release of the guidelines is a milestone and a long-awaited guidance document for the market. There is no doubt that the issuance of the guidelines will play a significant role in improving the standardization and quality of reporting. Guo Peiyuan, chief expert of SynTao Consulting, said.
ESG investment, the cold thinking behind the hot hand.
The announcement of the new regulations has once again turned the attention of society to ESG that has been popular for a long time.
According to the China Business Research Institute, the global focus on ESG has grown exponentially in recent years. As can be seen from Google Trends, the popularity of ESG entries has surged since 2019. By 2023, ESG entries will have an average annual popularity of more than 90, and in some months even reach a full popularity value of 100.
Compared with the repeated enthusiastic offensives in China, many overseas institutions are "disenchanting" and "cooling" ESG emissions. Analysis by financial data software firm Fact Set shows that mentions of ESG in US companies' earnings conferences** have been steadily rising until 2021 and have been declining since then. In the fourth quarter of 2021, 155 companies in the S&P 500 mentioned ESG initiatives; By the second quarter of 2023, the number of mentions had dropped to 61.
According to data from Calastone, a UK** service provider, as of September 2023, European and American investors have withdrawn from the ESG field for five consecutive months, with a total of 4Of the £8.5 billion, about half of the divested ESG** came from North American countries.
In addition to political reasons, the spearhead of foreign companies attacking or abandoning ESG is that it is difficult to generate actual economic benefits, and ESG is also suspected of becoming an excuse for many companies to "greenwash". In the view of many domestic industry insiders, these misunderstandings and misunderstandings are exactly what all parties should try to avoid in the ESG boom set off in China.
At present, people still have a vague or even vague understanding of the concept of ESG. ESG should actually be reversed and G (corporate governance) should be put in front. Because both social responsibility and environmental protection are made through corporate governance. Gao Minghua, director of the Corporate Governance and Enterprise Development Research Center of Beijing Normal University, said in an interview with Yicai that the formulation of ESG standards should be coarse rather than detailed, but special attention should be paid to and abide by the G guidelines, because this is the premise of all corporate decisions, and there is still considerable room for improvement.
Gao Minghua said that the concept of ESG needs to be promoted, but it cannot be exaggerated. At present, the evaluation indicators of social responsibility and environmental protection of some institutions are too large and complex, and there is a prominent tendency to expand, and some companies falsify in order to cater to ESG, that is, the so-called "greenwashing" phenomenon, which should be corrected in time.
Regarding ESG investment and reporting, Zhang Yan, a professor at the Chinese Academy of Social Sciences, believes that the cost of ESG system, system and capacity building of enterprises does not need to be very large, but only to further improve the existing corporate governance structure, but these tasks are necessary for enterprises to do. "The first is legality, which is to meet the requirements of regulation. The second is the recognition of the capital market, which reduces the cost of financing. The third is that by doing ESG work, enterprises may find shortcomings, find new social and environmental risk points, and through improvement, it is not easy to have a big risk, there will be no thunderstorm, there will be no big crisis, which is definitely a very big benefit for enterprises. ”
In view of the provisions and impact of this guideline, the industry has also given a high evaluation. **Bao Jie and Shi Yichen of the International Institute of Green Finance, University of Finance and Economics, believe that the current guidelines have a relatively complete overall framework, covering not only the sustainability disclosure framework, but also the specific topics in the three dimensions of environmental, social and governance. The level of detail and comprehensiveness of the relevant topics need to be set according to the existing sustainability disclosure basis of A-share listed companies.
In order to better implement the policy in the future, the two researchers suggested that on the one hand, it is difficult for listed companies to disclose some contents, and it is necessary to further study and introduce supporting toolkits, carry out relevant research to form supporting research results, and provide more guidance and support for listed companies. On the other hand, an index table should be added to the annex to provide a unified reference for listed companies. By indexing the sustainability information disclosure requirements, it can help listed companies better understand the content of the detailed rules and divide the indicators into different levels. In addition, the current level of understanding of sustainability information disclosure by listed companies is uneven, and it is necessary to accelerate the promotion of sustainable disclosure training for listed companies, and encourage listed companies to set up special departments or full-time personnel to be responsible for promoting sustainable information disclosure.
Editor-in-charge: Ren Haopeng |Review: Li Zhen |Supervisor: Wan Junwei.
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