CAPCO and CSI jointly released the Report on ESG Development of Chinese Listed Companies (2024)

Translated from China Securities Index

On November 22, the China Association for Public Companies (CAPCO) and the China Securities Index Co., Ltd. (CSI) jointly released the Report on ESG Development of Chinese Listed Companies (2024) (the "Report") at the 2024 China Public Companies Sustainable Development Conference. This marks the fourth consecutive year that the two organizations have published this report, opening a window for global stakeholders to understand the ESG development of China's listed companies.

The third plenary session of the 20th CPC Central Committee has outlined a grand vision for further deepening reforms and advancing Chinese Modernization. Chinese enterprises are courageously taking on their responsibilities, grounded in a new development philosophy. They are driving technological revolutions, reshaping industrial structures, and systematically promoting green, low-carbon transformations alongside the construction of a beautiful China. The release of this report coincides with the 20th anniversary of the ESG concept, vividly illustrating the consensus around ESG that has emerged across society, and fostering a new sustainable development landscape characterized by openness, inclusiveness, innovation, and collaboration.

The Report indicates that China is making solid progress in sustainable development, with multiple sectors working together to promote ESG initiatives. First, the country is enhancing the "green factor" in economic development, aiming to build sustainable competitive advantages for the Chinese market. According to statistics for the first three quarters of 2024, the export value of "the new three" products—electric vehicles, lithium batteries, and photovoltaic products—reached 757.83 billion yuan, accounting for 4.1% of China's total exports, with these products finding markets in over 200 countries and regions[1]. China is actively engaging in sustainable practices, leading global green transformation, and sustainability is increasingly becoming a hallmark of Chinese companies. Second, the standardization of sustainability information disclosure in China has entered a new phase, with companies actively promoting their green image. The Shanghai, Shenzhen, and Beijing stock exchanges have officially released the "Guidelines for Self-Regulation of Listed Companies—Sustainability Report," which established a localized ESG information disclosure framework tailored for Chinese listed companies, thus enhancing the comparability and transparency of information. Listed companies are exploring ways to improve the quality of their ESG information disclosures, collectively strengthening the foundation for ESG ecological development. Third, the development of sustainable investment is accelerating by attracting capital to empower companies in their green transformation efforts. By the end of June 2024, the scale of domestic ESG public funds reached 260.087 billion yuan, a 35.15% increase compared to 2020[2], with the proportion of passive ESG funds continuing to rise.

The Report analyzed how listed companies are proactively taking responsibility and fulfilling their duties regarding ESG as a vital component of high-quality development. In the environmental aspect, listed companies are embracing the call for a shift from a dual control on the amount and intensity of energy consumption to that of carbon emissions, thereby fostering momentum for green transformation. According to the latest statistics, the total environmental investment by companies included in the CSI index has exceeded 1.07 trillion yuan, with 74% of these companies clearly disclosing measures for carbon reduction. Additionally, the total green revenue of the sample companies reached 5.63 trillion yuan. On the social front, listed companies are enhancing the resilience of their value chains, fostering new production relations driven by new quality productive forces. By the first half of 2024, nearly 70% of listed companies had implemented measures to strengthen supply chain management. Furthermore, 57% of companies sampled by CSI established employee stock ownership plans, and nearly 60% engaged in rural revitalization projects, collectively investing over 75 billion yuan. In terms of governance, listed companies are accelerating the modernization of their governance systems and practices, with increasing emphasis on investor protection. The new Company Law underscores the central role of the board of directors and emphasizes the integration and promotion of CPC leadership and corporate governance. Currently, 72.6% of A-share listed companies have implemented cash dividends, with the total amount rising from 1.23 trillion yuan in 2018 to 2.23 trillion yuan in 2023.

In promoting the ESG practices of listed companies, the Report proposes five key measures: 1) strengthening the cultivation of sustainability concepts to further consolidate the consensus on sustainability; 2) solidifying the foundation for corporate sustainable competitiveness to deepen the implementation of sustainable development practices within enterprises; 3) enhancing the sustainable investment ecosystem to improve the quality and effectiveness of financial services that support the real economy's sustainable development; 4) boosting local ESG rating capabilities to further establish China's ESG evaluation influence; and 5) seeking international cooperation models in sustainable development to jointly build a global governance system for sustainability.

Under the leadership of the Shanghai and Shenzhen Stock Exchanges, the CSI has actively supported the capital market in furthering the green development strategy. The company's goal is to "create China's ESG evaluation standards and promote best ESG practices in China." The company is continuously enhancing CSI's ESG evaluation system, expanding the application of evaluation products, enriching the supply of ESG indices, and strengthening ESG practices. It aims to contribute to effectively communicating the ESG story of Chinese enterprises and promoting the global presence of Chinese ESG initiatives. Currently, CSI's ESG evaluation covers nearly 5,000 listed companies and over 2,200 bond issuers, with evaluation products being utilized by more than a hundred institutions, including pension funds, public mutual funds, and insurance groups. By the end of October 2024, CSI had published a total of 146 ESG and other sustainable development indices and tracked 89 products, with a total value of 83.3 billion yuan, effectively guiding capital into sustainable development sectors.

The Reports on ESG Development of Chinese Listed Companies are significant annual accomplishments jointly released by CSI and CAPCO. Looking ahead, CSI will leverage its strengths to further deepen communication and cooperation with relevant stakeholders in the ESG arena, explore the sustainable value of Chinese listed companies, help address pain points and choke points in the green transition, and better promote best ESG practices in China, thus continuously enhancing the sustainable impact of Chinese listed companies.

Notes:

[1] Source: General Administration of Customs

[2] Source: Wind, derived from CSI statistics

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