Enterprises focused on dual role for ESG

Chinese enterprises see ESG practices not only as a social responsibility but also an approach to enhancing corporate competitiveness.

A forum on the Environmental, Social, and Governance concept, or ESG, was held at Fudan University on Thursday, bringing together experts and practitioners from investment, business, academia and ESG research institutions.

ESG has been widely considered an unstoppable trend, but there may also be a doubt: Can enterprises really improve their competitiveness if they engage in ESG and adopt ESG policies?

One of the highlights was the discussion on how Chinese enterprises can use ESG innovation and transformation to improve their competitiveness and reputation in the global market. The participants shared their stories and cases of ESG innovation and transformation, such as digitalization, renewable energy, and the circular economy.

For example, Zheng Hongmeng, chairman and CEO of Foxconn Industrial Internet, believes that for an enterprise, especially a listed company, it is not only necessary to make EPS (earnings per share) bigger, better and stronger, but more importantly, to do ESG well. "EPS and ESG complement each other, especially through digital means."

For renewable materials, renewable energy and green energy, how to build and store them, and widely apply them, has created many circular and closed-loop applications. "When you do ESG well, you will also see the benefits reflected in your EPS," Zheng said.

Meanwhile, Huang Xiaowu, vice president of Haier Smart Home Co, saw opportunities in ESG trends.

"We see different trends in different markets around the world. More and more European consumers, especially the millennials, like to buy environmentally friendly and high-energy-efficiency products," Huang said.

"This gives us an opportunity. We used to have a lot of high-energy-consuming products such as large refrigerators being sold in the European market, many of which are energy efficiency Class F and E. Now we have launched products of Class C, and are even promoting Class B. This change has enabled us to increase our price index."

Yu Rong, from S&P Global Sustainable1, also pointed out that Chinese businesses have a better awareness of ESG disclosure, and the driving forces behind it are diverse, including regulation, the capital market and customer requirements.

"Chinese enterprises' important position in the global supply chain requires them to respond to the increasingly stringent ESG data disclosure requirements of suppliers by head customers, especially European enterprises," she said.

She said that her company had seen a growing number of Chinese enterprises voluntarily participate in the ESG questionnaire filling and rating, and had also seen an improvement in ESG data quality and standard consistency among Chinese enterprises.

ESG trend

In recent years, China has been actively participating in and promoting the global ESG movement, and has made remarkable achievements in ESG investment and practice.

"In China, regulators and enterprises have always been fulfilling and practicing ESG, but we have not used such fashionable words as ESG to express the social responsibility of Chinese enterprises," said Zheng Qinqin, professor of the School of Management of Fudan University.

However, the country also faces some challenges and gaps in ESG data quality, standard consistency, and stakeholder communication. How to balance the international standards of ESG and China's specific national conditions, and develop an ESG system based on China's characteristics, has become an important issue that needs to be solved urgently.

Zheng pointed out that some leading countries have rich ESG experience and hold a strong influence and voice in the global scope, which may have a negative impact on the ESG practice of latecomer countries.

The development of the ESG system should be based on local characteristics, and Chinese enterprises can fully demonstrate their competitiveness in national strategies such as "dual carbon," innovation-driven, rural revitalization, and common prosperity, explore new tracks, and achieve value creation, she suggested.

The event marked the first themed forum of a series of lectures on ESG, jointly launched by Fudan University's School of Management, CIB Wealth Management, and AEGON-Industrial Fund Management Co.