A recent survey by Fidelity International has unveiled the growing adoption of ESG strategies among Chinese companies.
The survey included 262 corporate executives at the C-suite and director levels, providing insights into the current and future ESG-related activities of Chinese firms.
Chinese companies are actively expanding their ESG capabilities and developing frameworks to incorporate ESG into their organizations. The survey indicates that as domestic momentum and global regulatory scrutiny on ESG performance increase, the level of ESG engagement in Chinese companies is becoming more robust.
ESG reporting is set to become the norm in China, with 53% of surveyed companies already having publicly announced an ESG, CSR, or sustainability strategy through reports or their websites. An additional 18% have plans to announce their ESG strategies in the future.
Regarding ESG reporting, 64% of respondents currently publish annual ESG reports, and another 29% plan to do so within the next three years. Consequently, by 2026, an impressive 93% of Chinese companies expect to have published an annual ESG report.
The survey also highlights a shift in ESG motivations among Chinese companies, with a growing emphasis on multiple stakeholders driving the development of ESG strategies. While there is still progress to be made in aligning with global standards, Chinese customers and shareholders are increasingly pushing for change, which is likely to continue influencing progress.
Key drivers for ESG adoption among Chinese companies include meeting customer expectations (47% of respondents) and investor expectations (44% of respondents). Furthermore, 37% of firms identified government initiatives as a key driver.
Looking ahead, two-thirds of companies surveyed plan to review focal areas for ESG within the next 12 months. Over half of the companies also intend to invest further in building tech and data capabilities to enhance efficiency in ESG data collection, which is crucial for transparency. Data collection remains a significant obstacle to progress on ESG disclosure, as highlighted by 52% of the surveyed firms.
The survey reveals that Chinese companies have made significant progress in establishing special board functions, including remuneration and nomination committees, despite not being mandatory. Larger firms outperform current legislation by prioritizing audit, remuneration, and nomination committee independence, although their overall board independence falls back to average levels.
A Fidelity International spokesperson said, “As domestic momentum for ESG management and integration gathers pace, and the scrutiny on ESG performance from foreign investment and export markets from increasingly stringent global regulation grows, levels of ESG engagement in Chinese companies are becoming more robust.”
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