Why is the first national ESG regional action plan in Shanghai?

On March 1st, the Shanghai Municipal Commission of Commerce issued the "Three Year Action Plan for Accelerating the Improvement of Environmental, Social, and Governance (ESG) Capability of Foreign related Enterprises in the City (2024-2026)" (hereinafter referred to as the "Three Year Action Plan"), which is the first ESG regional action plan in China.

The goal set by the plan is to establish an ESG ecosystem for foreign-related enterprises by 2026, preliminarily establish a standard system for compiling and evaluating corporate ESG reports, and enhance the ESG capabilities of foreign-related enterprises - "striving to achieve full coverage of ESG information disclosure for state-owned holding listed companies with foreign-related business, and significantly improve the ESG information disclosure rate of private listed companies".

The first ESG regional action plan in China was released in Shanghai, and there are multiple reasons behind this, which can be summarized as follows:

1、 Shanghai's economic status and international trade advantages

1. International Trade Center StatusAs the economic, financial, trade, and shipping center of China, Shanghai holds a significant position in international trade. According to statistics, Shanghai Port accounts for about 3.6% of global trade, making it the "largest trading port city in the world". The intensity of international trade gives Shanghai a unique advantage in promoting ESG concepts and aligning them with international standards.
2. Agglomeration of foreign-funded enterprisesShanghai has attracted a large number of foreign-funded enterprises to settle in, which often have higher standards and requirements in ESG management and practice. The agglomeration effect of foreign-funded enterprises provides a solid foundation for Shanghai to promote ESG regional action plans.

2、 Policy guidance and government support

1. policy innovationThe Shanghai Municipal Government has been committed to promoting high-quality economic development and innovating policies in multiple fields. In the field of ESG, the Shanghai Municipal Commission of Commerce has taken the lead in releasing the country's first ESG regional action plan, reflecting the government's determination and action in promoting sustainable development.
2. Government SupportThe Shanghai Municipal Government has provided strong support for the implementation of the ESG regional action plan through the collaborative work of multiple departments. For example, multiple departments such as the Shanghai Development and Reform Commission, the Shanghai Municipal Commission of Economy and Information Technology, and the Shanghai Municipal Commission of Commerce have jointly participated, forming a joint force to promote ESG development.

3、 Deep integration of ESG concepts with the real economy

1. Fundamentals of the real economyUnlike previous ESG policies mainly issued by financial regulatory authorities, the ESG Action Plan of the Shanghai Municipal Commission of Commerce extends ESG policies from the capital market to the real economy, ultimately focusing on corporate management. This deep integration makes ESG concepts more closely aligned with the actual operational needs of enterprises.
2. Stimulating Enterprise AutonomyThe ESG action plan of Shanghai emphasizes stimulating corporate autonomy and improving their enthusiasm for implementing ESG through a combination of policy guidance and market mechanisms. This approach helps to create a positive atmosphere for companies to spontaneously promote ESG development.

4、 Combining international standards with local characteristics

1. Benchmarking InternationalThe ESG action plan of Shanghai adheres to benchmarking international advanced standards and promotes the establishment of an ESG rule system that is in line with international standards and has Chinese characteristics. This international perspective helps enhance Shanghai's influence and competitiveness in the global ESG field.
2. local characteristicsAt the same time, Shanghai also pays attention to formulating ESG development paths and measures that are in line with the characteristics of local enterprises, based on the actual local situation. This localized implementation strategy helps ensure the effectiveness of ESG action plans in Shanghai.

As the first city in China to release an ESG regional action plan, Shanghai's reasons behind it include its economic status and international trade advantages, policy guidance and government support, deep integration of ESG concepts with the real economy, and the combination of benchmarking international and local characteristics. These factors collectively drive the development and innovation of Shanghai in the ESG field