The concept of green consumption has attracted much attention, and the low-carbon development of the home furnishing industry is highly consistent with ESG, resulting in the high popularity of "green marketing" in the home furnishing industry.
Text | Ji Sheng
来源 | 《经理人》杂志头图 | 欧派家居官网
The home furnishing industry belongs to the traditional labor-intensive industry, and has the characteristics of high energy consumption and greater pollution, as the so-called gold and silver mountains are not as good as lucid waters and green mountains, with the continuous strengthening of the country's supervision of environmental protection, the traditional high-consumption and low-efficiency industries must be accelerated to upgrade and iterate, otherwise they will be eliminated by the society and cannot achieve sustainable development.
Therefore, for the current market competitiveness of the leading home furnishing enterprises, whether from the perspective of economy, corporate strategic development, or industry technological innovation and sustainable development, they should and must always keep up with the ESG concept, in order to efficiently combine the company's benefits with social and environmental benefits, so as to achieve high-quality development.
Oppai Home Furnishing (603833. SH) as a listed company in China's custom home furnishing industry that has exceeded 100 billion market value, it can be said that it has full market competitiveness in the home furnishing industry. In 2023, the company independently released the "2022 Environmental, Social and Corporate Governance (ESG) Report" for the first time, aiming to gradually shift from the traditional business value model of "shareholder interests first" to the ESG sustainable development model in the new industrial situation competition by integrating ESG.
The economic benefits are highlighted
Oppai Home was founded in 1994 and listed on the Shanghai Stock Exchange in 2017. The company started with custom cabinets, and its business gradually extended to wardrobes, whole home customization, wooden doors, bathrooms, soft decoration, kitchen appliances, metal doors and windows, armored doors, furniture matching, complete home furnishings and other fields, forming a diversified industrial pattern, establishing a double ace category matrix of overall cabinets and wardrobes, with brands such as Oppai, MIFORM, Opali, and Ponis, covering multi-level consumer groups, and is a modern integrated service provider integrating R&D, manufacturing and sales in China.
Today, the company has five intelligent production bases in Tianjin, Qingyuan, Wuxi, Chengdu and Wuhan, with a total construction area of more than 2.5 million square meters, more than 7,000 stores worldwide, and its products are sold to 118 countries on 6 continents. With a strong brand and scale advantage, Oppai Home Furnishing continues to create market miracles, and steadily becomes a leading enterprise in the domestic whole-house custom home furnishing industry, and the total production scale of customized home furnishing products ranks first in the industry. When talking about the company's practice of deeper ESG concepts, we should first review the business performance of the past ten years to see whether the company is satisfied with economic development, otherwise, more social responsibility, corporate responsibility, and environmental contribution are impossible.
From the analysis of the income side, in recent years, the operating income of Opai Home Furnishing has grown steadily, with an operating income of 4.751 billion yuan in 2014, and the Galaxy Securities Research Institute expects the company's annual operating income in 2023 to be 23.684 billion yuan, with a CAGR (average annual compound growth rate) of 17.42% in the past ten years. In the first three quarters of 2023, the operating income was 16.565 billion yuan, of which cabinets, wardrobes and accessories, sanitary ware, and wooden doors achieved revenues of 5.164 billion yuan, 8.873 billion yuan, 813 million yuan, and 996 million yuan respectively, with year-on-year changes of -5.24%, +1.9%, +12.49%, and +6.34% respectively.
From the profit side, the net profit attributable to the parent company has increased from 385 million yuan in 2014 to 3.066 billion yuan in 2023 (forecast), with a CAGR of 23.06%, and the net profit attributable to the parent company has achieved rapid growth in the past ten years, and the growth rate is better than the growth rate of operating income, with a cumulative income of about 17.3 billion yuan in ten years, and the economic benefits are obvious. The net profit attributable to the parent company in the first three quarters of 2023 was 2.310 billion yuan, a year-on-year increase of 16.10%, and the operating income in the same period only increased by 1.82% year-on-year. (Chart 1)
From the perspective of profitability analysis, the gross profit margin in 2014 was 28.23%, and the gross profit margin in the first three quarters of 2023 was 33.99%, an increase of nearly 6 percentage points, and the gross profit margin remained at a high level; in terms of net profit margin, the company's net profit margin in recent years can basically reach 13%, and the net profit margin in 2014 was only 8.11%, an increase of about 5 percentage points; in terms of ROE, it has reached a peak of 39.45% since 2016 After that, ROE began to gradually decline, and ROE is expected to be 16.6% in 2023, a new low, and the weakening ROE is mainly affected by total asset turnover and financial leverage, but from a numerical point of view, the company's profitability can be considered to remain at a high level.
Economics has a clear definition of a business – that is, it is aimed at making a profit, and as a shareholder, you also need to focus on the return on investment, and the ROE performance is remarkable. In terms of cash dividends, since the company's successful listing in 2017, cash dividends have been distributed to shareholders every year, the dividend payment ratio has increased from around 20% to 40%, and the cumulative cash dividend payment is about 4.06 billion yuan, which is twice the scale of the first IPO financing.
Looking back on the business performance in the past ten years, it can be found that the company's economic benefits have expanded rapidly, and it has gradually become one of the leading enterprises in the industry, which has also led to the improvement of brand influence. In the context of the country's promotion of green and sustainable development, the company has the ability to deeply practice the concept of ESG development, and independently released the ESG Report for the first time in April 2023. So, how does it work?
According to the Sina Finance APP platform, a total of two rating agencies have made ESG ratings for Oppai Home Furnishing this year, MSCI has given a B grade, including a total environmental rating of 3.1 points, a social responsibility assessment of 3.1 points, and a governance rating of 5.3 points, with a full score of 10 points, and a Refinitiv agency has given a C rating, of which the environmental assessment is C-, the social responsibility assessment is C-, and the governance is B-. For this reason, this journal selects the 2022 ESG report of Opai Home Furnishing as the research object, and uses the "seven-step thinking" of this journal and the CSI ESG evaluation index system to conduct specific analysis of about 200 indicators in the three dimensions of E (environment), S (society) and G (corporate governance).
Deepen the ESG governance structure
In 2022, Oppai Home further established and improved its ESG governance structure, and the original corporate governance structure consisted of four committees under the board of directors, namely the strategy committee, the remuneration and assessment committee, the nomination committee, and the audit committee, and directly led the two functional departments of the group's president's office and the secretary of the board of directors. In 2022, the Company began to gradually integrate into the ESG structure, clarify the functions of each department, and form an ESG governance system as shown in Figure 2, which is divided into strategic decision-making level, strategic management level, and strategy implementation working group, striving to achieve goal-driven linkage between the top and bottom, and jointly ensure the effective planning and specific implementation of ESG strategic goals. Specifically, ESG is only an additional empowerment in the traditional management system, and does not subvert the existing governance structure, in the short term, it can give the company time to gradually transition to a new governance system, and the reshaping of the structure is not achieved overnight, but must be adhered to and gradually.
The company attaches great importance to communication with stakeholders, including shareholders, regulators, employees, suppliers, etc., and actively builds a good internal and external communication platform and establishes a transparent and smooth communication mechanism. The 2022 ESG report disclosed that during the reporting period, the company communicated with relevant parties on a number of potential issues related to the environment, society, economy, human rights, etc., summarized 36 applicable issues for material analysis, and finally identified 22 ESG material issues, of which 7 corporate governance issues, 7 environmental governance issues, and 8 social issues, which became important reference standards for the company's 2022 ESG report.
As early as 2015, the company launched the "Oppai Intelligent Manufacturing 2025" strategy, which is planned to be in-depth to the strategic level of large home furnishing and informatization, to realize the continuous evolution of products from single channel to multi-channel, whole home customization to full-case customization, and focus on the construction of digital factories - that is, Oppai Manufacturing 2025 Digital Lighthouse Factory, Oppai Home Furnishing will open up the whole industry through digitalization, and move towards "what you see is what you get, what you feel is what you want, design is manufacturing, and manufacturing is service" In addition to taking into account efficiency, we will improve the upgrade path of efficiency improvement and consumption reduction extending from production to the whole industry.
Secondly, the company adheres to the strategy of green and sustainable development, product research and development "with green as the background color, environmental protection as the cornerstone", regards customer health and safety as the responsibility and pursuit of the enterprise, and constantly meets the new needs of customers for green homes. In addition, the information disclosure work has once again won the A-level evaluation of the Shanghai Stock Exchange, which is also the fourth consecutive year that the company has won this honor, effectively safeguarding the legitimate rights and interests of shareholders.
The assessment of environmental performance indicators needs to be strengthened
Oppai Home adheres to the concept of green environmental protection development with sustainable development as the core, implements EHS management system, and builds its own rigorous green environmental protection system through ISO14001 environmental system certification and China environmental labeling product certification. From the perspective of green production, during the reporting period, the company actively promoted the green factory certification of the five production bases in Tianjin, Wuxi, Qingyuan, Chengdu and Wuhan, and in strict accordance with the requirements for the construction of the green manufacturing system issued by the Ministry of Industry and Information Technology, it started to transform from the aspects of facilities, energy consumption, emissions and performance, and accelerated the certification of green factories, such as accelerating investment in photovoltaic projects in terms of energy use.
From the perspective of consumers, according to the "Chinese Consumer Healthy Home Awareness Survey" report, up to 85% of consumers pay attention to health and safety issues when purchasing household products, to this end, the company released the "Oppai Health 3.0" strategy, in terms of harmful formaldehyde control, the company continues to refresh environmental protection standards, from the popularization of E0 level, advocating formaldehyde-free addition +The health 1.0 of the net aldehyde board, to the health 2.0 of the whole cabinet of net aldehyde, and then to the health 3.0 of the net aldehyde in the space today, with the supply side as the direction of promotion, to promote the transformation and upgrading of the industry in the direction of health and green.
In terms of resource utilization and carbon reduction, the company's 2022 ESG report only slightly mentions hydropower energy consumption, recycling, pollution prevention and control, and supplier evaluation. Specifically:
Energy consumption increased slightly. In 2022, the water consumption will be 1.792 million cubic meters, the intensity will be 79.72 cubic meters/million yuan, an increase of 0.32 cubic meters/million yuan year-on-year, and the electricity consumption will be 321.111 million kWh, with an intensity of 14,284 kWh/million yuan, an increase of 160 kWh/million yuan year-on-year.
Green packaging, lack of statistics. Oppai Home adopts the "4R" concept in terms of material use, namely Reduce, Reuse, Recycle, and Recovery, but the report lacks corresponding performance statistics and cannot evaluate the company's performance contribution in this regard.
Pollution prevention and control needs to be quantified. Regarding cleaner production and pollution prevention, Oppai Home Furnishing strictly controls and complies with the disposal of wastewater, waste gas, noise and solid waste, and conducts real-time monitoring in some production bases, striving to control pollution from the source. However, there is also a lack of relevant performance indicators in the ESG report, and there is no comparison without data statistics, and there is no way to talk about specific improvement measures in the future.
Assist in the green transformation and upgrading of the supply chain. During the reporting period, Oppai Home began to introduce the environmental assessment dimension to screen new suppliers, considering the overall friendliness of suppliers to the environment, and its screening ratio was 14.84%, which needs to be further strengthened.
In addition, there is a lack of indicators such as climate change and environmental opportunities, and the implementation of overall environmental performance statistics is insufficient, resulting in the content basically covering the main details, but still at the level of strategic management, and the follow-up needs to go deep into the level of strategy implementation.
Pay attention to the rights and interests of employees
According to the disclosure of Oppai Home's 2022 ESG report, the company attaches great importance to the protection of employees' rights and interests. During the reporting period, the total number of employees was 24,527, the company advocated and followed the concept of "people-oriented", continued to improve the employee management system, deepened the democratic management mechanism, and created a fair and warm working environment for employees, specifically from four aspects.
First, provide equal employment opportunities, follow the employment concept of "appointing people on the basis of merit, making the best use of their talents, and being able to go up and down", and build a standardized, professional and diversified career development path for employees;
second, to provide comprehensive basic social welfare;
Third, we should attach importance to safe production and build a dual prevention mechanism for hierarchical management and control of safety risks and investigation and management of potential accidents;
Fourth, build a "double engine" of training + development, and the training cost will exceed 5 million yuan in 2022.
Employee rights and interests involve recruitment, benefits, career development and other links, but the description is not detailed enough, such as the growth curve of employee recruitment in recent years, the care of special groups, the provision and intensity of other benefits in addition to the basic welfare system, and the training effect.
In addition, in terms of social opportunities, Oppai Home Furnishing established the "Loving Home Plan" in 2014 to focus on difficult families and family sub-health, and then held a series of Loving Home public welfare activities, and at the same time set up 5.15 Loving Home Day and established the Loving Home Public Welfare Foundation to awaken people's own sense of loving home and stimulate the positive energy of social happiness. For helping the needy, Opai Home Furnishing has carried out many charitable relief activities such as poverty alleviation, elderly care, orphan assistance, and disability assistance, actively engaged in welfare undertakings, and arranged employment for the disabled, people with employment difficulties in poor areas and surrounding villages and towns, and helped rural revitalization. Similarly, the content disclosed in the report still lacks relevant quantitative performance indicators, so it is impossible to assess the actual strength and depth of public welfare.
The CSI ESG evaluation system divides the social dimension into three themes: responsibility management, stakeholders and social opportunities, and the disclosure of social issues in the 2022 ESG report of Opai Home Furnishing mainly focuses on stakeholders - employees, social opportunities - public welfare. For other topics, such as supply chain, consumers, and corporate dedication, they are not mentioned separately, and the breadth and depth of coverage are insufficient, and the standard line is relatively vague in terms of topic induction, which also leads to the overall content is not substantial.
On the whole, the improvement direction of Oppai Home's ESG report can be biased towards quantitative performance indicators, cases, etc., especially to make a comparison with the data of previous years, so that there will be a force point in the future development and improvement, and it can also improve the fineness and content length of the company's ESG report, and finally participate in the trend of improving the construction of ESG system.
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