From "storytelling" to "showing value", are ESG information disclosure companies ready? Our reporter interviewed Guo Peiyuan, Chairman of Shangdao Ronglu

The "Decision of the Central Committee of the Communist Party of China on Further Comprehensively Deepening Reforms and Promoting Chinese-style Modernization" proposes to deepen the reform of the environmental information disclosure system in accordance with the law and build an environmental credit supervision system. In recent years, non-financial information disclosure, including environmental information, has received increasing attention. Under the active guidance of relevant departments, domestic companies have made great progress in ESG (Environmental, Social, Governance) information disclosure. In recent years, the Ministry of Finance, the Ministry of Ecology and Environment, the People's Bank of China, the State-owned Assets Supervision and Administration Commission and major domestic stock exchanges have successively issued some policy measures and disclosure guidelines to promote the standardization and development of ESG information disclosure. How do domestic companies view ESG information disclosure? How can we better do this work? Focusing on related topics, our reporter interviewed Guo Peiyuan, chairman of Shangdao Ronglu and chairman of the China Responsible Investment Forum.

Guo Peiyuan, a Ph. D. in Management from Tsinghua University, founded Shangdao Consulting in 2005. He was the general manager and is currently the chief expert. Shangdao Consulting focuses on the fields of corporate social responsibility and ESG, and has served hundreds of well-known domestic and foreign companies over the years. Guo Peiyuan launched Shangdao Ronglu in 2015 and has served as chairman to this day. Shangdao Ronglu focuses on ESG rating and data services and third-party evaluation services for green bonds. It is currently the only Chinese-funded ESG rating agency to display rating data on Bloomberg data terminals. It is also the first green in China to be authorized by the Climate Bond Initiative. Debt certification agency. Dr. Guo Peiyuan holds multiple social positions. He is the chairman of the China Responsible Investment Forum (China SIF), a member of the Green Finance Professional Committee of the China Financial Society, a member of the ESG Professional Committee of the China Association of Listed Companies, a member of the Green Development Professional Committee of the China Securities Industry Association, and an expert consultant to the Responsible Investment (ESG) Special Committee of the China Insurance Asset Management Association and a China consultant to the United Nations Environment Programme Financial Initiative (UNEP FI).

China Environment News: When it comes to environmental information disclosure, two other words are often mentioned: CSR and ESG. What is the relationship between them?

Guo Peiyuan:CSR is the abbreviation of Corporate Social Responsibility, which refers to the social responsibilities a company assumes in its business activities, including its impact on society and the environment, as well as its responsibilities to employees, customers, suppliers and the community. ESG is the abbreviation for Environmental, Social and Governance, which covers the performance of enterprises in environmental, social and governance, including enterprises 'attitudes and actions on issues such as climate change, resource management, human rights, working conditions, social equity, and corporate governance.

What is the difference between CSR and ESG? It can be simply boiled down to one sentence: the origins are different, but the same destination is achieved through different routes. CSR mainly originated from the anti-sweatshop movement in the 1990s, which led companies in the textile, clothing, electronics and other industries to examine their social responsibility performance when selecting suppliers. The origin of ESG development does not come from the supply chain, but comes from ethical investment or socially responsible investment. That is, in the early days, some capitals in Europe and the United States would incorporate non-financial factors such as ethical factors and environmental factors when investing, such as not investing in gambling. Industry, not investing in polluting enterprises, etc., have developed into ESG investment in the past 20 years. Therefore, the main difference between CSR and ESG is their different sources, but now the two have a bit of the same destination. They have many things in common, such as emphasizing the triple bottom line principles of economy, society and environment. Therefore, we must not only see the differences between the two, but also understand the similarities.

Information disclosure is the infrastructure of ESG. Because information disclosure affects the quality of ESG data, and data quality will have an impact on the construction of ESG evaluation system and ESG evaluation results, thus affecting ESG investment decisions. Without information, the market cannot judge which company is doing well and which is not doing well.

China Environment News: In order to promote ESG information disclosure, many departments such as the Ministry of Finance, the Ministry of Ecology and Environment, and the State-owned Assets Supervision and Administration Commission have issued policies and measures. What are the differences in the focus of these measures? What role did it play in practical work?

Guo Peiyuan:In recent years, environmental, social and corporate governance (ESG), sustainable development and responsible investment concepts have developed rapidly at home and abroad. On June 26, 2023, the International Sustainability Standards Council (ISSB) issued two sustainability information disclosure standards, which provide a consistent basic framework for the disclosure of corporate sustainability and climate-related information and become a symbol of global sustainable development. Milestone event.

Our country's ESG development has also entered the fast lane. Various government regulatory departments have continuously promoted the participation and practice of enterprises in the field of sustainable development by formulating and improving relevant supporting policies. Since 2023, the Ministry of Ecology and Environment has issued intensive carbon-related policies, mainly focusing on the construction of a carbon neutrality standard system, carbon data measurement and accounting, and the construction and operation of the carbon market to promote the deepening of climate transformation. In August 2023, the General Office of the State-owned Assets Supervision and Administration Commission issued the results of the "Research on the Compilation of ESG Special Reports on Listed Companies Controlled by Central Enterprises" to central enterprises and local state-owned assets, including the "Reference Indicator System for ESG Special Reports on Listed Companies Controlled by Central Enterprises" and the "Reference Template for ESG Special Reports on Listed Companies Controlled by Central Enterprises" to promote the acceleration of the establishment of unified ESG information disclosure standards and help build an ESG system with Chinese characteristics.

On April 12, 2024, under the unified deployment of the China Securities Regulatory Commission, the Shanghai, Shenzhen and Beijing Stock Exchanges simultaneously issued the "Guidelines for Self-discipline/Continuous Supervision of Listed Companies-Sustainable Development Report (Trial)"(hereinafter referred to as the "Guidelines"), requiring specified index sample companies and companies listed simultaneously at home and abroad to disclose the "Sustainable Development Report" or the "Environmental, Social and Corporate Governance Report". As a result, the disclosure of sustainable development information by Chinese listed companies will be more standardized and unified.

On May 27, the Ministry of Finance issued the "Enterprise Sustainable Disclosure Guidelines-Basic Guidelines (Draft for Comments)", which further clarified the direction for Chinese companies to improve the quality of sustainable development information disclosure, and also laid the foundation for the implementation and application of ISSB International Standards in China.

China Environment News: How do you evaluate the development of ESG information disclosure in China? What changes have been made by domestic enterprises in this regard in recent years?

Guo Peiyuan:We have carried out statistical research on ESG information disclosure of domestic listed companies for more than ten consecutive years and found that the number of sustainable development reports and ESG report disclosures of Chinese enterprises has increased year by year, but there is a lack of unified norms and guidance, and the quality of reports is uneven.

At present, when domestic companies disclose ESG information, the report names include ESG report, corporate social responsibility report, sustainable development report, etc. According to our statistics, as of May 1 this year, there were a total of 5362 A-share listed companies in Shanghai, Shenzhen and North China. As of June 10 this year, a total of 2090 listed companies had issued reports, an increase of 376 over the previous year. The number of companies that issued reports accounted for 38.9% of all A-share listed companies. In particular, the development momentum of ESG information disclosure on the Shanghai and Shenzhen Stock Exchanges is good, which is inseparable from the promotion of regulatory agencies and exchanges and the guidance of the concept of sustainable development of enterprises. With the official implementation of the Guidelines, there is still room for greater growth in the number of ESG reports released in the future.

We also found that different industries have different perceptions and attitudes towards ESG information disclosure, and key disclosure topics also vary according to industry characteristics. Among A-share listed companies, the financial industry, utilities and energy industries have higher report release rates.

China Environment News: You proposed in your research report that in recent years, the number of A-share reports named after "Social Responsibility Report" has accelerated, and the proportion of reports named after ESG has increased significantly. What is the reason? What is the difference between the two?

Guo Peiyuan:Traditional corporate social responsibility reports reflect the efforts of companies in fulfilling their social responsibilities to a certain extent, but they focus more on public welfare, charity and other aspects, and are mostly qualitative descriptions, mainly to highlight the brand and image, with less performance information. comparison and analysis. Standardized, structured, and quantitative ESG information disclosure is mainly for the capital market, which can better meet the analytical needs of investors, quantify content closely related to the company's operations, and provide more accurate and comprehensive sustainable development information. It also helps to promote the implementation of the company's sustainable development strategy.

I believe that judging from the current trend, sustainable information disclosure will gradually deviate from the original logic of "telling stories and building brands" for social responsibility information disclosure, and move more towards the logic of "talking about management and showing value", quantitative information The importance of the importance has also gradually increased. Under this trend, companies should establish and improve data collection, verification, analysis, utilization and reporting systems related to sustainable information disclosure.

On April 29, the relevant person in charge of the Listing Department of the China Securities Regulatory Commission said when participating in the Zhongguancun Forum's parallel forum on "ESG Supports the Construction of Beautiful China" that the China Securities Regulatory Commission will continue to evaluate the adaptability of the "Guidelines" and promote development while strengthening norms. The relevant person in charge of the Listing Department of the China Securities Regulatory Commission pointed out that the "Guidelines" are a "test outline" for listed companies to disclose sustainable information, not extracurricular reading materials. Since it is an "exam outline", it is inevitable to accept "invigilation" to prevent cheating and "greenness". For most listed companies, sustainability reports are not mandatory to disclose, but it does not mean that they can be disclosed at will. Companies cannot use announcements as "advertisements" and ESG disclosures as a means of brand marketing. They can over-package ESG's "coat" and provide inaccurate information to mislead investors.

China Environment News: Now, how do domestic companies view environmental information disclosure?

Guo Peiyuan:The promotion of environmental information disclosure by domestic enterprises should be said to be the result of the joint effect of the "carrot + stick" policy. While promoting mandatory disclosure, enterprises are encouraged to disclose voluntarily.

In fact, ESG information disclosure, including environmental information disclosure, is not enough to write a report. Enterprises should discover problems in their own management during the disclosure process and promote management through reporting. Although domestic companies have made great progress in this regard, they are still far from being in an ideal state. The main reason is that many companies are now mainly responding passively when disclosing ESG information, with a coping mentality of "handing in homework" rather than true recognition.

In recent years, regulatory agencies such as stock exchanges have paid more attention to the supervision of the board of directors on corporate ESG matters. From an internal perspective, the board of directors is responsible for managing the company's ESG management matters, which plays a great role in promoting efficient decision-making on ESG management and top-down ESG work. Under the promotion of the board of directors, ESG management can be better integrated into the daily work of various departments, which helps the company prevent ESG risks and achieve its own steady development.

China Environment News: For enterprises, how can we do a good job in this information disclosure?

Guo Peiyuan:At present, many companies 'ESG information is scattered across various departments of the company, mainly collected manually, lacking a standardized data standard format, and ESG data in different periods lacks comparability, which is far from realizing digitalization and informatization of ESG management. Therefore, enterprises should establish a top-down standardized ESG data management system and apply information platforms to achieve integrated management of ESG data in multiple business divisions and subsidiaries of the company, thus laying the foundation for quantitative analysis and targeted management in the next stage. However, the management of ESG data is a gradual process, and companies should beware of the mentality of seeking big and complete attention once and for all.

At the same time, companies should also face up to the role of ESG consulting institutions. Judging from the cases of companies with excellent ESG performance around the world, in the process of growth of their ESG performance, excellent companies use consulting institutions as "coaches" and "accompanying runners" to obtain management tools and methods, rather than as taxis to direct destinations.

In addition, relevant departments have issued a series of standards, rules, guidelines, etc. in order to regulate information disclosure. These requirements are not inconsistent in principle, but I think relevant departments should still pay attention to synergy issues in the process of formulating measures. For enterprises, especially listed companies, the preparation of ESG reports must follow the "1+N" strategy, which means that they must follow the requirements of the exchange where they are located and take into account other relevant regulatory requirements.