China Forum of Environmental Journalists (CFEJ) and Beijing University of Chemical Technology (BUCT) jointly published a report on November 18, evaluating the ESG performance of publicly listed Chinese companies in 2019, as reported by People.cn on November 18. According to the report, 1,006 out of the 3,933 companies that trade on the Shanghai Stock Exchange (SSE) and the Shenzhen Stock Exchange (SZSE) have released annual ESG reports in 2019, accounting for 25.54% of the total, with a net addition of 78 firms compared to the year prior. The report suggests that China should continue standardizing the ESG disclosure processes and establish a national ESG disclosure system.
Specifically, 607 Shanghai-listed and 399 Shenzhen-listed enterprises have published ESG reports in 2019, representing 69.60% and 44.27% of the total market capitalization of their respective stock market. These 1,006 companies averaged 33.44 points in their ESG disclosure scores last year, an increase of 7.42 points compared to 2018. Zhejiang Jingxing Paper JSC [002067:CH], Sichuan Kelun Pharmaceutical [002422:CH], Yunnan Chihong Zinc & Germanium [600497:CH], Shanghai Fosun Pharmaceutical [600196:CH] and BOE Technology [000725:CH] ranked the highest in 2019. Meanwhile, Zhenhua Port Machinery [600320:CH], Shandong Bohui Paper Industry [600966:CH], Luzhou Laojiao [000568:CH] and others have been warned or punished by local authorities due to environmental pollution issues last year.
Notably, among all 3,933 A-share listed companies, over 10% have gained points in environmental volunteering in 2019, for the first time recorded, though still less than 10% of the firms covered sustainability information related to pollutant discharge or application of green finance in their ESG or financial reports. However, in late July, China’s PBoC announced plans to start assessing the green finance performances of Chinese banking institutions once a quarter from 2021, which could potentially expand the coverage of green finance products in the country. Also, in the first half of 2020, Chinese companies issued a total of 136 green bonds in the country, with an overall worth of RMB109.55bn, representing approximately one-third of the global total. It is worth pointing out that, however, the average scope and quality of ESG disclosures of mainland-listed companies still fall far behind firms from US, Hong Kong, Japanese or Australian stock markets, citing a report from the Ping An Digital Economic Research Institute, with few companies streamlining their ESG data collection process in China. The situation could potentially improve if China’s CSRC begins mandating sustainability information disclosure for A-share listed companies, which is expected to happen by the end of 2020 or early 2021.