More focus on ESG key to green shift

Companies should attach greater importance to conducting more environmental, social and governance practices to contribute to China's green transition, said experts and market watchers.

They made the comments at the ESG Global Leaders Conference in Shanghai on Wednesday.

"Sustainable development is more than a concept from the macro perspective. It needs to be conducted in various activities. As the micro entities of social and economic activities, companies are crucial to advance sustainable development," said Tu Guangshao, founding chair of the board of the Shanghai Advanced Institute of Finance (SAIF), Shanghai Jiao Tong University.

To better attain such a goal, companies should better integrate ESG practices into their strategies, operation, management, performance evaluation and governance systems, Tu said.

Xi Guohua, chairman of financial conglomerate CITIC Group, said ESG should be more deeply integrated into companies' strategies, management and risk control. Chinese companies, especially listed companies, should step up research and actively participate in the promulgation of international ESG standards, he said.

Listed companies and State-owned enterprises based in Shanghai have conducted better ESG practices in general, according to the 2024 Shanghai ESG Development Report released during the conference.

This shows that external supervision and promotion play an important role in spreading ESG ideas and advancing related practices, said SAIF experts, the report's compiler.

Meanwhile, Shanghai-based small and medium-sized enterprises have attached greater importance to ESG management in the specific areas of supply chain management, environmental risk assessment and social responsibilities.

Multinational companies have helped to promote ESG concepts in Shanghai by leveraging their global networks and ESG experiences in other markets. Some Shanghai startups have integrated ESG into their business models and development strategies upon a company's inception, according to the report.

Under closer scrutiny, Shanghai-based listed industrial companies have outperformed their peers in other parts of the country in terms of carbon emission information disclosure and measures to reduce resource consumption and environmental expenditure. Over 91 percent of the Shanghai-based listed financial firms released their ESG reports last year, said the report.

Investors now place more emphasis on companies' ESG performance, hoping that their investment will bring not only financial returns but also positive influence on society and the environment. Therefore, companies need to improve their ESG performance so that they can be more competitive in the market. This will also help companies lower financing costs as their market value and trust among investors will be largely enhanced based on their better ESG performance, said SAIF experts.

According to market tracker Wind Info, 2,210 A-share companies released ESG reports in 2023, up 20 percent from a year earlier. Most constituent companies of the benchmark CSI 300 index have released their 2023 sustainability reports.

According to a report from the China Association for Public Companies in late September, more than half of the polled companies have set up special teams to fulfill their sustainability goals. Some 43.73 percent of companies have introduced their internal ESG mechanisms.

George Walker, CEO of multinational asset manager Neuberger Berman, applauded the sustainable information disclosure guidance released by China's three major exchanges and the Ministry of Finance earlier this year.

This has provided a comprehensive framework of information disclosure for companies. Meanwhile, investors are able to obtain more forward-looking and quantified information regarding targeted companies' ESG risks and opportunities. Therefore, they can come up with more precise asset pricing and wiser investment decisions, Walker said at the conference.

shijing@chinadaily.com.cn