Insights

On August 4, Huanqiu.com published a commentary entitled "The Current Status of ESG Information Disclosure of Chinese Listed Companies: More than One-third of Parent Companies Disclose ESG-Related Reports, a Year-on-Year Increase of 3 Percentage Points". The article reported on the "2022 ESG Information Disclosure Analysis Report of Chinese Listed Companies" (hereinafter referred to as the "Analysis Report") exclusively released by CCXGF. CCXGF is one of the first third-party institutions to enter China's green finance field and promote the construction of a green financial system. The "Analysis Report" integrates and analyzes the disclosure of ESG-related reports of China's A-share and Chinese-funded Hong Kong-listed companies in 2022, which is of great reference value to investors and issuers in the capital market. The following is the original report of Huanqiu.com.   recent years, sustainable finance has been evolving at a rapid pace around the world, especially in the Asia-Pacific region. ESG has also gradually moved from concept to reality, from a niche investment concept to a mainstream trend, and has become a hot topic around the world. On June 26, 2023, the International Sustainable Development Standards Board (ISSB) officially released the two standards, "General Requirements for Disclosure of Sustainability-Related Financial Information" and "Climate-Related Disclosures", which reached a global benchmark and are an important milestone in the development of sustainable information disclosure. This has had a wide-ranging impact on regulators and securities trading in various countries, and has also put forward new requirements for companies to disclose ESG information in compliance in the future. In addition, the Hong Kong Stock Exchange issued the "Consultation Paper on Optimizing Climate Disclosure under the Environmental, Social and Governance Framework", proposing that all issuers disclose climate-related information in their ESG reports, and introduce new climate-related information disclosure requirements that comply with the ISSB climate standards of the International Sustainable Development Standards Board (ISSB) , which will be consistent with the effective date of the ISSB standards on January 1, 2024. Driven by the continuous market and supervision, the level of ESG information disclosure of Chinese listed companies has reached a new level, the number and proportion of listed companies that actively disclose ESG information have increased significantly, and the integrity of ESG disclosure has also been continuously improved.   As one of the third-party institutions that entered China's green finance field early and promoted the construction of a green finance system, CCXGF recently released the "2022 ESG Information Disclosure Analysis Report of Chinese Listed Companies" (hereinafter referred to as the "Analysis Report"), which integrated and analyzed the disclosure of ESG-related reports of China's A-share and Chinese Hong Kong-listed companies in 2022. Among them, after the disclosure ratio of ESG-related reports of A-share listed companies exceeded 30% in 2021, the report ratio in 2022 further increased to 34%, and the disclosure ratio of Chinese Hong Kong-listed companies also increased by 2.67 percentage points compared with the same period.   According to the statistical analysis of the "Analysis Report", as of June 30, 2023, there are 6,295 A-share and Chinese Hong Kong-listed companies (Hong Kong-listed companies do not include companies listed in both places, the same caliber below), and a total of 2,739 listed companies disclosed ESG-related reports in 2022, with a disclosure ratio of 43.51%. Among them, the proportion of A-share listed companies disclosing reports is 34.08% (1,775 companies), which is a further increase of 3.90 percentage points compared with 2021; the proportion of Chinese Hong Kong-listed companies disclosing reports is 88.68% (964 companies), which is 2.67 percentage points higher than the disclosure ratio of the 2021 annual report. From the disclosure of ESG-related reports for three consecutive years from 2020 to 2022 (based on the statistical interval from the current year to June 30 of the following year), the proportion of ESG report disclosure in the A-share and Chinese Hong Kong-listed markets has shown a steady upward trend.   Disclosure of ESG-related reports for three consecutive years from 2020 to 2022 Data source: Compiled by CCXGF ESG Ratings databaseESG Ratings   In terms of report disclosure form , A-share listed companies still mainly present their reports in the form of social responsibility reports, accounting for 64.11%, but the proportion of listed companies presenting in the form of ESG reports (31.94%) is more than twice that of 2021 (14.71%); Hong Kong-listed companies still mainly present their reports in the form of ESG reports, accounting for as high as 94.71%.   Disclosure of ESG-related reports by A-share and Hong Kong-listed companies in 2022 Data source:Compiled by CCXGF ESG Ratings databaseESG Ratings   From the perspective of industry classification , among A-share and Hong Kong-listed Chinese companies, only banking companies achieved nearly 100% disclosure. A total of 14 industries, including non-bank financial and steel, had disclosure rates higher than 50%. Compared with 2021, three additional industries achieved more than half of the disclosure in the report; but there are still some industries with disclosure rates below 30%, namely electronics, defense and military industry, and machinery and equipment industry.   ESG Ratings database of CCXGF Co., Ltd.   From the perspective of different company attributes , the disclosure of reports by central state-owned enterprises and local state-owned enterprises listed on A-shares and Chinese Hong Kong stocks increased by 10.39% and 7.41% respectively in 2022 compared with 2021. The disclosure ratio of private enterprises is still close to that of the 2021 report. Driven by the "Work Plan for Improving the Quality of Central Enterprises' Listed Companies" issued by the State-owned Assets Supervision and Administration Commission in 2022, the proportion of ESG information disclosure by state-controlled listed companies has increased significantly compared with private enterprises, and the disclosure gap has further widened.   Disclosure ratio of ESG-related reports of A-share and Chinese Hong Kong-listed companies with different attributes in 2022 Data source: Compiled by CCXGF ESG Ratings database   According to the listed sectors and major index constituents , the proportion of ESG-related reports disclosed by listed companies on the Hong Kong Stock Exchange's main board and ChiNext in 2022 is close to 90%, followed by listed companies on the Shanghai Stock Exchange's main board, with a disclosure ratio of over 50%. In addition, the report disclosure ratio of constituent companies of important A-share benchmark indices is above 70%, and the disclosure ratio of constituent stocks of important Hong Kong stock indices represented by the Hang Seng Index is nearly 90%. ESG information, as an important supplement to the non-financial information of listed companies, especially the ESG information of the above-mentioned index constituents, can effectively support the construction of ESG index enhancement strategies. At the same time, as fund products pay attention to the benchmark ESG information, it will also force listed companies to continuously improve ESG information disclosure management.   Disclosure of ESG-related reports by listed sectors in 2022 Data source: Compiled by CCXGF ESG Ratings database   ESG information disclosure is an indispensable supporting tool in the entire ESG investment ecosystem. On the one hand, it can serve as a data source for ESG rating results, effectively supporting the investment and financing decisions of financial institutions. On the other hand, it can serve as the main tool to serve internal corporate management, effectively promoting the improvement of internal ESG management.   The disclosure of ESG information by listed companies is an important sign of the further opening up of China's A-share market and its alignment with international standards. In the medium and long term, it is also the starting point for improving the investment style and investor structure of A-shares, and moving towards institutionalization and value investment, which will help improve the maturity of China's capital market. Listed companies should strengthen their understanding and familiarity with domestic and foreign ESG standards, including the two standards "General Requirements for Disclosure of Sustainability-Related Financial Information" and "Climate-Related Disclosures" officially released by the ISSB, as well as the latest regulations on climate information disclosure by the Hong Kong Stock Exchange. At the same time, in combination with the company's own development, ESG topics and content should be sorted out to improve the corporate governance structure, promote low-carbon innovation and development, respond to the demands of stakeholders, truly integrate the ESG concept into the entire process of corporate operations and management, continuously improve the content of ESG information disclosure, and promote high-quality and sustainable development of enterprises.