Empowering Listed Companies and the Shanghai Stock Exchange to Continue to Promote the Positive Interaction of the ESG Ecosystem

The Shanghai Stock Exchange recently held an online training on "Dialogue with International Investors: ESG (Environmental, Social and Corporate Governance) Empowering Listed Companies", which was attended by more than 120 relevant persons in charge of Shanghai-listed companies.

Participants believed that with the improvement of my country's capital market opening to the outside world and the advancement of Shanghai's construction of an international green financial hub, the participation of international investors in the domestic green financial market will further increase. The Shanghai Stock Exchange said that in the future, it will continue to carry out extensive ESG promotion and training activities, continue to build communication channels for Shanghai-listed companies and international investors, and promote positive interactions in the ESG ecosystem.

  Investors and companies achieve positive ESG interaction

ESG information disclosure is a concentrated demonstration of the company's ESG work, and it is also the basis for ESG investment and rating. Under the background that sustainable development has been elevated to a new strategic height on a global scale, more and more investors and enterprises are gradually aware of the relevant Information on ESG will directly affect a business' reputation, value, performance and investment.

At this event, how to establish a positive interaction between investors and the company's ESG two-way communication has become the focus of discussion. A representative of a listed mining company said that, as an international resource company, the company has always used ESG as a tool to manage non-financial risks, actively integrated ESG into the company’s management system and all aspects of daily operations, and made changes in accordance with the requirements of different countries and regions. Develop targeted programs. Faced with the constantly updated demands of stakeholders, the company attaches great importance to strengthening continuous communication with stakeholders, formulates its own ESG priorities according to their demands, follows up in real time and updates them regularly.

A representative of a large asset management company believes that ESG provides investors with a new perspective to examine the long-term value of listed companies, and also provides a new perspective for the company's management to sort out the company's long-term strategy and enhance the company's resilience. ESG has become an important focus of communication with companies. More and more Shanghai-listed companies have begun to pay attention to ESG. They have formulated long-term carbon emission reduction targets, and adopted substantial measures such as technological transformation and business process upgrades. ESG actively empowers the green transformation of enterprises, which will bring a two-way win-win to investors' long-term value investment and the company's sustainable development.

  Indigenous assessment methods help ESG investing

ESG rating is an important link connecting ESG information disclosure and ESG investment. In December 2020, CSI released the CSI ESG evaluation method, which will cover all A shares in February 2021.

For a long time, people in the industry generally believe that China's ESG rating standards need to be in line with the development stage and development characteristics of Chinese companies, and cannot directly copy foreign experience.

The CSI ESG evaluation method consists of 13 themes, 22 units and nearly 200 indicators. It reflects the international consensus and combines local reality. For example, the CSI ESG evaluation method pays more attention to the consideration of common prosperity in the social dimension; in the dimension of corporate governance, it fully considers the shareholding concentration of state-owned enterprises, the participation of party groups in corporate governance and other domestic enterprise-specific internal governance mechanisms. Governance abnormality and other dimensions examine the external governance of the enterprise.

As of the end of July 2022, CSI has released a total of 113 sustainable development indices including ESG, social responsibility, and green themes, and has index series such as ESG benchmarks, ESG leadership, ESG strategies, and ESG themes. ESG indexes such as the CSI 300 ESG benchmark and the CSI 500 ESG benchmark have achieved excess returns relative to the parent index since the base date, highlighting the value of ESG investment.

  Actively build a good ESG ecosystem

As the organizer and first-line regulator of the capital market, exchanges connect market parties such as investors, listed companies and intermediaries. So far, the SSE has made progress in improving ESG information disclosure, financing and supporting green companies, developing ESG investment products, strengthening ESG capacity building, and conducting international ESG cooperation.

In terms of ESG information disclosure, in the 2021 annual report, more than 770 main board listed companies disclosed their 2021 ESG reports, sustainability reports or social responsibility reports, a year-on-year increase of 28%, a record high. All STAR Market companies will disclose ESG-related information in the special section of their 2021 annual reports, and more than 90 listed companies have separately released social responsibility reports or ESG reports, an increase of nearly three times year-on-year.

In terms of supporting green corporate financing, in the first half of 2022, the issuance of green bonds and green ABS on the Shanghai Stock Exchange reached 47.5 billion yuan and 27.7 billion yuan, up 18% and 33% year-on-year, respectively. In recent years, the Shanghai Stock Exchange has successively launched innovative products such as carbon neutral bonds and blue bonds.

In terms of developing ESG-themed products, there are currently 15 carbon-neutral, sustainable development and ESG wide-based ETFs on the Shanghai Stock Exchange, with a scale of more than 10 billion yuan. In addition, there are also ETFs in environmental protection industries such as photovoltaics and new energy listed on the Shanghai Stock Exchange. .

It is worth mentioning that the ESG empowerment training is a microcosm of the Shanghai Stock Exchange's long-term commitment to promoting ESG development. In addition to the ESG empowerment training for listed companies, in January this year, the Shanghai Stock Exchange also held the first ESG training for listed companies in the 2021 annual report. study.