How 4 Chinese enterprises are taking action on sustainable development 

Environmental, social and governance (ESG) factors are becoming increasingly important for companies looking to create long-term value. The World Economic Forum has championed stakeholder capitalism for more than half a century, and in the summer of 2019, launched the Stakeholder Capitalism Metrics initiative to advance ESG disclosure practices among leading companies and promote systematic integration of the global system of sustainability reporting.

In June 2020, the World Economic Forum Beijing Representative Office established the China ESG Champions Community to facilitate regional ESG exchanges and support Chinese stakeholders to participate and contribute to ESG global development. In 2021, there was unprecedented development of the international sustainability reporting standards, but at the same time, ESG has been sharply contested owing to its over-reliance on qualitative factors and a risk of “greenwashing”.

As Klaus Schwab, Founder and Executive Chairman of the World Economic Forum has said: “ESG is therefore not an end in itself. The ESG movement was and is an essential step in the right direction, but we should not confuse the ends with the means. What is essential is to define the purpose of business and to create the necessary metrics of performance.”

Driving one of the world’s largest and most dynamic economies, China’s enterprises have a leading role to play in actions for sustainable development. China's “dual carbon” goal has sparked a new wave of ESG practices, with Chinese state-owned enterprises (SOE) continuing to play a leading role as important market players.

To better understand this, four Chinese SOE leaders from energy, finance, automotive and conglomerates share their thoughts and practices on ESG integration in terms of model innovation, international cooperation, strategy development and corporate management to effectively promote the transformation of business towards a sustainable future.

Jian Tang, Chairman, China Longyuan Power Group Corporation Limited

In 1993, one year after the adoption of the United Nations Framework Convention on Climate Change, Longyuan Power was established and dedicated to new energy project construction, operation and technology development. It is now the world's largest wind power operator. With China's dual carbon goal, Longyuan Power has been further driven by ESG, explored model innovation and collaborated with the whole industry chain to promote sustainable development.

In an exploration of the New Nature Economy and nature-positive energy transition, the world's first "floating wind power plus marine aquaculture" demonstration project has formed a "structure sharing and wind-fishery interaction" model, doubling the revenue per unit of sea use and improving the efficiency with which resources are used. In addition, through strengthening R&D, Longyuan Power proposes circular economy solutions to waste, such as grinding and mixing waste wind turbine blades into homebuilding materials.

Shu Gu, Chairman, Agricultural Bank of China

China is among the largest green finance markets, with total green loans balance and green bonds exceeding 20 trillion Yuan (approximately $2.98 trillion) and 1.2 trillion Yuan (approximately $179 billion), respectively, up till now. It has become essential for Chinese banks and global peers to work together to promote green finance in a concerted way and support the establishment of transparent, reliable, and coordinated ESG information disclosure standards and green taxonomy, a consolidation of green definitions.

The Agricultural Bank of China (ABC) is an active participator in the area. ABC is a supporting organization of the Task Force on Climate-related Financial Disclosure (TCFD) and discloses ESG information according to unified standards to enhance transparency. Aligning with the recently updated EU-China Common Ground Taxonomy, in October 2022, ABC issued 20 billion Yuan (approximately $2.95 billion) in green financial bonds, making it the world's largest issuance. At the same time, as a member of the UN Global Investors for Sustainable Development (GISD), ABC continues to be in dialogue with the global community, promotes the implementation of coordinated, green finance actions and plays an important role in channelling financial resources for sustainable development.

Qinghong Zeng, Chairman, Guangzhou Automobile Group Co., Ltd

With global climate action and China's "dual carbon" goals, electrification has become the mainstream of the automotive industry. But electrification is not the end, to achieve the real "net zero", the entire automotive value chain needs to cooperate – in procurement, research and development, manufacturing, maintenance, end-of-life recycling and other aspects – to promote a green, low-carbon transformation.

In the 14th Five-Year Plan (China's national social and economic development guidelines) period covering 2021-2025, GAC's "1615" strategy defines five major areas of improvement: electrification, smart connectivity, digitalization, sharing and internationalization, in collaboration with internal and external stakeholders, to develop practices for sustainable development of the automotive industry and improvement of the global ecological environment. Our "GLASS Green Plan" is a commitment to achieve the goal of carbon neutrality throughout the product lifecycle by 2050 (possibly 2045). The plan includes measures to create a green supply chain, set green procurement standards, build zero-carbon factories, increase the proportion of smart new energy and energy-efficient vehicles, provide recycling solutions and invest in clean technologies.

Zhaoxing Zhang, Chairman, Yuexiu Group

Large conglomerates with diversified businesses often face more complex sustainable risks and opportunities, which places higher demands on corporate management and ESG integration. To truly play its important role in risk prevention and value creation, ESG integration should be steadily promoted through integrated ESG management and the grasp of material ESG issues based on the different characteristics of the industries in which multiple business units operate.

Integrating ESG into governance structure, corporate strategies and policies, data and disclosure practice, and continuously strengthening coordination according to international, domestic and industry dynamics is a continuous process of exploration. Yuexiu Group supports its listed subsidiaries to establish ESG management in line with their business activities and releases a separate ESG report annually to enhance disclosure. For example, Yuexiu Financial Holdings practises responsible investment, while Yuexiu Real Estate focuses on green building.

Guangyao Zhu, the Counsellor of the State Council of China, participated in interactions during the Special Dialogue on International Sustainability Standards by the World Economic Forum, where the following statement was shared: "As a responsible and the largest developing economy in the world, China has held a clear attitude of support for the development of ESG from the very beginning, and has promoted discussions including on strategic relations of governances at global level, national level and corporate level. China firmly supports the establishment of a unified, transparent and practical global baseline of sustainability reporting and emphasizes cooperation and inclusiveness."

The Trustees of the IFRS Foundation signed a memorandum of understanding with the Ministry of Finance of China on 29 December 2022 to establish an International Sustainability Standards Board (ISSB) office in Beijing. The office will focus on leading and executing the ISSB’s strategy for emerging and developing economies, act as a hub for stakeholder engagement in Asia and facilitate deeper cooperation and engagement with stakeholders. We look forward to seeing Chinese stakeholders contribute even more to the international development of ESG.