Author: Hao Junhui Source: IT Times
Since May 1, the Shanghai and Shenzhen North Stock Exchanges have officially implemented the "Guidelines for Sustainability Reporting of Listed Companies (Trial)" (hereinafter referred to as the "Guidelines"), and "Environmental, Social and Governance (ESG)" has become a key word that listed companies must pay attention to.
At a time when sustainable development and high-quality development have become the strong voice of the times, ESG has become an important intangible asset of modern enterprises. Wind data shows that as of May 11, a total of 2,094 A-share companies have disclosed their 2023 ESG reports, with a disclosure rate of 39.05%, an increase of 2.68 percentage points year-on-year.
As the "leader" of the domestic lighting industry, NVC Lighting has officially announced the construction of a comprehensive ESG governance system in 2023, and promised to improve the construction of ESG system by 2025, comprehensively cover and respond to international standards, and set a benchmark for ESG actions in the lighting industry.
"ESG is no longer a 'multiple-choice question', but a 'must-answer question'." During the 2024 SAP China Summit held on May 10, in an interview with the media, including IT Times, Lin Liangqi, CEO of NVC Lighting, admitted frankly, "Today's capital market evaluates the comprehensive value of enterprises, not just the profits presented on the financial statements, and it is difficult for enterprises to survive in the future if they do not do ESG." ”
Do ESG and don't fight price wars
In the context of global ESG, ESG is no longer just a social responsibility, but is related to the interests and value enhancement of enterprises, and is an important indicator of core competitiveness.
For NVC Lighting, the comprehensive construction of ESG is of very practical significance. In the past 20 years, China's lighting industry has transformed from the original traditional lighting to LED lighting, and has quickly become the world's largest LED lighting manufacturing country, but this situation has also led to a very severe situation in the lighting industry - price war.
In 2020, after Lin Liangqi took over as CEO of NVC Lighting, he began to propose "reshaping the value of light", "We do not fight a price war, but a value war. ”
As "sustainable development" gradually becomes a global consensus, the value of many invisible assets has begun to be reflected, and even cash value has begun to be realized. The "carbon ledger" is a typical representative, and the integration of people, finance, and carbon has become a necessary capability for enterprises to go global.
In March this year, Lin Liangqi led a team to participate in the Frankfurt Lighting Exhibition, green and environmental protection are the most important themes for all European companies to exhibit, "If your ESG social responsibility elements are not reached, the value of the enterprise and the industry will decline, and if your products are not healthy, environmentally friendly, and people-oriented, it will be difficult to survive." ”
Lin Liangqi believes that in the lighting industry, where "involution" is serious, the cost of carbon footprint and health footprint has not been clearly measured or paid enough attention, "Carbon has a cost, so can the revenue of the product cover the cost of carbon footprint?" Secondly, is the product produced junk or not? In order to reduce costs, how much social cost does this lamp carry and the cost of health impact? ”
On April 23, NVC Lighting released the latest associated natural light technology, the core of which is people-centered, with natural light as the goal, carefully selecting the color gamut presented by natural light, giving full play to the advantages of current LED spectral technology, combined with intelligent control and light mixing algorithm, for the first time in the industry, it can reproduce natural light with three colors to present a wide range of white light and soft light light.
According to the data released by the China Lighting Association, the size of China's lighting market is about 600 billion, and the consumption upgrade of smart whole-house lighting based on personalized customization is at least 1 trillion. The "2023 China Consumer Trends Report" also shows that 73.8% of consumers will give priority to green and environmentally friendly products or brands in their daily lives, and 68.9% of consumers will accept that the price of green products is higher than that of ordinary goods.
Taking the construction of ESG system as the starting point, reshaping the value of light through high-quality lighting solutions to meet the actual needs of consumers and avoid falling into traditional price and cost competition is NVC Lighting's "new business experience" in the ESG era.
Digitally drawing a "carbon footprint"
As a manufacturing enterprise with a history of 26 years, NVC Lighting has a huge volume, with two production bases in Huizhou and Wanzhou, Huizhou Headquarters Industrial Park covers an area of 285 acres, with more than 4,500 employees in the whole group, and the national channels involve 34 operation centers, more than 2,700 stores, and 100,000+ sales outlets.
On the other hand, NVC Lighting has set ESG goals for itself, including: by the end of 2024, ensure that more than 80% of its products meet the national energy efficiency level 2 standard, 21% of the sales of green and healthy lighting products, more than 40% of suppliers have obtained ESG certification, and reduce the carbon emission intensity of Scope 1 and Scope 2 by 50% by 2025.
How to build a system in an established manufacturing enterprise to ensure that ESG goals and business goals are highly aligned to ensure that ESG vision does not become empty words? "It comes down to digital management." Lin Liangqi said.
Under the ESG mandatory disclosure system, the biggest legal compliance risk is recognized as "floating green". The word "greenwashing" is derived from "bleaching", which refers to the behavior of trying to mislead consumers and exaggerate the actual environmental attributes of a product or service. However, judging from the current global trend, the requirements for the authenticity and accuracy of ESG data will become more and more stringent, and a third-party audit system may even be introduced, and the digital transformation of enterprises is the only solution to avoid risks.
NVC Lighting's ESG system construction and digital transformation are carried out simultaneously, but it still faces huge challenges: how to confirm data property rights, unclear and transparent reporting logic, artificial data extraction, system analysis function defects, and the failure to form strategic guidance for the ecosystem of the entire industry chain.
To this end, Lin Liangqi has identified four principles: first, data property rights must be clear; Second, the report should support the ESG framework; Third, there should be an automated data collection and acquisition mechanism; Fourth, the system should be able to provide forward-looking decision-making basis. At the same time, an ESG management committee and 13 special topic groups have been established to complete the separation and implementation of ESG goals.
At present, NVC Lighting has adopted SAP's technology in many fields, in addition to SAP S/4HANA Cloud and SAP BTP (Business Technology Cloud Platform), integrated into SAP's sustainability control tower, according to the most common ESG standards, such as the Global Reporting Initiative (GRI) standards, the Task Force on Climate-related Financial Disclosures (TCFD) framework, the International Sustainability Standards Board (ISSB) International Financial Reporting Sustainability Disclosure Standard No. 2 - Climate-related disclosures (IFRS S2), the Corporate Sustainability Reporting Directive (CSRD) (European Sustainability Reporting Standards (ESRS) and the EU Taxonomy), as well as the U.S. Securities and Exchange Commission's (SEC) Draft Standards for Climate Data Disclosure for Public Companies, use predefined sustainability indicators to report on the ESG performance of enterprises, and finally realize the management of ESG data and carbon footprints, and calculate the carbon footprint of products and companies.