Under current conditions, implementing ESG governance policies poses different levels of challenges for most companies. Most companies focus their ESG work mainly on the environmental (E) category from the perspective of operability and easy quantification of results. Common "carbon reduction" measures include switching to renewable energy, environmentally friendly materials, or changing the supply chain through green transportation solutions.
The concept of "carbon reduction" is not unfamiliar to the public, and China has proposed the goal of "peaking carbon emissions before 2030 and achieving carbon neutrality before 2060". But the ESG concept involves various aspects such as environmental protection, social responsibility, and governance, and "carbon reduction" is only one of them. We can better understand the relationship between the two from the following perspectives:
Firstly, ESG is an investment philosophy and evaluation standard that focuses on the long-term value of a company, while carbon peaking and carbon neutrality are development goals. ESG is an investment philosophy that fully considers environmental, social, and corporate governance factors in the investment decision-making and management process. Related concepts also include responsible investment, socially responsible investment, impact investment, sustainable investment, etc. The core concept of ESG is to focus on the performance of enterprises in the three dimensions of environment, society, and governance, and to evaluate the value of enterprises and their contributions to promoting sustainable economic development and fulfilling social responsibilities by incorporating non-financial factors. Carbon peak and carbon neutrality are specific development goals proposed by China to address global climate change, aiming to achieve peak carbon dioxide emissions before 2030 and carbon neutrality (i.e. balance between carbon dioxide emissions and elimination) before 2060. This goal reflects China's active participation and responsible attitude towards global climate governance, and also provides an important opportunity for China's economic transformation, upgrading, and green development.
Secondly, ESG is closely related and interacts with carbon peaking and carbon neutrality. There are both differences and connections between ESG, carbon peaking, and carbon neutrality, and the two complement and promote each other. On the one hand, the environmental dimension in ESG covers multiple aspects such as climate change, natural resources, pollution, and waste, among which carbon peaking and carbon neutrality are the most important aspects. To achieve carbon peak and carbon neutrality, enterprises need to reduce greenhouse gas emissions, improve energy efficiency, increase the proportion of renewable energy, and promote low-carbon technological innovation in their production and operation processes. These are all important indicators in the ESG evaluation system. Therefore, ESG can provide a comprehensive evaluation framework and guiding principles for companies to achieve carbon peak and carbon neutrality, helping them identify risks and opportunities, formulate reasonable goals and strategies, and enhance their competitiveness and reputation. On the other hand, carbon peaking and carbon neutrality can also provide a specific action goal and driving force for ESG. With the continuous strengthening of policy support and regulatory requirements for carbon peak and carbon neutrality at the national level, enterprises will face higher environmental standards and stricter punishment measures. This will encourage enterprises to pay more attention to the role of ESG in their investment decisions, actively incorporate ESG factors into their business operations and risk management, and thus improve their performance in the environmental dimension.
Again, ESG not only focuses on environmental issues, but also on social and governance issues. Although ESG is closely related to carbon peaking and carbon neutrality, the two cannot be equated. ESG not only focuses on environmental issues, but also on social and governance issues, which also have significant impacts on a company's sustainable development and social responsibility. The social dimension of ESG involves multiple aspects such as employee rights, customer satisfaction, supply chain management, and social welfare, while the governance dimension involves multiple aspects such as corporate governance structure, business ethics, anti-corruption, and information disclosure. These aspects are not only closely related to the economic benefits of the enterprise, but also closely related to the social benefits of the enterprise. Therefore, in the process of promoting ESG strategies, enterprises should not only focus on environmental issues and ignore social and governance issues, but should consider their own performance and impact in ESG from multiple perspectives and levels, in order to achieve comprehensive sustainable development.
In short, understanding the relationship between ESG and China's "2030 carbon peak, 2060 carbon neutrality goals", energy conservation and emission reduction concepts requires thinking from multiple perspectives and levels. Enterprises should adopt ESG as a comprehensive investment and management philosophy, with the core goals of promoting sustainable economic development and social responsibility. They should achieve comprehensive sustainable development in the dimensions of environment, society, and governance, in order to better achieve development goals such as carbon peak and carbon neutrality. At the same time, governments, investors, consumers, and other parties should fully recognize the importance of ESG and jointly promote the improvement and innovation of enterprises in ESG, making positive contributions to achieving global climate governance and sustainable development goals.