Shanghai releases plan to improve ESG for greater sustainability

The latest international evaluation standard for Environmental, Social & Governance is highly compatible with China's development concept of "innovation, coordination, green, openness and sharing," experts said as Shanghai released its three-year plan to improve the ESG capabilities of foreign-related businesses in the city.

"With the growing popularity of the concept of sustainable development, ESG has gradually become an important standard and rule for measuring the high-quality development of enterprises, especially large enterprises involved in multinational business," said Li Jing, director of the ESG management office of Ernst & Young in China.

Some enterprises have taken solid steps forward in the application of ESG ideas. Management consulting firm PricewaterhouseCoopers held its first Asia-Pacific meeting of its Sustainability Strategy Research Conference earlier this week. A wide range of topics were explored, such as energy transition, sustainable development goals and the impact on supply chains.

Amy Cai, PwC China sustainability managing partner, said there are differences between the ESG regulations in Europe, the United States, China, and other parts of Asia-Pacific, thus comparisons and cooperation are needed for better practises in the sector.

▲ Amy Cai, PwC China sustainability managing partner spoke about the company's first Asia-Pacific meeting and the concept of sustainability.

Amid growing global recognition of ESG, Shanghai released a comprehensive ESG-improvement plan for foreign-related enterprises to enhance their advantages in global competition. The Action Plan for Accelerating the Improvement of Environmental, Social, and Governance (ESG) Capabilities of Foreign-related Enterprises in Shanghai (2024-26) was released on Monday by the Shanghai Commission of Commerce.

To create an ESG ecosystem for foreign-related enterprises by 2026, the plan includes 12 key measures in three major actions: the enhancement of the ESG capacity of enterprises, the improvement of the ESG market efficiency, and the optimization of the ESG service system.

Detailed measures include supporting private enterprises in actively practicing ESG concepts, giving full play to the leading roles of ESG practices in foreign-funded enterprises, and broadening the application of ESG in the cross-border business of foreign-funded enterprises.

The program would also strengthen international exchanges and cooperation in the field of ESG, innovate ESG financial services and products, cultivate and expand ESG professional service organizations, and increase the publicity of ESG concepts.

In addition, a mechanism to promote ESG work in foreign-related enterprises would be established, with the introduction of ESG-related support policies and the cultivation of ESG professionals.

▲ A KFC franchise in Shanghai has set up a pet dining area outside, welcoming guests to bring their animals.

"We see two big challenges today: one is the effort it takes to prepare for the disclosure of the sustainability data," said Renate de Lange, PwC global sustainability markets leader. "Another challenge is that climate actions are still often perceived as just doing good, instead of investing in a long-term resilient business, or just cutting (short term) cost."

ESG concepts and evaluations are widely recognized in European and English-speaking countries, but are relatively new in China. In January this year, Shanghai released a new round of Action Plan 7.0 on sustainably building an international first-class business environment, which emphasizes the need to benchmark against international standards. The three-year ESG program fills this gap precisely.

As an international center of foreign-related enterprises in China, Shanghai needs to give full play to its advantages, promoting leading enterprises and industry associations to participate in the development of ESG-related standards to connect with the world.

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