Preface
ESG (environmental, social and Governance) is an investment concept that focuses on corporate environment, social responsibility, environmental protection and sustainable development rather than just financial indicators, covering multiple dimensions such as ESG information disclosure, rating and investment. It aims to promote the company to integrate external factors such as social and environmental governance into the internal business management of the enterprise, reduce risks, give full play to the social responsibility of the enterprise and realize the greater value of the enterprise. The research and innovation Department of Huabao securities aims to track the ESG field for a long time, release the ESG high-frequency signal, create research results in the ESG field, explore the index quantification method of China’s ESG evaluation system, and help industrial enterprises and investors have a deeper and comprehensive understanding of the ESG evaluation system, ESG information disclosure and ESG investment.
Research viewpoint
ESG event focus: the state owned assets supervision and Administration Commission of the State Council established the science and technology innovation Bureau and the social responsibility bureau to guide enterprises to actively practice the ESG concept. On March 16, 2022, in order to effectively promote the scientific and technological innovation and social responsibility of central enterprises, with the approval of the central Editorial Committee, the SASAC of the State Council separated the existing Bureau of scientific and technological innovation and social responsibility, established the Bureau of scientific and technological innovation and the Bureau of social responsibility, and held an inaugural meeting recently. Whether it is to realize technological transformation or fulfill the requirements of social responsibility, they all coincide with the concept of ESG. The meeting also emphasized that the social responsibility bureau should promote enterprises to actively practice the concept of ESG. It is expected that the ESG evaluation standard will be further localized, detailed, standardized and normalized according to China’s national conditions. The company shall study the indicators in the ESG evaluation standard in advance, adjust the development strategy and prepare for ESG information disclosure. Occupy the first mover advantage in the future ESG theme investment.
Sustainable investment and financing: in terms of ESG funds, as of mid March 2022, the cumulative returns of CSI 300esg benchmark index and CSI 500esg benchmark index since July 2017 were 2.17% and 6.44% higher than the parent index respectively. In terms of green bonds, in 2021, China issued 485 issues of green bonds, with an issuance scale of 607542 billion yuan, an increase of 124.54% over the previous year (216 issues), and an increase of 172.58% over the previous year (222883 billion yuan).
Analysis of ESG management of key companies: Minmetals Bangbas mine project may be able to predict relevant risks in advance from the perspective of ESG, so as to strengthen governance and reduce losses in the process of operation. After the operation of the bambas mine, there were constant conflicts with the local community, the supply chain transportation was interrupted for up to 400 days, and the delivery of refined copper mine was unstable, affecting the confidence of downstream customers and capital market. From the pre investment stage, conduct ESG due diligence to screen risks, so as to make reasonable investment decisions; In the investment stage, carry out mine construction, reasonably communicate and arrange the relocation and resettlement of local communities; In the post investment stage, in mine operation and commercial production, Chinese mining enterprises can carry out responsible investment and ESG information disclosure according to China’s own national conditions and the mainstream standards adopted internationally, so as to carry out ESG management and practice.
Risk tips: 1 The promotion of ESG policies outside China was less than expected; 2. The macroeconomic downturn exceeded expectations.
