Over the past year, ESG seems to have reached a new crossroads. On the one hand, sustainability challenges centered on climate change remain prominent. On the other hand, with the economic cycle brought about by geopolitics and the effects of the epidemic, and the new economic cycle superimposed on the technology cycle, uncertainty in ESG development still exists. There is even a view that the term ESG is less than twenty years old, but its useful life may have come to an end. An American editor of Fortune magazine also wrote: ESG has entered a “thorny adolescence.”
On the other hand, the Chinese market’s attention and recognition of ESG has reached an unprecedented level, and Chinese companies and investors still maintain their belief in ESG. In 2020, China officially made a commitment to “strive to achieve carbon peak before 2030 and achieve carbon neutrality before 2060”, which has also greatly promoted a new round of development of ESG in China.
Qian Kelei, executive editor of Fortune Asia, hosted the summit
“Fortune” officially released the “White Paper on ESG Leaders of Chinese Enterprises” on November 2, 2023. Against the backdrop of uneven trends and inconsistent trends in the development of ESG, this white paper systematically sorts out the important nodes and evolution process since the ESG concept entered China, especially since 2020, and also summarized the ESG innovation of Chinese enterprises. Operational practice. The power of corporate role models is precious. We have seen that in this trend, more and more Chinese companies have completed the “digestion” of ESG concepts to “export”, and the transformation of ESG practices from “integration” to “leading”.
Weng Xingang, director of the Fortune Research Institute, announced the official release of the “White Paper on ESG Leaders of Chinese Enterprises”
The main chapters and contents of this white paper include
Chapter 1 Unstoppable: ESG bursts out with new vitality amid doubts
1.1 2020-2021: a new turning point
1.2 2022: The “ebb tide” is coming
1.3 2023: Change in doubt
Chapter 2 Adapting measures to local conditions: ESG opportunities under Chinese modernization
2.1 ESG in China: From “few inquirers” to “many practitioners”
2.2 ESG opportunities in the context of Chinese modernization
2.3 Chinese companies’ ESG is emerging
Chapter 3 Pursuing Excellence: Observations on ESG Leaders of Chinese Enterprises
3.1 Characteristics of Chinese Enterprises’ ESG Leaders
3.2 Excellent cases of China’s ESG leaders
Chapter 4: The Way to Win: ESG is not a “destination,” but a path to a sustainable future
This white paper summarizes: Along with doubts and debates, ESG is undergoing a self-transformation, but it is by no means the end. Although the ESG system has some problems and encounters development obstacles, the world is still working hard to form a unified and integrated development situation on ESG issues. Controversy over the concept of ESG may continue globally, but the sustainable development proposition represented by ESG will not be denied. The popularity of ESG stems from real-world concerns, and the drive for change has not disappeared.
The white paper points out that the connotations of ESG and Chinese-style modernization theory are highly consistent. As the development model shifts from scale and speed to quality and efficiency, China’s economy is entering a new stage of development. In this context, the value core of economic prosperity, environmental sustainability, and social equity advocated by ESG is highly consistent with China’s important strategies of high-quality development, common prosperity, and the realization of “double carbon” goals. These important strategic goals have explored the path, pointed out the focus, deepened the content for the practice of ESG concepts in China, and provided a grand stage for the development of ESG in China. It is foreseeable that practicing ESG concepts and promoting sustainable development will become the “proposition of the times” and “value consensus” for Chinese enterprises.
This white paper also proposes the concept of “Chinese corporate ESG leaders” for the first time and refines the characteristics of these leading companies. What distinguishes ESG leaders from ESG leaders is not only their practical leadership, but also their influence. ESG leaders continue to empower upstream and downstream industry chains and industry companies to jointly promote ESG practices. Since 2020, Chinese companies’ ESG practices have shifted from following to leading, nurturing innovation in the local market, and then feeding back global ESG development.
The core characteristics of “Chinese corporate ESG leaders” extracted in this white paper include:
Think global, act local
Conceptually, we highly identify with global ESG and sustainable development trends, and deeply understand the importance of ESG to corporate value and business ecology. Sustainable development has become a common goal pursued by all mankind, and has been summarized as a more specific ESG framework in the business field. As an important member of the global industrial chain, Chinese companies’ business practices and information disclosures are actively aligned with global ESG standards to enhance the overseas competitiveness of Chinese companies’ products and services. In specific practice, we should take into account global ESG values and China’s local development needs, fully understand the connotation and extension of ESG in the context of Chinese modernization, proactively assume the responsibility of promoting solutions to China’s sustainability challenges, and use ESG as a guide to create Social value, and high-quality development to help realize Chinese-style modernization.
Strategic traction, endogenous integration
China’s ESG leaders have chosen to elevate ESG to the company’s strategic level, thereby promoting the endogenous integration of ESG. China’s ESG leaders have gradually established an ESG strategic system that combines industry commonality and corporate personality, focusing on the balance of the three major themes of environment, society and corporate governance. China’s ESG leaders generally break down ESG mid- and long-term goals into phased goals, and guide internal steps to achieve sustainable development changes by setting KPIs. China’s ESG leaders use the traction of ESG strategies to promote the in-depth integration of ESG and business, fully consider environmental and social factors in product design, research and development, manufacturing, services and other aspects, and achieve the joint growth of commercial value and social value. In order to achieve effective implementation of ESG strategies, China’s ESG leaders have established a complete ESG governance structure, implemented ESG strategic initiatives from aspects such as incentives, assessments, processes, and culture, and formed an ESG culture “from top to bottom.”
Digital empowerment accelerates ESG transformation
China’s ESG leaders have high digital maturity, and digitalization is the basis for efficient replication and migration of ESG practical experience. China’s digitalization and ESG development go hand in hand, which is one of the main reasons why many ESG leaders are emerging in the Chinese market.
There are three levels of digital application for China’s ESG leaders.
First, establish an internal ESG digital management system within the enterprise. The application of ESG digital management systems can improve the efficiency of enterprise ESG management, especially the smoothness and timeliness of the flow of ESG information and data within the enterprise. Second, extend ESG digital capabilities to the supply chain. Chinese corporate ESG leaders are in a huge industrial chain and occupy a dominant position. On the one hand, based on the important status of the supply chain, it is necessary for them to extend ESG management to the upstream and downstream of the supply chain. On the other hand, they have the responsibility and ability to drive the majority of small and medium-sized supply chain enterprises onto the path of sustainable development. Through digital tools, these “chain owners” will efficiently interact with the supply chain and easily incorporate the supply chain into their ESG management system. Third, realize the external empowerment of ESG digitalization. As pioneers in digitalization and ESG, Chinese enterprise ESG leaders have accumulated rich experience and real industry data, and have accumulated them into scenario-based systematic solutions. Therefore, they are gradually summarizing ESG digital experience into replicable ESG services and solutions. Through extensive external cooperation and exchanges, they apply ESG digital solutions to more business scenarios to drive the entire industry and society to achieve ESG transformation.
Chinese corporate ESG leaders have also navigated a “route” to the future in this storm. This white paper selects some companies that meet the characteristics of China’s ESG leaders, such as Lenovo Group, Mengniu Dairy, etc., and analyzes the ESG practice cases of these leader companies in detail. Among them, Lenovo Group, which has the most sample significance, received the highest ESG rating of “AAA” from MSCI, the world’s largest index company, at the end of 2022. It is the only technology manufacturing company in mainland China to obtain this certification. ESG leader companies like Lenovo have not only set a benchmark for China’s ESG practices, but have also begun to export ESG services and solutions to external customers to improve ESG levels.
At the Fortune ESG Summit, Ablikmu Ablimiti (Amu), Vice President of Lenovo Group and Vice President of Strategy and Business Development of China, attended. Looking back on Lenovo’s 17 years of ESG practices, Amu emphasized that only when ESG practices are completely integrated with corporate value creation, social value creation, and integrated with digital technology can the long-term value of ESG be released, and corporate ESG organization and culture, ESG digital platform , will provide two major supports for corporate ESG practice and long-term value creation.
In the next few decades, sustainability issues, mainly climate change, will be a major challenge facing a community with a shared future for mankind. To this end, the sustainable business change represented by ESG has provided a long-term answer to the question “Why are companies born?” In the past, successful companies built their own “moats” in terms of resources, technology and business models. In the future, ESG will become the key foundation for companies to build a strong moat. Adhering to long-termism for sustainable development is destined to be a difficult but correct path. The future of ESG reform is worthy of the expectations of every long-termist. (Fortune Chinese)
The full version of this white paper can be downloaded by scanning the QR code below.