From One to Many: ESG and Corporate Value ESG (Environmental, Social, and Governance) factors have become increasingly important in the business world. Companies are realizing that their environmental and social impact, as well as their governance practices, can significantly affect their long-term success and value. In the past, the focus was primarily on financial performance and shareholder value. However, this narrow perspective is no longer sufficient in today's society, where stakeholders, including customers, employees, investors, and regulators, are demanding more transparency and accountability from companies. ESG factors encompass a wide range of issues, such as climate change, resource management, labor practices, diversity and inclusion, ethical business conduct, and board composition. By addressing these factors, companies can not only mitigate risks but also seize opportunities for innovation and growth. Investors are increasingly incorporating ESG considerations into their investment decisions. They recognize that companies with strong ESG performance are more likely to generate sustainable returns and withstand market volatility. As a result, companies that prioritize ESG are attracting more capital and enjoying a competitive advantage. ESG is not just a trend; it is a fundamental shift in how businesses operate and create value. It requires a holistic approach that integrates sustainability into every aspect of a company's strategy, operations, and culture. Companies that embrace ESG as a core part of their business model are not only contributing to a more sustainable future but also enhancing their own long-term value. In conclusion, ESG is no longer a nice-to-have; it is a must-have for companies that want to thrive in today's complex and interconnected world. By aligning their business practices with ESG principles, companies can build trust, attract talent, foster innovation, and ultimately create long-term value for all stakeholders.

On October 20, 2023, Wall Street News held the second "Zero Carbon Future ESG Innovation Practice Awards" ceremony in Shanghai. The purpose of this ceremony is to showcase the outstanding contributions of excellent companies in addressing industry, regional, and global challenges, and to work together with ESG experts, industry leaders, and senior media professionals to discuss the zero-carbon future and play a leading role in the field of ESG practices.

At the event, Li Zhiqing, Director of the Center for Environmental Economics Research at Fudan University and Deputy Secretary of the Party Committee of the School of Economics, shared high-quality ESG innovation practice cases. He stated that Chinese companies have made a breakthrough from 0 to 1 in ESG and now need to seek a path for large-scale capital infusion into green development to serve the green and high-quality development of the real economy.

From 1 to Many: Better Understanding Corporate Value

"What makes a good company?" Li Zhiqing mentioned two points: profitability and social responsibility. It means being able to coordinate the economic value and social value of the company.

He said that ESG is not a new term:

"Today, if an entrepreneur says that they don't know about ESG or haven't practiced ESG, they are already OUT."

ESG itself is "a result of the evolution of economic theory." Companies that practice ESG must incur costs and pay a price, but this is beneficial to society. Therefore, companies need to think about how to seek a balance between economic returns and social value.

The concept of ESG is not static; it evolves with history. Currently, we have entered a moderately prosperous society, and Chinese companies have made a breakthrough from 0 to 1 in ESG. Compared to the traditional binary economic problem of "poverty-backwardness," the current focus is on the new binary economic problem:

"Today, we know the carbon emission factor of this bottle of water, but we have no way of knowing how many bottles of water you drink in a day. Maybe you drink half of this bottle, maybe you finish it, and you have no way of knowing."

In July of this year, the United Nations announced the arrival of the "Age of Global Boiling." Li Zhiqing mentioned that in the face of such macro externalities, what we can do is "the redistribution and reconfiguration of resources, the adjustment of the industrial structure, technological changes, and the evolution of development concepts. Of course, the most important thing is the input of capital, funds, and resources."

The Future of ESG in China: Pure Green Direction

When discussing the direction of ESG work in China, Li Zhiqing proposed the theory of "green assets," which refers to "assets that create environmental value, social benefits, and climate change benefits in the future." These assets can be classified into emission rights, emission reduction, and zero emission categories. It is worth noting that emissions trading and emission reduction assets are severely undervalued. For example, the price of emission trading assets in China is only one-tenth of that in Europe.

Currently, the country's close measures on carbon emission management have provided a direction, which also leads us to think: how can enterprises achieve mutual benefit and win-win results in this path?

Li Zhiqing believes that "for a long time, there has been a lack of means to make our capital market turn towards green. Today, the coupling relationship between our capital market, finance, and real economy is the highest in history." Therefore, from a financial perspective, when looking at ESG, it is necessary to find a way for a large amount of capital to be integrated into green development, and opening a course on "environmental finance" may be one of them.

Finally, Li Zhiqing believes that the concept of ESG should be "adapted from the West to the East". In fact, the concept of "harmony between man and nature" has long existed in the traditional Chinese cultural perspective. Therefore, when developing ESG, we should adhere to the standpoint of "serving the green and high-quality development of our real economy."