Log in to Sina Finance APP to search [Xinpi] to see more evaluation levels.

Source: China Securities Investment Fund Industry Association

[editor's note] with the intensification of global warming and the outbreak of the COVID-19 epidemic, sustainable development has become a global strategic consensus, and ESG, as an important starting point for enterprises to practice sustainable development, has become an international mainstream idea. With the proposal of the goal of "double carbon" in China, the local ESG practice in China has also entered a period of rapid development, and the enterprise ESG management awareness and performance level represented by listed companies have been significantly improved.

The report of the 20th CPC National Congress emphasizes that green and low-carbon economic and social development is the key link to achieve high-quality development. As an important pillar of our national economy, central enterprises play a key role in promoting high-quality economic development and industrial upgrading, serving the national strategy, improving people's livelihood, scientific and technological innovation, etc., and also shoulder the important task of leading the practice of Chinese-style ESG. With the deepening and promotion of the new round of state-owned enterprise reform and the development of world-class enterprise value creation action, ESG construction will become an important way for central enterprises to implement the spirit of the 20th CPC National Congress, implement the new development concept of "innovation, coordination, green, openness and sharing", and promote higher quality development. At the same time, there is an urgent need for the Chinese market to establish a value evaluation system that can comprehensively reflect the business performance of central enterprises and the positive externalities in the environment and society, so as to help central enterprises to discover and create value.

This paper analyzes4playerarcadegamesThis paper introduces the trend and progress of ESG information disclosure and construction of listed companies in central enterprises, and puts forward ESG issues and evaluation indicators with local characteristics. Based on the positioning and outstanding contribution of national strategies such as serving green and low-carbon transformation, ensuring social livelihood and achieving common prosperity, this paper makes a preliminary exploration on ESG topics and indicators with central enterprise characteristics, in order to promote the establishment of a more systematic, scientific and effective value discovery mechanism for central enterprises.

I. ESG Information Disclosure and performance of domestic listed companies

(1) the trend of ESG information disclosure in A-share market

As of June 30, 2023, a total of 1771 A-share listed companies have disclosed independent ESG reports (including social responsibility, sustainable development, environmental sustainability reports, etc.), with a disclosure rate of 34%4playerarcadegames.4%; among them, the rate that has been examined or authenticated by a third party is relatively low, only 2.1%. However, from the point of view of the trend, the disclosure rate of ESG report and the third-party verification / verification rate have increased steadily in 2020-202. in the past three years, the compound growth rate of ESG report disclosure rate of A-share listed companies has been more than 10%, and the third-party verification / verification rate has increased rapidly, with a growth rate of more than 60%.

Comparatively speaking, the disclosure rate of ESG reports of central enterprises in China is significantly ahead of the market. In the "work Plan for improving the quality of Central Enterprise holding listed companies" issued by SASAC in May 2022, it explicitly required for the first time to achieve full coverage of ESG special report disclosure of central enterprise holding listed companies by 2023, which greatly accelerated the process of ESG information disclosure of central enterprises.

According to Castrol's ESG data, among the A-share listed companies, there are 443 listed companies controlled by central enterprises (hereinafter referred to as central enterprises, corresponding to "central enterprises" in the chart) and 919 local state-controlled listed companies (local state-owned enterprises in the chart below). By the end of June 2023, 78.3 per cent of central enterprises and 52 per cent of local state-owned enterprises had disclosed independent ESG reports, well above the average disclosure level of 25 per cent of non-state-owned enterprises. In 2022, the third-party verification / verification rate of ESG reports carried out by central enterprises and local state-owned enterprises is 7.4 times and 2 times higher than that of non-state-owned enterprises respectively.

(2) ESG enables the high-quality development of state-owned enterprises

General Secretary Xi Jinping pointed out that state-owned enterprises are the important material and political foundation of socialism with Chinese characteristics, an important pillar and dependent force for the party to govern and rejuvenate the country, and play an irreplaceable role in promoting the process of Chinese-style modernization in an all-round way. Since the founding of New China, state-owned enterprises, guided by the strategy of serving the country, have made great contributions to promoting China's economic development, industrial upgrading, livelihood protection and scientific and technological innovation. In May 2022, the SASAC of the State Council issued the work Plan for improving the quality of listed companies controlled by Central Enterprises, requiring central enterprises to implement classified policies and precise efforts within three years, promote the creation of a number of flagship leading listed companies with strong core competitiveness and strong market influence, and cultivate a number of professional pilot listed companies with obvious professional advantages and outstanding quality brands.

At the same time, the role of ESG in promoting the high-quality development of central enterprises has become increasingly prominent. In recent years, SASAC has continuously established and improved the ESG ecosystem and established the Bureau of Social responsibility in March 2022, clearly proposing to "do a good job in the construction of the central corporate social responsibility system, actively adapt to and lead the formulation of international rules and standards, and better promote sustainable development", releasing a clear signal to actively promote the construction of corporate ESG system. In the "work Plan for improving the quality of listed companies controlled by Central Enterprises", it is clearly proposed for the first time that listed companies controlled by central enterprises should establish and improve the ESG system and strive to achieve full coverage of ESG special reports by 2023. In August, 2023, SASAC issued the Circular on forwarding the Research on the compilation of ESG Special report of Central Enterprise holding listed companies, to further guide and standardize the ESG information disclosure of central enterprise holding listed companies. The accelerated introduction of ESG-related policies of central enterprises will greatly promote the construction of ESG system of central enterprises, promote the level of governance and operational efficiency, so as to help them give better play to their functions such as strategic security, industrial leadership, national economy and people's livelihood, and public services, and achieve high-quality development.

(3) ESG is a useful supplement to the valuation system with Chinese characteristics.

As an important pillar of our national economy, central state-owned enterprises have always maintained a high level of contribution to GDP. The total operating income of central enterprise holding listed companies and local state-owned listed companies (collectively referred to as central state-owned enterprises listed companies) listed on A-shares accounts for more than 60% of the national GDP for a long time. Although the number of central state-owned enterprises listed companies only accounts for about 1x4 of the total market, its total market capitalization accounts for nearly 1x2, taxes and fees account for about 70%, and total revenue and profits account for 65.4% and 70.2%, respectively. Thus it can be seen that central state-owned enterprises play an important role in China's capital market.

However, what does not match the role of the "pillar" of the central enterprises is the undervalued level of the listed companies of the central enterprises for a long time. Especially in the past two years, under the influence of a series of factors such as the epidemic and the deep adjustment of the real estate industry, the valuations of listed companies of central enterprises in the fields of construction, communications, infrastructure, banking, insurance and non-bank finance have generally declined significantly. Based on the statistics from Wande, the valuation level of the listed companies controlled by central enterprises is discounted compared with that of non-state-owned enterprises for a long time. As of July 2023, the PE (TTM) / PB of non-state-owned enterprises is 2.3times / 2.1times of that of central enterprises.

Listed companies of central enterprises are currently significantly undervalued in the capital market. The traditional valuation system based on a single dimension of fundamentals and financial indicators can not fully reflect the value creation of central enterprises and their great contribution to serving the national strategy, serving the real economy and serving the people's livelihood. it is difficult to meet the requirements of high-quality development of central enterprises in the new era and new stage, so it is necessary to establish a more scientific and reasonable index system to reflect the value of sustainable development of central enterprises.

As a concrete tool to implement the concept of sustainable development, ESG evaluation provides a relatively clear systematic index system for how to evaluate the characteristics and level of sustainable development of enterprises.

According to our evaluation and tracking of the ESG performance of listed companies of central enterprises, central enterprises have made great contributions to fulfilling their social responsibility and promoting social low-carbon transformation for a long time, especially in ensuring employment, energy security, human capital development, precise poverty alleviation, common prosperity, and providing public products and services. Based on Castrol's ESG scoring system, the overall ESG performance of central enterprises is significantly better than that of non-state-owned enterprises. Judging from the scoring results, the central enterprises are ahead of the non-state-owned enterprises in terms of ESG total score and sub-item performance.

We believe that central enterprises can further enhance their intrinsic value by improving governance, environmental and social performance, and ESG evaluation can be used as an important tool to discover the social value of listed companies in central enterprises. Under the background of the gradual mainstream of the concept of sustainable investment, the capital market will gradually attach importance to the advantages of ESG of central enterprises and integrate them into their valuation, tilt to the central enterprises with excellent ESG performance in the medium and long-term resource allocation, form ESG premium, and promote the formation of the value discovery mechanism of central enterprises.

II. Environmental issues of ESG with Chinese characteristics: focusing on the implementation of the "double carbon" strategy

According to incomplete statistics, there are more than 600 third-party organizations engaged in ESG evaluation in the world, and ESG ratings are widely used in the world, such as MSCI, Sustainalytics, FTSE, S & P and so on. The domestic ESG evaluation service market has also developed rapidly in recent years. China Securities, Wande, Shangdao Ronglu, Huazheng and other institutions have launched localized ESG evaluation and data. However, due to the late start, the domestic third-party ESG rating system still has a lot of room to improve in terms of application depth, investment effectiveness, industry influence and credibility, while overseas rating systems and methodologies also have big problems in applicability, coverage and timeliness of evaluation to the Chinese market.

Based on the existing international and domestic mainstream ESG frameworks and standards, and considering the characteristics of the local market, domestic macro and industrial policy standards, as well as the trend of enterprise information disclosure, this paper refines the core issues related to sustainable development and the relationship between industry and enterprise development, and attempts to put forward the topic of characteristic ESG of central state-owned enterprises, so as to provide clues and tools for improving the social value evaluation of central enterprises.

(I) Climate change

In recent years, with the "double carbon" goal put forward and the frequent occurrence of natural disasters, the risks and opportunities related to climate change have gradually become important factors affecting the operation and long-term development of enterprises. Achieving carbon peak carbon neutralization is a major strategic decision made by the CPC Central Committee. The report of the 20th CPC National Congress clearly put forward that it is necessary to improve the regulation and control of the total amount and intensity of energy consumption, focus on controlling fossil energy consumption, and gradually shift to the double control system of total carbon emissions and intensity. Therefore, national environmental regulation will gradually transition from dual control of energy consumption to dual control of carbon emissions, and it will also become a compulsory course for enterprises to deal with climate change and promote green and low-carbon transformation. We believe that attention should be paid to issues such as strategic plans and measures for enterprises to deal with climate change, energy consumption, clean energy use, carbon emissions and other greenhouse gas emissions.

Listed companies of central enterprises are obviously ahead of non-state-owned enterprises in terms of carbon emission disclosure rates. in 2022, the carbon emission disclosure rates of central enterprises and local state-owned enterprises were 37.2% and 15.1% respectively, with a growth rate of 66.8% and 58.9%, respectively. it can be seen that actively dealing with climate change and implementing the "double carbon" strategy has become the core task of the high-quality development of central enterprises. As most of the central enterprises are concentrated in high emission industries, their average greenhouse gas emission intensity is significantly higher than that of non-state-owned enterprises. in terms of specific values, the emission intensity of central and local state-owned enterprises is 2.67 times and 1.73 times that of non-state-owned enterprises respectively. It can be seen that the central enterprises still have a long way to go in accelerating the green transformation and reducing carbon emissions.

(2) Environmental risks

Under the background of increasingly stringent environmental supervision, the environmental risk management ability of enterprises will have an impact on their business stability and efficiency, thus affecting the long-term competition pattern and sustainable development ability. We believe that identifying and measuring the environmental risks faced by enterprises is not only a necessary step to evaluate the environmental performance of enterprises, but also an important prerequisite for understanding whether the environmental management systems and measures are adequate and effective.

It is suggested that when evaluating the environmental risk exposure level of enterprises, we should focus on the environmental externalities, regulatory policies and objectives related to the industry, region and supply chain. The industry determines the environmental policy risks, operational risks, environmental externalities of the industry and the additional costs caused by rising resource prices; different regions will also bring different operation management and violation costs to the company due to different regional emission reduction targets, regulatory intensity and environmental penalty requirements. The environmental risk of the supply chain is due to the fact that the upstream and downstream supply chain of the enterprise may extend in the whole industry and around the world, so the environmental risk will be transmitted to the enterprise along the supply chain. Therefore, different industries have different degrees and sensitivity to environmental risk exposure.

Listed companies of central enterprises are mainly concentrated in industries with high carbon emissions and high energy consumption, such as energy, thermal power, chemical industry, transportation, building decoration, and non-ferrous metals, which naturally face high environmental risks and environmental governance pressure. it is also more vulnerable to strong environmental supervision and environmental administrative penalties. According to Castrol's environmental risk assessment model, at present, nearly half of the central enterprises are concentrated in high environmental risk exposure industries and areas with strict environmental supervision and control.

(3) Resource utilization and ecological protection

General Secretary Xi Jinping pointed out in the report of the 20th CPC National Congress that "we will enhance the diversity, stability, and sustainability of ecosystems, speed up the implementation of major projects for ecosystem protection and restoration, and implement major projects for biodiversity conservation." Strengthening the construction of ecological civilization and promoting green development are the important foundation for realizing sustainable economic and social development and building a beautiful China. The production and operation of enterprises should strictly implement relevant international and domestic laws and regulations, protect and save natural resources, and explore the development model of green production. Especially after the adoption of the Kunming-Mongolia Framework in 2022, biodiversity finance has gradually become a global environmental issue, and more and more institutional investors are bringing biodiversity into the investment and research framework. especially for industries such as coal, non-ferrous metals, agriculture, forestry, animal husbandry and fishery, which rely heavily on natural resources, such as land, water, energy and minerals, the capacity building of resource utilization and ecological protection of enterprises is increasingly becoming an important factor in investment decisions.

The topic focuses on the efficiency of production and operation processes on natural resources such as water, energy and land and their externalities on biodiversity, as well as governance and strategies established to reduce negative impacts, risk management objectives and measures, and performance evaluation and disclosure. Take water resources management as an example, industries with high water consumption or using water as the main raw materials are more sensitive to water shortage. In areas where water resources are scarce or water quotas are implemented, companies will face higher costs for the use of water resources. even the risk of production and operation interruption. Attention should be paid to whether enterprises establish a management mechanism for the utilization of water resources, and examine water consumption, water saving and water resources utilization efficiency.

In terms of energy consumption, the data show that the disclosure rate of energy consumption information across the market has increased significantly in the past three years, with a growth rate of more than 50%. Among them, the disclosure performance of central enterprises is better than that of non-state-owned enterprises, and the disclosure rate of energy consumption data of central enterprises has reached 45.1% in 2022. In terms of energy consumption intensity, the average energy consumption intensity per unit revenue of listed companies of central enterprises in 2022 is significantly lower than that of local state-owned enterprises and non-state-owned enterprises, indicating that their energy use efficiency is higher.

The use of land resources is closely related to biodiversity, and operating in ecologically fragile areas (especially mining, energy pipelines, etc.) may have a negative impact on ecology, biodiversity or on the normal life and health of local residents. In order to avoid affecting the operation of the company or being punished or sued because of ecological protection, attention should be paid to the way in which the enterprise uses land resources, the area occupied by land, the impact on biodiversity, whether the relevant system of ecological protection has been established, whether it has been subject to regulatory punishment and litigation, and whether relevant measures have been carried out.

(4) Environmental management

Under the background of stricter environmental supervision and accelerated landing of the "double carbon" policy, environmental management capability has become an important non-financial factor that affects the financial performance and valuation of enterprises, and will also become an important judgment basis to distinguish between market leaders and laggards. Under the issue of environmental management, attention should be paid to indicators such as environmental management system, pollution and waste management.

With the continuous improvement of A-share enterprises' awareness of environmental management in recent years, more and more A-share companies have begun to co-ordinate environmental management issues, including the formulation of environmental management objectives, systems and performance evaluation objectives. Nearly 40% of the enterprises have passed the ISO14001 series environmental management system certification, of which the certification rate of central enterprises has reached 47.0%, exceeding the certification rate of non-state-owned enterprises, which shows that central enterprises are more advanced in environmental management systems and concepts and have stronger awareness of environmental management.

In recent years, China's environmental protection policy and environmental law enforcement continue to tighten. From the data of environmental penalties, listed companies of central enterprises are subject to more environmental penalties because of their industries and economies of scale. From a sub-industry point of view, the industries that are more vulnerable to environmental penalties include energy, public utilities, raw materials, industries, etc., the proportion of central enterprises in these industries is generally higher; in terms of scale, large-scale and high-market capitalization companies account for a large proportion of central enterprises. if measured according to the frequency of environmental penalties per unit revenue, the number of environmental penalties is lower than that of non-state-owned enterprises. According to the statistics of the change rate of the average number of annual environmental penalties and the number of environmental penalties per unit revenue of A-share listed companies from 2020 to 2022, we can also find that the number of environmental penalties of central enterprises decreases faster than that of non-state-owned enterprises. at the same time, the certification rate of environmental management system and the implementation of "double carbon" strategy are better.

(5) Environmental opportunities

On the one hand, the active layout of green and low-carbon products and services by enterprises can avoid the plateau materials and production costs faced by high energy consumption products, on the other hand, it is also helpful for enterprises to grasp the opportunities of energy transformation and the development of low-carbon innovative technology. through the card position in advance for the company's medium-and long-term green and low-carbon development to lay a good foundation.

The first way to deal with climate change is to accelerate the transformation of the energy structure, with emphasis on increasing the proportion of renewable energy, promoting clean energy production, electrification of energy use, intelligence and energy efficiency. With the continuous progress of clean energy and clean technology, the cost of greening will continue to decline, which will bring more medium-and long-term development opportunities to related industries and enterprises with green and low-carbon transformation ahead of time. By evaluating the specific measures and effectiveness of enterprises in green products and services, resource recycling and green certification, we can identify and measure the business opportunities and profit potential faced by enterprises in the green transformation.

According to Castrol's ESG evaluation data, nearly 1/5 of the listed companies controlled by central enterprises have dabbled in the green products and services market in 2022. The proportion of green income of listed companies of central enterprises is about 13.5%, which is higher than that of local state-owned enterprises, non-state-owned enterprises and the whole market. Because of its industry distribution characteristics and environmental responsibility, central enterprises have taken the lead in formulating and implementing green and low-carbon transformation and development strategies to speed up the layout of green industries.

III. Social issues of ESG with Chinese characteristics: social responsibility and value creation

(1) employees' rights and interests

The report of the 20th CPC National Congress mentioned that "improving the distribution system, implementing the strategy of giving priority to employment, improving the social security system, and improving the protection of workers' rights and interests and the system of distribution according to work are important starting points for realizing common prosperity and social fairness." this requires enterprises to put the concept of people-oriented through their daily management. Through the evaluation of employee employment policy, employee management and welfare, employee health and safety, employee training and development, talent motivation and training, identify enterprises that take the lead in human capital management and will benefit from human efficiency improvement in the medium and long term.

Employee employment is the core link of enterprise human resource management, which is not only directly related to the employment, welfare, working conditions and many other aspects of employees, but also closely related to the reputation and social image of the enterprise. Enterprises should follow the principles of fairness, impartiality and openness, establish clear employment policies and recruitment processes to ensure transparency and fairness, and at the same time strengthen the supervision and implementation of employment to prevent illegal acts such as child labor and forced labor. In addition, enterprises should promote multiculturalism, respect the different backgrounds and characteristics of employees, avoid gender discrimination and provide equal opportunities.

Employee benefits and incentives are important factors that determine employee satisfaction and loyalty, so employee compensation and welfare data are very important to measure the attitude and measures of enterprises in employee motivation and management. The data show that the salaries and benefits, social insurance and house fund, various funds and welfare expenses and annuity contributions of central enterprises are higher than those of non-state-owned enterprises. Although the level of compensation and benefits is related to the industry, the data show that in most industries except finance and communications services, the average salary and benefits level of central or local state-owned enterprises is higher than that of non-state-owned enterprises.

Protecting the life safety and occupational health of workers is the most basic responsibility of all industries and enterprises. China also attaches great importance to safety issues, and the government and relevant regulatory departments are also making stringent efforts to pay close attention to production safety in high-risk industries. Strict implementation of the accident classification system and responsibility system. In recent years, the disclosure rate of A-share listed companies in "occupational health and safety management system" and "safety production cost ratio" has shown an overall upward trend. The certification rate of the occupational health and safety management system has increased from 19.2% to 28.9%. In terms of the cost ratio of safety production costs, central enterprises are far ahead. In 2022, the disclosure rate of safety production costs of central enterprises / local state-owned enterprises reached 65.2% and 46.5%, respectively, 2.60 times / 1.85 times that of non-state-owned enterprises.

Employee health and safety issues are highly related to the industry. In the industries where central enterprises account for a relatively high proportion of central enterprises, such as energy, public utilities, raw materials, industry, medicine and health, the disclosure rate of safety production costs of central state-owned enterprises is better than that of non-state-owned enterprises, and the cost ratio of safety production costs of central / local state-owned enterprises is 2 / 5 times that of non-state-owned enterprises.

Through the analysis of the disclosure of A-share companies in leadership development training or promotion plans, we can see that the head companies attach great importance to talent training and development planning, with an average disclosure rate of nearly 50%. Thus it can be seen that the policies of enterprises in recruiting and employing talents, as well as whether enterprises pay attention to the development needs of employees at different stages, whether they attach importance to employees' career planning, and constantly innovate the environment and institutional mechanism for the growth of talents. paying attention to the construction of talent growth resources and providing a broad stage for employees to realize their self-value is an important key to determine whether an enterprise can attract and develop talents.

In terms of employee turnover rate and employee satisfaction, the employee turnover rate of central enterprises is significantly lower than that of non-state-owned enterprises, the employee satisfaction of central enterprises is significantly higher than that of non-state-owned enterprises, and the employee satisfaction of central enterprises has increased significantly in 2022, which reflects that central enterprises are better than non-state-owned enterprises in terms of employee welfare and satisfaction.

(2) Social responsibility of supply chain

Affected by geopolitics, trade frictions, diplomatic conflicts, natural disasters, public health crisis and national competition and other factors, supply chain security has become a key risk for the development of some industries. For industries and enterprises whose supply chains are complex or highly dependent on outsourcing, social factors such as labor treatment, working environment, production safety, product quality and community relations of upstream suppliers will greatly affect the stability, security and raw material prices of the supply chain, and the operational risks caused by suppliers will also be transmitted with the supply chain, making enterprises face potential business interruption, supervision or reputation risks. Therefore, the management and procurement system of the supply chain, as well as the consideration of social responsibility factors when assessing suppliers, are effective means to reduce the ESG risk of the supply chain and enhance the resilience of the supply chain.

(3) products and customers

The relationship between products and customers is not only the embodiment of enterprise reputation, but also the basis of sustained growth. Product safety and quality are related to enterprise credit and social impact, and even to public health and safety. Enterprises should establish a strict product quality and safety management system and guard against potential risks such as product recalls, user complaints, regulatory penalties, etc. Customer service processes, standards and complaint handling mechanisms are related to customer rights and interests, affecting customer satisfaction and loyalty. In addition, as privacy security and data protection have become major issues related to national security and economic and social development, the relevant systems and measures of enterprises in privacy security and data protection are becoming increasingly important. Therefore, under the issue of "products and customers", focus on product safety and quality, customer rights and interests protection, privacy security and data protection and other indicators.

At present, the overall certification rate of ISO90001 quality management system is relatively high, with nearly 40% of the total A market in 2022. Among them, the ISO90001 quality management system certification rate and information security management system certification rate of central enterprises are significantly ahead; relatively speaking, the performance of local state-owned enterprises lags behind, lower than that of non-state-owned enterprises. The certification rate of the information security management system is still at a lower level than other indicators, with the exception of central enterprises, local state-owned enterprises and non-state-owned enterprises are not more than 10%. As data security rises to the level of national strategy, enterprises should pay more attention to it and increase the construction and investment in information security. Therefore, when measuring the performance of enterprises in "products and customers", it is suggested to evaluate the management system, measures and effectiveness from the aspects of product safety and quality, customer rights and interests protection, privacy security and data protection.

(4) creation of social value

The report of the 20th CPC National Congress pointed out that "Chinese-style modernization is the modernization of common prosperity for all the people." Enterprises are rooted in the society, and it is also the duty of enterprises to give back to the society. Therefore, in the process of enterprise value evaluation, we must pay more attention to the social value created by corporate social responsibility. The production and operation process of enterprises should not only create profits, but also create social value, which includes not only the business innovation of enterprises, but also the social contribution to the local community and the environment, as well as the response to the national strategy.

In the era of rapid development of science and technology, when high-quality development gradually replaces the economies of scale model, business model innovation will become a necessary means for enterprises to create value and enhance competitiveness. In the past three years, the disclosure rate of invention patents of A-share listed companies has been maintained at a high level, the disclosure rate of central enterprises is close to 100%, and the disclosure rate of non-state-owned enterprises is also steadily increasing; in terms of quantity, the number of invention patents of central enterprises also far exceeds that of local state-owned enterprises and non-state-owned enterprises. However, in terms of R & D expenditure rate, central enterprises lag behind non-state-owned enterprises, mainly because they are mainly distributed in traditional industries such as public utilities, finance, energy, real estate and raw materials, while non-state-owned enterprises are more distributed in medicine and health, information technology, industry and other industries. these industries have high requirements for R & D innovation, a large proportion of R & D expenditure in revenue, and a higher proportion of doctorates in terms of staff structure. Therefore, on the whole, the R & D expenditure rate of non-state-owned enterprises is significantly higher than that of central enterprises.

The development and utilization of clean technology reflects the importance and contribution of the company to green innovation and low-carbon transformation and development, and also reflects the central enterprises' support for national strategy and social value creation. Through the analysis of the R & D investment and green patents of green technologies such as new energy, new energy vehicles, green buildings, CCUS, waste management, energy conservation and so on, we can see that central enterprises pay more attention to the invention and investment in green patents, and the number and proportion of enterprises with green patents are higher than those of non-state-owned enterprises.

In the process of creating profits in production and operation, enterprises need to be responsible not only to shareholders and employees, but also to consumers and community construction, especially in major national strategies such as supporting rural revitalization. Central enterprises have played a key leading role. According to the data, the amount of foreign donations made by central enterprises / local state-owned enterprises in 2022 is 5.82 times and 1.6 times that of non-state-owned enterprises respectively, especially in the energy industry where central enterprises are absolutely dominant (the market capitalization of central enterprises accounts for 93.9%). The average amount of donations from central enterprises / local state-owned enterprises is 79.7 times and 8.5 times that of non-state-owned enterprises, respectively. In terms of the amount of foreign donations accounting for the total operating income, the public utilities industry dominated by central enterprises (the market capitalization of state-owned enterprises accounted for 97.3%) accounted for 0.23% of the total operating income, 2.3 times that of non-state-owned enterprises.

In terms of helping out of poverty, the average number of central enterprises / local state-owned enterprises helping to set up archives and establish cards to lift people out of poverty in 2022 is 2.2 and 1.3 times that of private enterprises, and state-owned enterprises have made great contributions to achieving the goal of common prosperity of our country. Since 2016, SASAC and central enterprises have sent a total of 37000 poverty alleviation cadres, invested hundreds of billions of yuan in aid funds, and have been designated to help all 248 national key counties in poverty alleviation and development work to get rid of poverty. 2) it has played an important role in helping our country win the battle against poverty.

Central enterprises have been playing an important leading role in responding to the national policy and serving the national strategy, not only the practitioners of the national strategy, but also the important representative of the national image. In the strategic direction of key countries, such as rural revitalization, Belt and Road Initiative, regional coordinated development and common prosperity, central enterprises should continue to make efforts and bear the main responsibility. In addition, under the background of the current reform of state-owned enterprises, the central enterprises, as the focus and window of the reform, assume the demonstration and leading role of industrial transformation. Central enterprises should promote the upgrading and optimization of China's industrial structure through technological innovation and technological breakthroughs, actively explore the direction of digital transformation and low-carbon transformation, and lead the progress of the industry. Therefore, the response to national policies and strategies should be included in the evaluation of the social responsibility of central enterprises as an important dimension.

IV. The topic of ESG governance with Chinese characteristics: improving Chinese-style modern corporate governance.

(1) Governance structure

A sound governance structure is the core of ensuring the company's long-term sustainable development, a reasonable and transparent governance structure, including reasonable ownership structure, independence and effectiveness of board supervision, executive compensation incentive system, compliance operation, transparency and high-quality information disclosure, etc. a sound corporate governance structure will help to improve the efficiency of corporate decision-making and the level of risk management, and enhance corporate governance transparency and market trust. Provide solid support for the sustainable growth of the company.

The structure and background of the board of directors play an important role in supervising the management and protecting the rights and interests of minority shareholders. the rationality of the size of the board of directors, the stability of the board of directors and the qualification, experience and independence of independent directors and committee members are all important prerequisites to ensure that the board of directors can perform their duties. According to the data in 2022, the proportion of sole directors of A-share listed companies is generally 37%, 39%, and the gap is relatively small, which is highly consistent with the measures for the Administration of Independent Directors of listed companies, which requires that the proportion of independent directors of listed companies in the board of directors shall not be less than 1/3.

The data show that the proportion of board chairman and CEO of non-state-owned enterprises with the same person is significantly higher than that of central enterprises. This is because most of the private enterprises in our country are developed from the family business or partnership, and the founder or family has a strong influence on the board of directors, which is prone to problems such as familization, insider control, chairman serving as CEO, etc., while the central enterprises generally pay more attention to the checks and balances between the board of directors and management, and perform better in the governance structure. In terms of stability, the turnover of directors of central enterprises is higher than that of non-state-owned enterprises, and the average turnover times and proportion of central enterprises are higher than those of non-state-owned enterprises.

Executive compensation and incentive system are very important to solve the principal-agent problem. on the one hand, reasonable equity incentive mechanism can closely combine personal interests with enterprise performance and enhance the competitiveness of enterprises. at the same time, it also helps to strengthen the role of attracting, retaining and encouraging talents, and ensure the stability of the core backbone personnel. In the "work Plan for improving the quality of listed companies controlled by Central Enterprises", it is clearly proposed to "make overall use of equity incentives for listed companies and equity and dividend policies for science and technology enterprises". Improving the incentive mechanism is one of the key points in the reform of state-owned enterprises in recent years. In recent years, the equity incentive system of state-owned enterprises has been gradually improved, but there is still a certain gap compared with non-state-owned enterprises in incentive intensity, incentive scope and flexibility.

Scientific and rational equity allocation is the cornerstone of the company's stable and healthy development. In terms of ownership structure and shareholder power, if there is excessive concentration of equity in the company, we should focus on the related transactions between the listed company and the controlling shareholder, and evaluate the rationality of related party transactions, the fairness of pricing and the performance ability of related parties. At present, the overall equity concentration of central enterprises in A-share listed companies is higher than that of non-state-owned enterprises; in addition, in terms of the proportion of equity pledge and the proportion of major shareholders holding pledge, non-state-owned enterprises are significantly higher than central enterprises. therefore, for private enterprises, we need to focus on the equity pledge of shareholders to avoid the risk of passive closing and the change of the company's real control caused by the excessive fall in the share price of the pledged stock or the additional pledge does not meet the requirements of the pledgee.

In view of state-owned enterprises and financial enterprises, the report of the 20th CPC National Congress mentioned "promoting state-owned enterprises and financial enterprises to strengthen the leadership of the Party in improving corporate governance". This brings the three-year action plan for the reform of state-owned enterprises (2020-2022) and the work plan for improving the quality of listed companies controlled by central enterprises "strengthening the leadership of the party and improving corporate governance" to a higher level. According to statistics, the central enterprise group has fully completed the party building into the constitution in 2021, and the high-quality development of listed companies controlled by central enterprises has accelerated in 2022. It is a long-term task for state-owned enterprises to continuously explore and improve the organic unity of the party's leadership and corporate governance.

(2) Protection of investors' rights and interests

Fully protecting the rights and interests of shareholders is an important part of the sustainable development of enterprises. Enterprises should ensure fair and reasonable pricing in related party transactions and avoid damage to shareholders' rights and interests as a result of related party transactions. Fairly priced related party transactions help to protect the rights and interests of shareholders, enhance the company's reputation and reduce potential legal risks. The formulation and implementation of the dividend policy also affects the protection of shareholders' rights and interests. Whether there is an active dividend policy and how the dividend rate compares with the average level of the industry is the focus of shareholders' attention. Positive dividend can return investment to shareholders and increase the trust of shareholders. at the same time, it also reflects the good profitability and sound financial situation of the enterprise.

In addition to paying attention to the rights and interests of shareholders, enterprises should also pay full attention to the demands of various stakeholders in the process of development. Listed companies can strengthen communication with stakeholders through regular reports, performance announcements, field research, community interviews, special seminars, media network communication and other channels and forms, accept feedback and supervision from all parties, and further enhance the public and stakeholders' understanding of the company. Through the identification and evaluation of key factors such as key risks and opportunities, business development strategy and the needs of stakeholders, combined with the development direction of national social responsibility, on the basis of scientific evaluation, deepening research and full analysis, in order to achieve win-win economic, environmental and social benefits as the goal, formulate the company's long-term strategic policy, goal and implementation route.

In terms of the rights and interests of creditors, the company should strictly abide by the commitments of the bond market to ensure that the interests of bond investors will not be harmed. Regularly disclose bond repayment, communicate potential repayment risks in advance, and enhance market confidence. Investor protection will not only help to maintain the company's reputation, but also enhance market trust and attract the attention of more long-term investors. Through the establishment of a sound investor relationship management system, the company can better interact with shareholders and creditors to achieve win-win results.

(3) Information disclosure

The company's adequate information disclosure is a key element to establish transparency, enhance investor confidence and maintain market order. In terms of information disclosure, companies should actively formulate strategies to ensure accurate, timely and fair transmission of information.

Information disclosure includes not only traditional financial information and three statements, but also ESG special report and information disclosure. The enterprise ESG report should define the quantitative target, and enhance its credibility through third-party authentication, so as to further improve the quality and effectiveness of ESG information disclosure. As an important information tool, the reliability, standardization and authenticity of financial information, as well as the transparency, timeliness and compliance of financial information disclosure are very important to measure the current financial situation and operating results of enterprises and to predict the future development trend of enterprises.

Through the analysis of the financial information disclosure of A-share listed companies, we can see that the average number of illegal information disclosure of central enterprises is higher than that of non-state-owned enterprises. Further according to industry statistics, it is found that the frequency of letter violations in the financial, energy and raw materials industries with high concentration of central enterprises is in the forefront, indicating that information disclosure has a certain relationship with industry attributes and industry regulatory policies. On the whole, central enterprises need to pay more attention to information disclosure and further improve the letter-wearing mechanism.

(4) Business ethics

Since the 18th CPC National Congress, with the continuous strengthening of anti-corruption efforts and the development of special inspections for state-owned enterprises, executive corruption in state-owned enterprises has become a prominent key issue in the governance of state-owned enterprises. The report of the 20th CPC National Congress continues to emphasize the need to combat corruption with zero tolerance. State-owned enterprises must deepen their awareness of anti-corruption, avoid illegal and disciplinary problems such as embezzlement of state-owned assets and transfer of benefits, and strictly prevent the loss of state-owned assets. The data show that the central enterprises generally improve the mechanism construction of anti-corruption education, system, supervision and prevention, and the disclosure rate of whistleblower system and bribery and anti-corruption policies is significantly better than that of non-state-owned listed companies.

In addition, with the strengthening of anti-monopoly law enforcement in our country, enterprises are facing the potential risks of fines and regulatory penalties as a result of monopoly behavior, so there is an urgent need to establish sound competition regulations and formulate clear commercial competition policies. to prevent unfair competition and ensure compliance with business activities.

reference

[1] China Green Finance Development report "Research on the Target Route of carbon neutralization promoted by China's Financial Industry" 2021

[2] HSBC and 21st Century Capital Research Institute "China Green Financial Development report-Research on the Target Route of China's Financial Industry to promote carbon Neutralization (2021)" 2021

[3] State-owned assets Supervision and Administration Commission of the State Council "work Plan for improving the quality of listed companies controlled by Central Enterprises" 2022-5-27

[4] Circular of the State-owned assets Supervision and Administration Commission of the State Council on forwarding the "Research on the compilation of ESG Special reports of listed companies controlled by Central Enterprises" 2023-7-25

[5] Ministry of Ecology and Environment "Annual report on China's policies and actions to deal with Climate change 2022" 2022-10-27

[6] State Council SASAC Social responsibility Bureau, China Social responsibility 100 Forum "Central Enterprise listed Company Environment, Society and Governance (ESG) Blue Book (2022)" 2022-11-7

[7] Qi Yue, Li Ziyuan and Chen Hui, "establishing a social performance evaluation system of central enterprises aiming at social value based on the concept of ESG", State-owned assets report, No. 8, 2023.

[8] measures of China Securities Regulatory Commission for the Administration of Independent Directors of listed companies 2023-8-1

[9] the Party Committee of the State-owned assets Supervision and Administration Commission of the State Council "deeply implemented the Action of deepening and upgrading the Reform of State-owned Enterprises" 2023-10-1

[this article is contributed by Han Xiaoyan and Kong Linghan of ESG Research Department of Castrol Fund, revised by China Securities Investment Fund Industry Association]

[1] unprofitable enterprises have been removed from the enterprise sample

[2] data source: "State-owned enterprises should be good creators of common prosperity", https://baijiahao.baidu.com/s? Id=1735860771811835516&wfr=spider&for=pc

Brief introduction of Sina Finance ESG rating Center

Sina Finance ESG rating Center is the first Chinese ESG professional information and rating aggregation platform in the industry, which is committed to promoting and promoting sustainable development, responsible investment, and ESG (environmental, social and corporate governance) values, spreading ESG's corporate practices and role models, promoting the development of China's ESG cause, and promoting the establishment of ESG evaluation standards and the upgrading of corporate ratings in China.

Relying on the ESG rating center, Sina Finance has released a number of ESG innovation indices to provide more choices for investors who focus on corporate ESG performance. At the same time, Sina Finance established a China ESG leaders Organization Forum to work with China ESG to lead enterprises and partners to promote the establishment of an ESG evaluation standard system suited to the characteristics of the Chinese era through the concepts of environmental, social and corporate governance, and promote the development of ESG investment in China's asset management industry.