Following the public consultation on the guidelines for sustainable development information disclosure by the Shanghai Stock Exchange, Shenzhen Stock Exchange and Beijing Stock Exchange on February 8, three cities of Shanghai, Beijing and Suzhou have also issued policies to promote ESG development. In addition, according to incomplete statistics from the reporter of "Daily Economic News", in the first two months of this year, at least 23 A-share companies established ESG management committees (or strategy and ESG committees, etc.) by adding or changing the original board of directors strategy committee, and most of them were convener/chairman/chairman of the committee.
Do these opinions, guidelines, policy changes, and corporate actions mean that the spark of ESG has begun to ignite?
Three major exchanges issue "Sustainability Information Disclosure Guidelines"
On February 8, the Shanghai Stock Exchange, the Shenzhen Stock Exchange and the Beijing Stock Exchange solicited public opinions on the "Guidelines for the Continuous Supervision of Listed Companies No. X - Sustainability Report (Draft for Comments)". During the reporting period, companies that were continuously included in the SSE 180, STAR 50, SZSE 100 and ChiNext indexes, as well as companies listed at home and abroad at the same time, should disclose their sustainability reports, and encourage other listed companies to disclose voluntary disclosures. The Beijing Stock Exchange does not make mandatory disclosure requirements for the "Sustainability Report", and encourages companies to "do what they can".
In the process of formulating the guidelines, the "three insistences" have been embodied: insisting on seeking truth from facts, adhering to the concept of systems, and insisting on conforming to the national conditions of the mainland. Specifically, in the formulation of rules, not only the theoretical completeness and scientificity are considered, but also the capabilities of listed companies, market institutions and regulatory capabilities are comprehensively considered to achieve the matching of costs and benefits; at the same time, the disclosure framework constructed with corporate governance, strategy, impact, risk and opportunity management, indicators and objectives as the core elements is clarified, so as to promote high-quality information disclosure with better internal governance and specific actions; Strengths and priorities, and actively learn from beneficial experience in the field of ESG.
More noteworthily, the Guidelines provide a framework for disclosure of information on sustainable development. In response to climate change, the Guidelines require listed companies to disclose climate adaptation, transformation plans, total greenhouse gas emissions, emission reduction measures, and carbon emissions-related opportunities.
It is reported that in the next step, the Shanghai and Shenzhen North Stock Exchange will continue to enrich and improve the sustainable development rule system, product system and service system, give full play to the function of the capital market hub, and gradually realize the strategic goals of gathering green and sustainable development enterprises, creating green and sustainable development products, connecting green and sustainable development financial capital, establishing green and sustainable development brands, and building a green and sustainable financial market ecology.
By the end of 2023, a total of 1,020 listed companies on the Shanghai Stock Exchange had disclosed their 2022 social responsibility reports, ESG reports or sustainability reports, with a disclosure rate of 47%, and the number and proportion of disclosures reached a new high. The Shanghai Stock Exchange and the China Securities Index have released a total of 138 ESG and other sustainable development indexes, and 43 ESG and other green ETFs listed on the Shanghai Stock Exchange, with a scale of more than 60 billion yuan.
Beijing's Implementation Plan for Promoting the High-Quality Development of ESG System
Recently, the Beijing Municipal Development and Reform Commission and relevant departments have studied and drafted the "Implementation Plan for Promoting the High-quality Development of the Environmental Social Governance (ESG) System in Beijing (Draft for Comments)", which clearly proposes to be based on the "three needs" and to green productivity. The first is the need to integrate international rules to promote the better practice of ESG in Beijing, the second is the need to form a greater joint force between the government and the market to promote the high-quality development of the capital, and the third is the need to cultivate new business forms and new momentum in the service industry.
At the same time, the "Implementation Plan" focuses on six aspects: strengthening ESG information disclosure, strengthening the construction of ESG ecosystem, supporting the high-level and characteristic development of ESG rating system, enriching and deepening ESG practices, pilot demonstration, and building scientific and effective supervision, and proposes 20 specific measures. It includes strengthening ESG information disclosure, strengthening the construction of the city's ESG ecosystem, supporting the high-level and characteristic development of the ESG rating system, enriching and deepening ESG practices, promoting ESG pilot demonstrations, and building a scientific and effective regulatory system.
The Implementation Plan proposes that by 2035, the high-quality development of Beijing's ESG system will enter the track of rule of law, with full and efficient information disclosure, a complete ESG ecosystem, a high-level and distinctive rating system, rich and colorful ESG practices, and an effective regulatory system, so as to become a national highland and an international representative city for ESG development.
Shanghai's Three-Year Action Plan for Accelerating the Improvement of ESG Capabilities of Foreign-related Enterprises in Shanghai
The plan was issued by the Shanghai Municipal Commission of Commerce and aims to promote the ESG capabilities and levels of foreign-related enterprises. The overall policy goal is to basically form an ESG ecosystem for foreign-related enterprises with the participation and coordinated development of the municipal government, industry organizations, foreign-related enterprises, and professional service institutions by 2026.
The focus of the action plan includes three aspects: the action of improving the ESG capability of enterprises, the action of ESG market efficiency empowerment, and the action of optimizing the ESG service system. Specifically, it is broken down into 12 items, including giving full play to the leading role of state-owned enterprises, private enterprises and foreign-funded enterprises in ESG, and strengthening international exchanges and cooperation in the field of ESG. Each task has a specific lead unit:
ESG incentive policies for Suzhou Industrial Park
On March 19, Suzhou Industrial Park held an ESG Industry Development Promotion Conference to accelerate the gathering of elements of the ESG industry chain in the park. At the meeting, Suzhou Industrial Park released a series of "policy packages" to support the development of ESG industry, such as the "Suzhou Industrial Park ESG Industry Development Action Plan" and "Suzhou Industrial Park ESG Industry Policy". Among them, newly established and eligible ESG projects in the park can receive a settlement incentive of up to 5 million yuan, enterprises rooted in the park and meet the ESG industry development direction can receive a development incentive of up to 1 million yuan, Suzhou Industrial Park ESG Industry Innovation Center can receive a rent subsidy of up to 3 million yuan for eligible ESG projects, and for characteristic buildings and industrial parks that meet the scope of support, they will be recognized as "ESG Industry Characteristic Buildings (Industrial Parks)" , give a reward of up to 200,000 yuan, etc.
The park is also the first region in the country to introduce specific support measures to promote the development of the ESG industry. In terms of application and practice, the park will give a reward of up to 50,000 yuan to enterprises that actively practice ESG concepts and standardize the disclosure of ESG reports, and 50,000 yuan to enterprises that have obtained A or above or equivalent level in mainstream ESG ratings at home and abroad.
The impact and significance of corporate ESG strategy
The "Sustainability Information Disclosure Guidelines" issued by the three major exchanges will not only help promote outstanding listed companies to stand out in terms of sustainable development, win wide recognition from the market and investors, thereby further improving their valuation level, but also an important trend in future information disclosure. At the micro level, although there are differences in scale, industry and practice basis, and management capabilities of more than 5,000 listed companies, the capital market has a uniform high standard for the quality of disclosure, requiring consistency and comparability of information. Therefore, even if it is voluntary disclosure, it is by no means arbitrary, and the bottom line of information disclosure must be strictly adhered to, and the relevant rules of the capital market must be followed.
Sustainability information disclosure is not simply a formality, but a demonstration of the company's real practices. By disclosing in detail their efforts and achievements in environmental protection, social responsibility and corporate governance, listed companies can not only enhance their social image and reputation, but also more accurately assess and respond to potential risks and opportunities, thereby enhancing investor confidence. Enterprises should take this opportunity to increase the importance of sustainable development, promote the improvement of internal management, and truly integrate the concept of sustainable development into daily operation and management.
The three documents in Beijing, Shanghai, and Suzhou were issued by the municipal government's subordinate units, namely the Commerce Commission, the National Development and Reform Commission, and the Industrial Park, respectively, rather than directly by the municipal government, so they each reflect the unique perspectives and functions of the issuing units.
It is worth noting that the three cities have deeply integrated the concept of ESG into the policy framework of "dual carbon" and high-quality development, especially in Suzhou, where the concept of new quality productivity is mentioned, and it is believed that ESG will inject strong impetus into the development of new quality productivity in the park.
At the same time, all three cities are focusing on ESG information disclosure (ESG reporting) and the improvement of ESG ratings. For example, Shanghai has clearly stated that by 2026, the ESG information disclosure rate of state-controlled listed companies with foreign-related business should be fully covered, and the ESG information disclosure rate of private listed companies should also be significantly improved, while Beijing has set a target of 70% ESG information disclosure rate and ESG rating improvement of listed companies by 2027, and Suzhou has encouraged enterprises in the park to improve their information disclosure and rating level through financial incentives.
In addition, all three documents emphasize the importance of building an ESG ecosystem, including supporting professional institutions, introducing talents, conducting special training, building digital platforms, and promoting the development of ESG financial products and services. It is worth mentioning that Beijing also plans to set up ESG societies and associations and hold the "China ESG Conference", and Suzhou Industrial Park has acted quickly to inaugurate a number of ESG-related institutions at the conference, such as the China-Singapore Green and Sustainable Development Research Center and the Suzhou ESG Research Center, which have taken a solid step to promote the construction of the ESG ecosystem.
All in all, both the exchange's ESG guidelines and the ESG policies of the three cities have stimulated enterprises, especially the ESG behaviors and information disclosures of the enterprises under their jurisdiction, to a certain extent. In the capital market, it is an inevitable trend for everyone to pay attention not only to financial information, but also to non-financial information such as ESG. From the ESG policies of the three cities, it can be seen that the macro environment for corporate ESG actions is changing, and for corporate managers, ESG not only affects the compliance and image of enterprises, but also effectively affects the strategy and behavior of enterprises.