Since 2020, the ESG (Environmental, Social, and Governance) concept has gradually taken root in China and become an important consideration in investment decisions. Under the joint promotion of the government, media, and social organizations, ESG has become one of the hottest development trends currently.
According to the "China Responsible Investment Annual Report 2023", China's ESG policies and market will continue to develop steadily in 2023, with carbon peak and carbon neutrality as the focus, information disclosure and product growth as the lever, and the overall acceleration of the insurance industry. The scale of ESG investment in China continues to grow rapidly, with a total increase of 34.4% compared to 2022, reaching a historic high. However, despite some progress in various aspects, the development of ESG in China is still in its infancy and faces many challenges.
Firstly, the public's awareness of ESG concepts is relatively low. Although the concept of ESG is gradually entering the public eye, the public's understanding of it is still limited. This is mainly due to the wide range of fields involved in ESG, which requires the public to possess certain professional knowledge and background. For example, although Internet companies' "996" overtime, minors' playing games, and Meituan riders' job security issues have received much attention, most people do not understand that these issues are closely related to the "social" issues in ESG. In addition, although more and more companies and institutions are paying attention to ESG, these activities are mainly focused on the business sector and have low relevance to the daily lives of the public, resulting in weak public perception of ESG.
Secondly, companies have insufficient investment in ESG resources, especially at the board and organizational levels. Although some large state-owned enterprises and listed companies have made significant investments in ESG, there are still some companies that have insufficient understanding of ESG concepts and lack relevant professional knowledge and experience. From the published ESG reports, it can be seen that most companies only disclose ESG related management policies, with less disclosure of implementation methods and specific measures, and even less data reflecting the effectiveness of implementation. This reflects that companies' emphasis and awareness of ESG still remain at the policy level, and require joint efforts from all sectors of society to translate it into practical actions.
In addition, ESG information disclosure is insufficient and data quality needs to be improved. Although more and more Chinese companies are paying attention to ESG issues and making relevant disclosures, the overall number of companies disclosing is still relatively small, and the quality and depth of disclosure vary greatly. Some companies may have only made superficial disclosures, lacking detailed data and specific implementation plans, which makes it difficult for investors and stakeholders to have a comprehensive and in-depth understanding of the company's ESG performance. At the same time, although the Chinese government has introduced a series of ESG related policies and regulations, overall, the ESG policy and institutional framework are still not perfect.
Finally, the practical application of ESG in investment also faces many difficulties. On the one hand, enterprises often face the temptation of short-term economic benefits in their operations, and finding a balance between short-term economic benefits and long-term sustainable development is a major challenge. On the other hand, ESG practices require the joint participation and cooperation of multiple stakeholders such as businesses, investors, governments, and the general public, but there may be conflicts of interest and communication barriers between different stakeholders.
Taking the protection of minors in the gaming industry as an example, although the government has introduced relevant policies to strengthen supervision, it still requires the joint efforts of all sectors of society to truly implement ESG concepts. From public supervision to government policy implementation, to investment guidance, every aspect is essential. Only through joint efforts from all parties can we promote the in-depth development of ESG in China and achieve a more sustainable and responsible future.