21st Century Business Herald intern Lei Ye Reporter Li Deshangyu reported from Beijing April 22 is World Earth Day, and it is also the season for corporate ESG report release.
Maintaining the earth's ecological balance and protecting the earth's natural environment has become the focus of increasing attention in the world. As an economic entity, the production activities of enterprises are closely linked with the natural environment, and how to pursue sustainable development while pursuing economic benefits has become a must-answer question.
On May 1 this year, the "Guidelines for Sustainable Development Reporting (Trial)" (hereinafter referred to as the "Guidelines") issued by the three major stock exchanges in Shanghai, Shenzhen and Beijing will be officially implemented. Sample companies of SSE 180, STAR 50, SZSE 100 and ChiNext Indexes, as well as more than 450 companies listed at home and abroad, have been included in the mandatory disclosure list.
Recently, the central bank and other seven departments issued a document for the first time to explicitly include ESG in credit ratings, which once again shows the importance and urgency of enterprises to do a good job in ESG.
What should companies do to prepare, how to seize the golden transition period to formulate ESG reporting plans, and what ESG disclosure standards should Chinese companies adopt?
A number of industry insiders told the 21st Century Business Herald that most of China's enterprises are currently in the initial stage of "formulating ESG strategic planning and figuring out the current status of data", and many companies still have insufficient endogenous motivation, lack of quantitative data, and flashy phenomena in the preparation of ESG reports. For listed companies, it may be necessary to conduct a comprehensive analysis in multiple directions in the same report in the future. There is no specific best time for companies to prepare ESG reports, and the sooner it starts, the better.
What ESG disclosure standards are applicable to Chinese companies?
The Guidelines specify that listed companies are required to publish their 2025 annual sustainability reports before April 30, 2026. The official release draft of the Guidelines consists of 6 chapters and 63 articles, setting 21 specific topics and about 288 detailed indicators of information disclosure.
A number of industry insiders revealed to the 21st Century Business Herald that at present, the overall ESG disclosure status of enterprises is unsatisfactory, the disclosure rate is low, and the quality is not good, so it is necessary to continue to promote and do a good job in the first steps.
In an interview with 21st Century Business Herald, Ernst & Young Greater China Managing Partner Bi Shunjie said that most Chinese companies are currently in the initial stage of "formulating ESG strategic plans and figuring out the current status of data".
In order to facilitate listed companies to better understand and apply the Guidelines, the China Association of Public Companies has organized a comparative analysis of the Guidelines with the information disclosure standards and rules issued by overseas institutions such as the International Sustainability Standards Board (ISSB), the Global Reporting Initiative (GRI), and the U.S. Securities and Exchange Commission (SEC).
Guo Peiyuan, chief expert of SynTao Consulting and chairman of SynTao Green Finance, said that the different standards are not completely different, and there are many connections between them. For listed companies, it may be necessary to conduct a comprehensive analysis in multiple directions in the same report in the future.
According to Guo Peiyuan, the GRI standard has always been the highest usage standard for A-share listed companies, and the utilization rate of CSI 300 index enterprises has reached 75%. After comparing and analyzing the Guidelines with the GRI Standards, SynTao found that the Guidelines are compatible with the GRI Standards and the core content is not very different.
Guo Peiyuan believes that in the information age, the integration of standards is a major trend, and listed companies can integrate the "Guidelines" and GRI standards.
How to seize the best time to write ESG reports
"The Guidelines give companies a certain amount of room for relief in disclosure, so that companies that are required to make mandatory disclosures have additional time to make up ESG assignments, and companies that are not required to disclose should also have more 'make-up lessons'. Industry insiders further explained to the 21st Century Business Herald that there is no specific best time for companies to prepare ESG reports, and the sooner it is carried out, the better. In the ESG Rating Analysis Report of A-share Listed Companies released in 2023, the rating agency SynTao Green Finance revealed the positive correlation between the level of ESG rating and the level of ESG disclosure, pointing out that more and better ESG information disclosure will significantly improve the level of rating.
An industry insider told the 21st Century Business Herald that the company should conduct an in-depth study of the current disclosure framework and requirements in mainland China and the world for the preparation of ESG reports. At the same time, it is recommended to seek cooperation with professional third-party institutions.
According to reports, the third-party agency will conduct quantitative analysis based on the collected enterprise data. On this basis, the corresponding weights are assigned according to each index, and the size of the weights is closely related to the unified disclosure level in the industry. If a company wants to be on a good track record on an issue, it needs to at least keep pace with the industry level.
Guo Peiyuan believes that in the same topic, qualitative and quantitative disclosures often coexist. Taking carbon emissions as an example, in addition to quantitative disclosure of carbon emission data Scope 1, Scope 2 and Scope 3, the company also needs to conduct qualitative analysis of carbon emission reduction prospects and transformation paths. Quantitative disclosures are often more difficult than qualitative disclosures. Therefore, starting with qualitative disclosure can reduce the difficulty for listed companies to apply the Guidelines.
He suggested that in the future, listed companies should establish a complete set of ideas, that is, to build their own ESG information disclosure index manual. The handbook should cover all the indicators that need to be disclosed, and find a combination of applicable requirements to meet different disclosure requirements, which is an important measure for listed companies to take in the future. In addition, these measures can be combined with digital strategies to make ESG management and disclosure more digital.
Is it more cost-effective for enterprises to write their own reports?
Most of the listed financial institutions are leading the way in ESG information disclosure, setting an example for other companies. Bi Shunjie introduced to the 21st Century Business Herald that in terms of ESG information disclosure, according to statistics, among the companies that disclose ESG-related reports in A-shares in 2022, listed companies in the financial industry have the highest disclosure rate of 89.8%, of which the disclosure rate of ESG-related reports of listed banks in 2022 is 100%.
Bi Shunjie pointed out that green finance has the function of resource allocation, and can guide and leverage financial resources to tilt more towards green and low-carbon fields through a series of green finance-related policies and product innovations. The disclosure of ESG information with Chinese characteristics by the banking industry through social responsibility reports can greatly encourage other industries to improve the breadth and depth of their ESG disclosure information, and promote other industries to carry out ESG practices with Chinese characteristics.
Bi Shunjie suggested that enterprises can integrate their own resources, open up ESG career development channels, strengthen the talent pool with ESG professional knowledge, and pay attention to the multi-role training of ESG talents from strategic planning to practical skills. Bi Shunjie said that the enterprise ESG management platform of a third-party institution can be selected to help enterprises quickly build digital ESG management capabilities from 0 to 1.
According to the above-mentioned industry insiders explained to the 21st Century Business Herald, in view of the differences in the characteristics of different industries, the outstanding performance of the financial industry in information disclosure is mainly due to two aspects. First of all, the financial industry's own carbon emissions are relatively small, which provides a good foundation for its environmental performance. Second, the financial industry is subject to strict regulation, which has prompted it to pay more attention to information transparency, which has led to remarkable results in information disclosure.
In the view of the above-mentioned industry insiders, hiring a third-party agency to write ESG reports is more expensive for small and medium-sized enterprises. From a long-term perspective, self-written reports are undoubtedly a more viable option for enterprises. The essence of a corporate sustainability report is to tell your own story. If you don't know how to tell the story at the initial stage, you can temporarily hire someone else to guide you, but in the end, you can't always rely on others to explain your own characteristics and have someone else write the report on your behalf. Therefore, ESG reports should ultimately be digested and absorbed by the enterprises themselves, and the enterprises should write their own reports.
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