On November 22, 2024, the China Association for Public Companies (CAPCO) and the China Securities Index Co., Ltd. (CSI) unveiled the Report on ESG Development of Chinese Listed Companies (2024)at the China Public Companies Sustainable Development Conference. Now in its fourth year, this annual publication serves as a critical lens through which global stakeholders can gauge the evolving ESG landscape of Chinese enterprises.

Chinese Enterprises: Leading the Way in Sustainable Development

Against the backdrop of the Third Plenary Session of the 20th CPC Central Committee, which charted ambitious plans for modernization and reform, Chinese enterprises are championing ESG principles to drive technological transformation, industrial upgrades, and green transitions. The 2024 Report also marks the 20th anniversary of the ESG concept, reflecting an emerging consensus on sustainability and the importance of fostering innovation, inclusivity, and openness in development.

Key findings from the Report highlight China's notable strides:

1. Green Competitive Advantage

China is enhancing the "green factor" in its economic growth, turning sustainability into a hallmark of its global competitiveness. In the first three quarters of 2024, the export value of "the new three" green products—electric vehicles, lithium batteries, and photovoltaic products—surpassed 757.83 billion RMB, contributing 4.1%of total exports and reaching over 200 countries. This robust performance underscores China's leadership in the global green transformation.

2. Progress in ESG Disclosure Standards

The Shanghai, Shenzhen, and Beijing stock exchanges have introduced localized ESG disclosure frameworks, tailored to meet the needs of Chinese enterprises. The "Guidelines for Self-Regulation of Listed Companies—Sustainability Report" offer a structured approach to enhance transparency and comparability, signaling a new phase in standardized ESG information disclosure.

3. Accelerating Sustainable Investment

Sustainable investment is growing rapidly, with domestic ESG public funds reaching 260.087 billion RMBby June 2024—a 35.15% increasesince 2020. Passive ESG funds are gaining traction, aligning capital flows with green and socially responsible enterprises.

ESG in Practice: Chinese Enterprises Rising to the Challenge

The Report showcases how Chinese listed companies are integrating ESG principles into their strategies:

·Environmental: Listed companies are pivoting to carbon emissions control, investing over 1.07 trillion RMBin environmental initiatives, and achieving 74% compliancewith carbon reduction disclosure standards. Notably, their total green revenue reached 5.63 trillion RMB, reflecting their leadership in clean technology adoption.

·Social: Nearly 70%of companies have strengthened supply chain management, while 57%implemented employee stock ownership plans. Additionally, investments in rural revitalization projects surpassed 75 billion RMB, highlighting a commitment to social equity and community development.

·Governance: Governance practices are modernizing, driven by reforms in the Company Lawthat emphasize board leadership and integrate CPC guidance. The proportion of A-share companies issuing cash dividends has risen to 72.6%, with payouts doubling to 2.23 trillion RMBbetween 2018 and 2023.

Strategic Recommendations

The Report outlines five strategic measures to further advance ESG integration:

1.Strengthen Sustainability Education: Foster awareness and consensus on sustainable development principles.

2.Bolster Corporate Competitiveness: Support enterprises in embedding ESG practices into their operations.

3.Develop Sustainable Investment Ecosystems: Enhance the quality and efficacy of ESG-focused financial services.

4.Build Local ESG Rating Capabilities: Position China as a global leader in ESG evaluation.

5.Promote Global Collaboration: Foster international partnerships to advance a sustainable governance framework.

CSI: Championing ESG Standards and Best Practices

The CSI is actively refining its ESG evaluation system, expanding index offerings, and supporting global capital flows into sustainable sectors. By the end of October 2024, CSI had published 146 ESG indicesand tracked 89 productswith a total value of 83.3 billion RMB, facilitating investment in green transformation. Its evaluations now cover 5,000 listed companiesand 2,200 bond issuers, widely adopted by institutional investors including pension funds and insurance groups.

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