SSE-listed Companies' Breakthrough in ESG Practices in 2024: Shifting from "Why to Do" to "How to Make Effective Results"

Translated from Shanghai Securities News—www.cnstock.com

(Shanghai Securities News, www.cnstock.com) (Reporter He Xinyi) Recently, the international authoritative index agency MSCI released the APAC ESG Ratings Leaders and Upgrades in 2024. The report systematically assesses the trends and industry distribution of ESG ratings in 13 Asia-Pacific markets. The Chinese market has shown a significant leap in this rating cycle and is one of the most dynamic markets in the region.

In MSCI's ESG rating assessment of 758 Chinese companies, 26% of them received an upgrade in 2024, setting a record high. The proportion of AA and AAA enterprises rose to 8.9% (from 1.4% in 2020). Policy promotion, governance improvements and green technology innovation have jointly driven the rating leap, reflecting a gradual shift of Chinese companies from passive responders to active practitioners.

Taking companies listed on the Shanghai Stock Exchange (SSE-listed companies) as an example, in 2024, 1,068 SSE-listed companies independently disclosed ESG reports, reaching a disclosure rate of 63%—a record high. The practice of SSE-listed companies shows that deeply integrating ESG elements into technological innovation, management systems and industrial transformation is more effective in cultivating differentiated competitive advantages.

At the same time, SSE-listed companies have made significant progress in global ESG rating rankings. A total of 306 SSE-listed companies were included in the MSCI ESG rating, of which 90 companies received an upgrade in the latest rating, and 9 companies' ratings jumped by 2-3 levels, such as Enn Natural Gas Co., Ltd., Hisense Visual Technology Co., Ltd., and Joincare Pharmaceutical Group Industry Co., Ltd.; 8 companies received AAA rating, including 4 banks (China Construction Bank Corporation, China Minsheng Banking Corp., Ltd., China Merchants Bank Co., Ltd., and Industrial Bank Co., Ltd.), Aima Technology Group Co., Ltd., Enn Natural Gas Co., Ltd., Guotai Junan Securities Co., Ltd. and Huatai Securities Co., Ltd., at the leading level in the world.

Among the 296 companies included in the MSCI rating for two consecutive years, the number of companies above A rating increased from 37 to 49. In the early stage, the ESG-related guidelines and action plan issued by SSE provided important guidance for companies to understand and practice ESG concepts. CMOC Group Limited said that in line with international standards, and with a clear framework and pragmatic indicators, the guidelines promote corporate ESG practices to a higher level of refined and systematic management.

The new quality productive forces and the financial industries have taken the lead in rating leap. MSCI rating data shows that new quality productive forces areas such as new energy, high-end manufacturing and digital economy have shown strong momentum for ESG upgrading. More than 30 companies with improved ratings are from emerging industries, among which computer and electronics-related companies have increased their ESG ratings by an average of 0.57 and 0.31 levels, respectively.

In 2024, Wingtech Technology Co., Ltd. invested 1.8 billion yuan in the R&D of its semiconductor business. The Company continues to develop new products combining high-power discrete devices and modules, logic and analogue chips, further enhancing its independent innovation capability and core competitiveness. In 2024, Hundsun Technologies Inc. invested 2.458 billion yuan in R&D expenses, accounting for 37.36% of its operating revenue. Through large model technology, the Company helped financial customers improve efficiency, significantly improved productivity in the financial industry, and reduced energy consumption in production environments. Yutong Bus Co., Ltd. has completed the full technical upgrade of the battery, motor and electronic control systems in domestic pure electric buses and highway buses, achieving technological breakthroughs with lower energy consumption, longer driving range, faster power replenishment and better operation.

The companies above A in the MSCI rating are mainly financial and biopharmaceutical companies. Leading ESG companies have shown significant operating advantages, with an average R&D intensity of 5.2%, 1.1 percentage points higher than the market average; ROE of 9.9%, 1 percentage point higher than the market. Haier Smart Home Co., Ltd.'s air conditioner product line pioneered AI energy-saving technology, equipped with AI intelligent energy-saving algorithm + cloud intelligent adaptation technology. In 2024, the Company achieved a net profit attributable to its parent company of 18.741 billion yuan, up 12.9% year on year, confirming the positive cycle between ESG investment and financial returns. This shift marks that Chinese listed companies are moving out of the formal stage of ESG and entering the deep waters of value creation.

Low-carbon transformation reconstructs industrial competitiveness. SSE-listed companies are turning ESG practices into technology moats. In 2024, SSE-listed companies invested environmental protection-related funds of over 180 billion yuan in total, more than 1,300 companies took carbon reduction measures, and the annual carbon dioxide emission equivalent was reduced by 1.14 billion tons.

Fuyao Glass Industry Group Co., Ltd. has integrated solar cell modules into laminated glass. A sunroof with a power generation of 200W under standard conditions is expected to generate 290 kilowatt-hours of electricity per year, which is equivalent to an annual increase of 1,450 km in driving range. Shanghai Boiler Factory, a subsidiary of Shanghai Electric Group Company Limited, launched the technical mechanism research of carbon dioxide capture, utilization and storage (CCUS) in 2010, and joined hands with top domestic scientific research institutes to vigorously promote the development of raw material technology for carbon dioxide, laying a solid technical foundation for the development of green energy. These innovations are reshaping low-carbon industry standards and breaking the inherent perception that "environmental protection equals higher costs".

The above information is provided for reference purposes only and does not constitute investment advice.