Source of this article: Times Finance Author: Zhou Hang
When ESG has gradually become a compulsory course for beauty companies, Proya has also become a "top student" to answer.
On the evening of April 18, Proya (603605.SH), a local Chinese beauty company, released its 2023 annual performance report. Last year, Proya achieved operating income of 8.905 billion yuan, a year-on-year increase of 39.45%, and net profit attributable to shareholders of listed companies of 1.194 billion yuan, a year-on-year increase of 46.06%.
This is a report card that far exceeds the industry average. Proya's performance reached a record high, with double-digit steady revenue growth for six consecutive years, becoming the first local beauty company in China to enter the "8 billion yuan club".
As a "long-distance runner" in the beauty track, Proya not only has outstanding financial performance, but also has gained a lot from ESG strategy practice. According to the 2023 Sustainability and Environmental, Social and Governance (ESG) Report, in 2023, Proya's Wind ESG rating jumped to AA, ranking first in the personal products industry for the first time.
At present, ESG practices in China's beauty industry are still in their early stages, but they are the only way for the industry to develop healthily. As early as 2021, Proya has carried out a series of ESG practices. In August 2022, marked by the release of the first sustainable development strategic plan, Proya's ESG system evolved from initial exploration to scientific and systematic.
As an industry leader, Proya's ESG practice methodology is also crucial to the development of the entire industry.
Turning beauty into a sustainable business
Since last year, many consumers have found that Proya's star products have upgraded their packaging. In fact, behind the packaging upgrade of these star products, there is Proya's sustainable business experience.
Taking Proya Bispecific Antibody Serum 3.0 as an example, in 2023, the product will begin to launch refill solutions to encourage consumers to choose refills. Not only Double Anti Serum 3.0, Ruby Cream 3.0 will also continue the concept of sustainability in terms of new product packaging.
The upgraded ruby cream uses 22% less plastic for a single product. The refills of Ruby Cream 3.0, which is not yet on the market, will reduce the amount of plastic used by more than 100 grams per piece.
In order to achieve sustainable packaging, Proya also collaborated with packaging material industry experts last year to compile the "Proya Sustainable Packaging Management Manual". According to the latest data released by Proya, the proportion of the company's sustainable packaging materials has reached 25.47% in 2023, an increase of 25.31% compared with the base year of 2021.
But all of the above is just a small part of Proya's ESG layout. According to the previously released ESG strategic plan, Proya will take comprehensive ESG management as the cornerstone to promote the development of three important sectors: sustainable business, sustainable value chain, and sustainable social ecology, and has achieved many results.
Take, for example, sustainable business. In 2023, Proya Longwu R&D Center and Proya Shanghai R&D Center will be officially put into use, and the new raw material ingredient "3,3,5-trimethylcyclohexanol succinate dimethylamide" has been successfully recorded. At the same time, Proya has also established a sustainable product assessment working group with the product development process as the main line.
Important progress has also been made in the construction of sustainable palm oil and low-carbon factories.
In 2023, Proya officially joined the Roundtable on Sustainable Palm Oil (RSPO), basically completed the review of the use of palm oil, the raw material of existing products, and started the replacement of certified palm oil. The production plant has also further transformed into a digital and intelligent low-carbon factory, and has won many honors such as "2023 Green Supply Chain Management Enterprise" and "2023 Provincial Green and Low-carbon Factory".
Not only that, Proya's ESG efforts are also supported by supply chain partners. In 2023, Proya evaluated the ESG performance of a total of 264 suppliers, of which 100% of its key partners have carried out ESG compliance assessments. Proya also joined hands with ten strategic partners (suppliers) to jointly issue a carbon reduction declaration, promising to reduce its own carbon emissions by 2025.
Infuse your brand with social value
In Proya's view, the beauty of a brand lies not only in the external charm created by its products, but also in its deep concern and positive contribution to social issues.
Proya pointed out in the ESG report that "the existence and development of an enterprise cannot be separated from the social environment and human context in which it is located, so paying attention to and devoting itself to public welfare undertakings is Proya's unshirkable responsibility and internal driving force as a leading cosmetics company in the industry." ”
In 2023, Proya donated funds to launch the Zhejiang Proya Public Welfare Foundation, focusing on public welfare directions such as "promoting education development", "exploring social innovation", "assisting emergency disaster response" and "helping employees in public welfare", and carried out public welfare projects such as "going to a distant place", "one county, one dream" and "Proya Hope Primary School", and launched activities such as "old things renovation" and "Hakimi Winter Warmth Project". In 2023, Proya invested 8.6612 million yuan in social welfare, and from 2022 to the end of the 2023 reporting period, Proya invested a total of 10.0958 million yuan in social welfare.
Not only that, Proya also actively deploys online content marketing and offline activities by focusing on the four social themes of gender equality, love and intimacy, youth and growth, and mental health, so as to give more social significance and spiritual value to the brand.
In these content and activities, Proya advocates a variety of values, including breaking gender bias and bravely facing the true face of love and intimacy, paying attention to school bullying and supporting the healthy growth of teenagers, facing up to emotional experiences, caring and accepting oneself, all of which have achieved strong resonance with consumers.
Specifically, in 2023 alone, Proya will produce and print 110,000 copies of "We Can" gender education picture books that can be read by all ages, launch the "Firefly Project" public welfare activity against school bullying, and also release themed TVCs such as "Handsome Female Male Soldiers" and "More than Mothers in the World". 233,000 people directly benefited from social advocacy activities and 247 million people indirectly benefited from social advocacy activities.
According to the data, from 2022 to the end of the reporting period in 2023, Proya's social advocacy activities have benefited a total of 665,100 people, and 365 million people have indirectly benefited.
Proya said that this series of social advocacy and public welfare practices is not only an important part of Proya's brand culture, but also an emotional bond between Proya and consumers and the public.
ESG is a "must-have" in the new growth stage of the industry
In addition to Proya, local Chinese beauty companies such as Shanghai Jahwa and Yatsen E-commerce are paying more and more attention to the disclosure of ESG-related reports.
According to statistics from CITIC Securities, the CSR report disclosure rate of A-share beauty companies has increased rapidly from 27% in 2015 to 73% in 2021, which is continuously higher than the disclosure rate of the A-share market. Ernst & Young's White Paper on ESG Trends in the Beauty & Personal Care Industry also pointed out that from 2020 to 2022, the number of sustainability reports disclosed by China's listed beauty and personal care companies increased from 14 to 21.
In the past five years, China's local beauty companies have ushered in a bright moment in the opportunities of online consumption dividends and market changes. As the industry matures, market competition will inevitably transition from scale growth to endogenous growth.
Some analysts have pointed out that through active environmental management, social responsibility and strong governance, beauty companies can not only enhance their competitiveness in the global market, but also build a more stable and sustainable business model.
In addition, sustainable consumption has also become a new trend that beauty companies cannot ignore. According to Bain & Company's Asia Pacific Sustainable Consumption Trend Insights, 90% of respondents are willing to pay a premium for the sustainability of their products, while a whopping 51% of respondents cite environmental protection as one of the top three most important shopping criteria.
Specific to the beauty industry, EY's White Paper on ESG Trends in the Beauty & Personal Care Industry also pointed out that consumers' attitudes towards beauty and skin care have become more scientific and rigorous, and their attention to the safety and environmental impact of beauty and skin care products has increased significantly. The sustainability of the product has become one of the factors they consider when choosing a product.
It is worth mentioning that the investment direction of the capital market is also changing. According to the 2023 White Paper on ESG Development Insights in Major Industries of China-EU Trade, the scale of global sustainable investment has reached 35.3 trillion yuan in 2020. It is estimated that by 2025, the scale of ESG global investment will exceed 50 trillion yuan, accounting for one-third of the total global asset investment.
Zhang Bin, a sustainability service partner at EY, once pointed out to Times Finance that "a single method such as negative screening can no longer meet their needs for ESG investment strategies, but they hope to adopt a more active and systematic ESG investment strategy." Therefore, their requirements for transparency and comparability of ESG information disclosure are constantly increasing in order to obtain better returns and risk management results. ”
On April 12, the Shanghai and Shenzhen North Stock Exchanges officially released the "Sustainability Reporting Guidelines (Trial)", marking the official entry into the mandatory era of A-share ESG information disclosure.
For local Chinese beauty companies that are riding on the momentum, it has become a "compulsory course" to build a scientific and systematic ESG system if they want to truly compete with international beauty groups. The exploration of ESG by local leading enterprises is an important cornerstone for the industry to move towards high-quality development. At present, Proya's preemption and practice in ESG has also become a model to encourage beauty companies to make efforts towards ESG.