China’s businesses ‘should better integrate ESG practices’
Chinese businesses should attach greater importance to implementing more environmental, social and governance (ESG) practices to contribute to the country’s green transition, experts said at the recent ESG Global Leaders Conference in Shanghai.
“Sustainable development is more than a concept from the macro perspective,” said Shanghai Jiao Tong University’s Tu Guangshao. “It needs to be conducted in various activities. As the micro entities of social and economic activities companies are crucial to advance sustainable development.”
He added: “To better attain such a goal, companies should better integrate ESG practices into their strategies, operation, management, performance evaluation and governance systems.”
At the conference, 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 roll-out 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 experts from the Shanghai Advanced Institute of Finance (SAIF), 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.
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, according to the report. So 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 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 44% of companies have introduced internal ESG mechanisms.
George Walker, CEO of multinational asset manager Neuberger Berman, said he 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.
Energy transition demands international co-operation
Global solidarity and cooperation is paramount if international global energy transition goals are to be achieved, according to China’s Foreign Ministry spokesperson Lin Jian.
Lin told a Beijing press conference that developed countries in particular need to create favourable conditions for international green cooperation. Protectionism, unilateralism and politicization will only harm the common interests of the international community.
He said that over the past decade China has generated over half of its domestic electricity consumption increase through clean energy generation, accounting for over 40% of the world’s annual installation of renewable energy facilities. It has also reduced its carbon dioxide emissions by around three billion tons. It is one of the countries with the fastest reduction and the top one user of renewable energy, Lin said.
Lin’s comments came in response to two reports by the International Energy Agency: the World Energy Outlook 2024 and Renewables 2024. The Renewables 2024 report highlighted China’s anticipated role in leading the global renewables market, with the country projected to account for 60% of the worldwide capacity expansion by 2030.
China has pledged to peak its carbon dioxide emissions before 2030 and has been accelerating its growth in the green industry, including the development of green energy technologies and the establishment of a green industry chain, Tian Yun, an economist based in Beijing, told the Global Times website.
