Excellent ESG performance is not only a bonus for corporate image, but also a powerful engine that drives talent aggregation, investment opportunity expansion, cost optimization, revenue and value growth, and reduces regulatory risks. In the feedback from business leaders, it is common to hear doubts about ESG value and concerns about its difficulty in quantifying returns and internal recognition. However, if companies truly integrate ESG into their strategic planning, investment decisions, and operational activities, ESG will be deeply rooted in every important aspect of their operations, greatly enhancing their commercial and social value.
According to a report by Xinhua News AgencyIn 2023, Yili Group's ESG rating reached A-level by the world's authoritative rating agency MSCI, ranking among the highest ratings for A-share and Hong Kong listed dairy companies. In 2023, Yili's external donations reached 280 million yuan. According to professional institutions' accounting of Yili Group's ESG social value, Yili has created a positive impact value of 6.805 billion yuan for society and the environment during its operation. This is in addition to creating 10.429 billion yuan of net profit attributable to shareholders, Yili has also created additional social value for various stakeholders. This strongly demonstrates the value of ESG.
ESG data, as a barometer of non-financial performance in business operations, is crucial for companies to accurately manage environmental, social, and corporate governance risks. It encourages enterprises to proactively plan compliance paths, strengthen the transparency, completeness, and accuracy of sustainable information disclosure, and draw blueprints and action plans for risk mitigation, effectively manage non-financial risks of enterprises, and resist potential threats.
From an ESG perspective, corporate executives can gain profound insights into core issues such as energy conservation and carbon reduction, improving energy efficiency, reducing garbage and waste, improving supply chain resource utilization efficiency, employee turnover rate, employee well-being and satisfaction, compliance with corporate governance, transparency of governance processes, and management efficiency, and take action accordingly.
The Five Value Contributions of Corporate ESG Performance
Specifically, outstanding ESG performance can bring five direct and profound value contributions to a company:
talent magnetIn today's fiercely competitive talent market, young people and top talents of Generation Z increasingly favor employers who uphold the correct principles of business ethics and are committed to sustainable development. A survey shows that over 50% of MBA students are willing to accept salary cuts for companies with excellent environmental performance, and Generation Z and Millennials are particularly integrating their personal values into their career choices. Therefore, ignoring ESG may lead to talent loss, while companies that focus on this field can enjoy an advantage of up to 40% in employee retention rate.
Capital favorsThe demand for sustainable investment has surged. According to a report by The Paper on July 11th this year, as of the end of 2023, the balance of green loans in China exceeded 30.08 trillion yuan, an increase of 36.5% from the end of 2022; In terms of specific purposes, the loan balances for the energy-saving and environmental protection industry, clean energy industry, and infrastructure green upgrading industry are 4.21 trillion yuan, 7.87 trillion yuan, and 13.09 trillion yuan, respectively. ESG funds have become a new favorite in the market. Investors are increasingly valuing the social and environmental benefits of their investments while pursuing financial returns. The data shows that the scale of ESG investment continues to grow rapidly in China and Asia, opening up vast financing and investment opportunities for companies that integrate ESG concepts.
Cost-cuttingFrom supply chain optimization to efficient resource utilization, ESG practices help companies tap into the potential for cost savings. For example, through sustainable procurement and green operations, companies can significantly reduce expenses and improve profitability.
Revenue GrowthSustainable products and services are becoming a new driving force in the market, attracting consumers of all ages to donate generously. Nearly 90% of Generation X consumers express willingness to pay a premium for sustainable products, opening up new growth points for businesses.
Risk buffering and social recognitionAs responsible corporate citizens, companies with excellent ESG performance can alleviate regulatory pressure, avoid legal disputes and reputation damage. At the same time, they have also won the trust and support of employees, regulatory agencies, consumers, and the public, which helps companies establish and enhance their reputation and positive image. On the contrary, companies that ignore ESG, especially those that experience ESG black swan events, may face serious operational crises such as project disruptions, consumer boycotts, and stock price declines.
Therefore, improving ESG performance is not only a corporate social responsibility and ethical responsibility, but also a key path for companies to achieve profit growth, enhance long-term value, and market competitiveness. Enterprises must deeply embed ESG concepts into their strategic core and investment decision-making processes, rather than viewing them as marginalized public welfare activities, in order to fulfill their responsibilities to shareholders and all stakeholders and create a sustainable future together.