On December 28, the first forum of the “Oriental lecture hall on the rule of law” with the theme of “Summit Forum on the construction of enterprise compliance system in key industries in the new era” was held in China Financial Information Center in Shanghai Shanghai Lujiazui Finance & Trade Zone Development Co.Ltd(600663) . Ni shoubin, President of green technology Bank Research Institute, said at the meeting that at present, ESG’s influence in the capital market is gradually expanding. China urgently needs to build an ESG rating system to provide benchmark reference for Chinese and foreign investors to carry out ESG investment.
ESG is the abbreviation of environmental, social and governance. It is an investment concept and enterprise evaluation standard that pays attention to the performance of enterprise environment, society and corporate governance rather than traditional financial performance. Ni shoubin said that ESG can be understood as an upgraded version of corporate responsibility (CSR) in the company law. From CSR to ESG, information disclosure will be more comprehensive and quantitative.
“The introduction of ESG can be called a revolution in corporate governance.” Ni shoubin said that more and more investors pay attention to the challenges of enterprises to deal with environmental and social problems, and more deeply realize that environmental, social and corporate governance problems can cause major credit risks in a short time. For example, the supply chain disturbance, pollutant leakage and product safety recall caused by weather factors are ESG related issues, which will have an impact on the financial and credit status of the enterprise.
Ni shoubin introduced that according to the latest data of the United Nations Organization for responsible investment principles (PRI), PRI had signed more than 2600 institutions as of September 2019, covering a total asset management scale of US $89 trillion. At the level of government supervision, policy makers constantly update and adjust the requirements for enterprise ESG management, and the exchange level has successively stipulated in the listing rules that issuers need to regularly disclose their ESG reports or management. For example, the CSRC stipulated that listed companies must disclose environmental information in 2008. In 2013, the US Environmental Protection Agency stipulated that some listed companies with high temperature chamber gas emissions must disclose their emission information. In China, Shanghai Stock Exchange and Shenzhen Stock Exchange have issued guidelines and solicited opinions on the disclosure of ESG and CSR information by listed companies.
Ni shoubin said that at present, overseas rating systems such as Mingsheng index (MSci), Dow Jones Sustainability Index (DJSI) and FTSE Russell have been basically mature, and scoring rules and databases sufficient to support ESG evaluation have been formed. Foreign ESG rating results may deviate from the real social value of Chinese enterprises, especially state-owned enterprises (such as related party transactions, poverty alleviation and new rural construction). Therefore, China urgently needs to build an ESG rating system to provide benchmark reference for Chinese and foreign investors to carry out ESG investment. At the level of ESG information disclosure, it is recommended that enterprises make fair and high-quality disclosure. On the basis of compliance, with reference to international policies and guidelines, they should benchmark with enterprises in the same industry with excellent ESG practice, and constantly improve the disclosure contents and working methods.
(Shanghai Securities News · China Securities Network)
