ESG Investing Frontiers Forum | How to Promote ESG Disclosure of Non-listed Companies


The 16th ESG Investing Frontiers

How to Promote ESG Disclosure of Non-listed Companies


The 16th ESG Investing Frontiers Forum, "How to Promote ESG Disclosure of Non-listed Companies", was held on March 31, 2022. Speakers from finance and research sectors joined remotely to discuss the trends, opportunities and challenges of ESG information disclosure of unlisted companies.

List of guests:

  • Gang FAN, Dean of China Development Institute (Shenzhen)

  • Guohong LIU, Head of the Institute of Financial Development and State-owned Assets and Assistant Dean at China Development Institute

  • Leslie MAASDORP, Vice President and Chief Financial Officer of the New Development Bank

  • Hai’ou CHEN, Secretary-General of the Shenzhen Green Finance Association

  • Jeff CHIEN, China Partnership of Plug and Play


In his opening speech, Mr. Gang Fan, Dean of the China Development Institute, pointed out that ESG has received increasing attention from governments, companies and the public in recent years. Reaching emission peak and carbon neutrality has become a state policy. The market has deepened its understanding of ESG, and investors have shown a higher demand for corresponding market products. Mr. Fan used the concept of "no regrets in reducing emissions" as an example: "In the early days, many people rejected energy saving and emission reduction, thinking that they would regret it if one day scientists prove that global warming has nothing to do with carbon emission.   But in fact, when we reduce our fossil fuel consumption, we are also improving the energy efficiency, cutting the energy cost, and increasing the overall profit. Therefore, we will not regreat for reducing emissions." Mr. Fan believes that public recognition of carbon reduction creates better market conditions for companies to invest in activities and projects that are both sustainable and profitable. The future of enterprises is closely related to the well-being of our society. Enterprises should make more contributions to the public and take active roles in realizing common prosperity.


In his keynote speech, Mr. Guohong Liu, Head of the Institute of Financial Development and State-owned Assets and Assistant Dean at China Development Institute, explained the relationship between the maximization of shareholder interests and social value. Drawing upon an early academic perspective that business is the greatest charity, Mr. Liu suggested that shareholders' interests and social values are not contradictory but consistent. We can maximize shareholders' interests and social value at the same time. Mr. Liu believes that incentives are very important to the development of ESG. For the government, the biggest incentive for ESG is not to encourage nor compel information disclosure, but to attract more participants through market interests under government regulation and social norms. For companies, fulfilling social responsibility is the external precondition for future development. If companies do not take ESG into consideration, they will find themselves in great operational risks. Furthermore, fulfilling social responsibility is a necessary capability for every company; failing to assume social responsibility indicates the company’s incompetence in gathering resources and providing services.


Mr. Leslie Maasdorp, Vice President and Chief Financial Officer of the New Development Bank, suggested that a major and fundamental revolution of our systems of production and economy is underway, and there are a number of forces/drivers. First, the shift of societal values. Consumers and investors are beginning to see that the core responsibility of enterprises is to contribute to the well-being of society, and the investment community and asset owners are starting to emphasize the growing importance of ESG in evaluating investment risk. These changes will have a long-term impact on business decisions. With the introduction of technological innovations to the risk assessment process, it is now possible to quantify and reflect companies' impact on society in corporate financial accounting.

The widespread concept of ESG has initiated significant changes in the financial sector. The industry is paying more attention to sustainable development projects, which calls for the establishment of universal ESG standard to assess the economic, social, and environmental value of a company. Mr. Maasdorp believes that China, as the world's factory, should further optimize its production processes and set an example for the entire world. Its large economy determines its key role in global carbon emission reduction. Since China is an increasingly important participant in the global economy and society, it will exert positive influence on the disclosure of corporate information, too.


Published in October 2020, the "Shenzhen Special Economic Zone Green Finance Regulations" came into effect in March 2021. Ms. Chen Haiou, Secretary General of the Shenzhen Green Finance Association (SZGFA), reported that the Shenzhen Special Economic Zone Green Finance Regulations, the world's first local regulations for green finance, has achieved significant breakthroughs in a number of areas. In particular, the regulations require financial institutions to establish corporate governance structures and organizational systems in line with sustainable goals and green investment management systems according to their own bossiness strategies. Institutions must conduct evaluations of sustainability on eligible investment projects. Meanwhile, the regulations set out clear requirements for environmental information disclosure. Starting from January 1st 2022, Shenzhen launched the first round of mandatory environmental information disclosure for financial institutions.

In addition, the Guangdong-Hong Kong-Macao Greater Bay Area Green Finance Alliance was established in 2020. It will promote the establishment and mutual recognition of environmental information standards, laying the foundation for the environmental information disclosure system in the Greater Bay Area. This means to build a database of environmental information for financial institutions and all enterprises to support the development of green finance in the Greater Bay Area. SZGFA will also support financial institutions and enterprises in the Greater Bay Area to adopt technology roadmaps and methods for scientific carbon reduction targets and conceive a practical plan for achieving emission peak and carbon neutrality.


Mr. Jeff Chien, China Partnership of Plug and Play, gave a presentation on how startups can technologically support big companies in ESG. Plug and Play China, as an innovation platform, helps big companies to innovate in addition to making early-stage investments. In recent years, more and more companies have participated in the circular economy and are committed to push for breakthroughs in environmental protection. With nearly 20 years of experience in innovation consulting, Plug and Play helps large companies to find and connect with forward-thinking technology solutions around the world. Sustainable development is one of Plug and Play's nineteen focuses. Plug and Play has acted as an innovation partner to help big companies identify innovation opportunities in the sustainability sector, focus on innovation needs, help large companies connect and collaborate with startups that have relevant cutting-edge technologies, thus enabling large companies to develop sustainably. Plug and Play China believes that large enterprises can effectively integrate more innovation resources and promote ESG practices through an open innovation model.

Roundtable discussion


After the keynote session, Xing'an Ge, Vice Chairman of the Second Council at China Alliance of Social Value Investment, hosted a roundtable discussion on "Opportunities, Challenges and Prospects of ESG Disclosure for Unlisted Companies." The guests also participated in a closed-door discussion session afterwards.


  • Hui ZHANG, Director of Investment Banking Department at China Renaissance

  • Ying BAO, Operation Director of Department of FinTech at Shenzhen Securities Information Co.

  • Hongping XU, General Manager of Green Finance Department of Industrial Bank Shenzhen Branch

  • Guan WANG, Partner of Jingtian & Gongcheng

  • Hanqi ZHU, CEO of Enhanced Robotics

Xing'an Ge: China Renaissance has compiled an annual new economy report and a number of new economy company indices according to ESG concepts, providing services to new economy companies while also promoting ESG development concepts. Why does China Renaissance value the compatibility between companies and ESG concepts? Many new economy companies choose to list in Hong Kong. How does the investment bank help them with ESG information disclosure?

Hui Zhang: The capital market has indeed undergone irreversible changes. Investors are paying more attention to risk management. They tend to take environmental concerns and social responsibilities into consideration while choosing investment targets. Capital has also played a very important role in the acceptance and practice of ESG investment concepts. Changes in the external environment, such as the COVID pandemic, international warfare and social problems, have further contributed to the fact that efficiency is no longer the only priority for corporate governance. Due to policies and changes in external environment, ESG concepts will become important references for investment decisions. This year, investment institutions will be more clear about ESG requirements, which we believe is a good start.


China Renaissance has been paying close attention to the development of new economy companies and industries for the past 15 years. In 2020, the Stock Exchange of Hong Kong(HKEX) published guidelines and regulations regarding corporate ESG reporting. Although not mandatory, these guidelines and regulations suggest that companies have the responsibility to disclose information. China Renaissance connects institutions that are experienced with corporate ESG sharing with our invested companies and IPOs in order to help them with assessments related to information disclosure.   

In addition, China Renaissance has assisted funds that are interested in ESG disclosure with   market guidelines summaries and investment matching. In the future, the weight of ESG indicators in the capital market will be further increased. We believe that information disclosure can attract more companies to pay attention to ESG and help match them with funds that emphasize social value. We, as an investment banking institution providing ESG assessment system, resource sharing and fund introduction, can also benefit funds and companies, and we did receive good feedbacks from them.

Xing'an Ge: As the first member of the Equator Principles in China, Industrial Bank has not only taken the lead in elevating sustainable development to the level of corporate strategy and governance, but has also made green finance a core business. How does the bank promote ESG information disclosure for non-listed companies?

Hongping Xu: Industrial Bank is a pioneer in green finance in China. Green finance is one of our three signature fields of our business. The bank has established a sophisticated green finance governance structure and service system. According to our 2021 annual report released this March, the balance of green financing is nearly 1.4 trillion yuan. We served 38,000 customers and provided more than 450 billion green loads. Industrial Bank is also one of the earliest financial institutions in China to carry out ESG practices, and has been rated A for three consecutive years by MSCI. We have incorporated ESG strategic planning into our new five-year strategy and hope to build an ESG management system that encompasses corporate governance, product creation and information disclosure.

In terms of guiding corporate information disclosure, we have made the following layout:

First, we have been conducting high-quality ESG disclosures in interaction with our clients for more than 13 years.

Second, we have incorporated ESG management concepts into the entire process of

credit extension, optimized our credit policy and strongly supported projects with good social and environmental benefits.

Third, Industrial Bank has increased its investment in IT technology and artificial intelligence to mend the information gap between banks and enterprises and to improve its own information management capabilities. Our self-developed system is the industry's leading digital platform for green finance. It accurately measures environmental benefits of dozens of industries, analyzing and evaluating the environmental and social risks of loan applicants.

The state and government regulators have introduced many policies requiring financial institutions to support the development of Small and mid-size enterprises (SMEs) over the past years. For SMEs, survival is the priority, and we should give them positive guidance on ESG disclosure accordingly. ESG disclosure should be in line with the business value and long-term development of SMEs. Firstly, it is important for the industry chain to lay the foundation. For example, mainstream enterprises in   developed countries and regions such as the EU will require environmental and social disclosure from their suppliers when making purchases overseas. Secondly, investment and financing guidance from financial institutions, for example, banks, should take more non-financial factors into consideration and gradually put ESG concepts into the whole process of granting credit. Equity institutions should increase their ESG evaluation of invested companies as well. Finally, the government should play an important role in helping SMEs to understand the why and how of ESG disclosure since many SMEs are unfamiliar with this relam. This will solve many challenges for SMEs.

Xing'an Ge: Mr. Guan Wang has many years of experience in listing and compliance management. From a legal perspective, what kind of impact does ESG disclosure have on the financing and M&A of companies? Are there any specific cases for non-listed companies to follow? What are the similarities and differences in the consideration and weighting of ESG in domestic and international M&A laws?

Guan Wang: In the due diligence of M&A, we will take ESG risk factors such as commercial bribery, personal data privacy, environmental protection and labour issues as key focuses. M&A parties will also look atinto the company's reputation, culture and focus on integration issues across all ESG criteria. Sometimes M&A parties will also consider the composition of the company's board of directors; for example, whether the board has female executives and whether it has a diverse cultural and educational background.

In one of our cases, a private company tried to acquire a subsidiary of a state-owned company. Usually, due diligence is conducted only on the acquired company, but this time an additional reverse ESG due diligence on the acquirer was needed. In addition to the acquisition price, information on the acquirer's labour protection, anti-commercial bribery governance and poverty eradication were investigated. This is because the shareholders of the acquired company want to ensure that the original employees are provided with good protection after the acquisition and that the acquirer's culture is compatible with the old one, which will facilitate a longer-term development for both the local employees and the community.


Speaking of differences between China and other countires, I have seen an interesting phenomenon in my legal work in China and the U.S. In their domestic and international legal requirements related to M&A, there is a common gap in ESG disclosure requirements for SMEs in both countires. Mandatory ESG disclosure in many countries and regions is mainly applicable to the annual reporting requirements for listed companies. However, there is a difference in systematic ESG guidance. China adopts top-down guidelines in some industrial policies. For instance, we have a blacklist for market access and a guiding catalogue for industrial restructuring of the market. Through such industrial guidance, we are able to filter out enterprises that have adverse impacts on the environment and society. In other countries, private sector investors have a stronger values orientation and they influence the strategic adjustment of companies not through direct industrial guidance, but through their own market appeal. There is also a difference in the areas of focus. In other countries, the focus is more on equal rights and climate change, while in China the focus is more on carbon neutrality, labour protection and data privacy.

Xing'an Ge: Enhanced Robotics provides innovative elder-friendly devices and workforce enrichment solutions. As a prominent founder in the medical robotics field, do you think ESG reporting will have an impact on a startup's competitiveness in the primary market?

Hanqi Zhu: First of all, we have to make it clear that for startups, social value and profit are not contradictory but highly consistent. In this era, most startups aim to solve social problems at their very moment of founding. It is not that all founders want to do charity, but that a startup must solve a social problem if it wants to have a hundred times or even a thousand times return on investment from its early investors. The prerequisite for commercial success is to change people's lives or improve their quality of life. I think the entrepreneurial logic of today is different from that of the past. Many companies have good cash flow and financial figures, but they don't attract investors because they don't have the potential to contribute to society and, by extension, to win a big market share.


With regard to ESG reporting, companies more often than not think of the market. My company produces exoskeletons; they are expensive and most of our customers come from overseas markets. Based on the feedback we received in overseas markets last year, these consumers are more interested in whether the company they buy from publishes an ESG report or whether it meets environmental requirements. If the ESG report can make us more competitive in overseas markets, we will treat it as a market barrier and implement it.

In overseas markets, there is still a stereotype of Chinese companies being "not environmentally conscious." If ESG reports can change this stereotype and win high-net-worth individuals over, companies will be more active in promoting ESG implementation.

Xing'an Ge:   With the help of Shenzhen Stock Exchange and Torch High Technology Industry Development Center at Ministry of Science and Technology, V-Next service has now covered 46 countries and regions around the world by connecting all parties involved in the private equity market. Based on the data on V-Next platform, how much does the release of ESG reports by a startup affect its valuation, financing cost and speed of financing in the capital market?

Ying Bao: From our current observation, the percentage of both domestic and foreign startups publishing full ESG reports is actually very low. This is in line with the characteristics of startups' information disclosure in general. They have lower standardization and willingness to disclose compared to listed companies. For startups, the cost for learning and operating according to ESG concepts is high, as they cannot allocate professional teams and personnel for thorough disclosures. Many startups are still experimenting with their own technical theory or business model and do not even have financial information, let alone standard information disclosure.


But there is another phenomenon that I would like to highlight.As the process of emission peak and carbon neutrality continues, we realize that startups are helping to improve ESG governance in traditional industries. Startups that are able to reduce or digitally upgrade traditional energy-intensive industries are very competitive in terms of speed and frequency of financing. For example, AI companies, which have been popular in the past few years, are usually able to solve the decentralized needs of different industries at a lower cost, and then apply AI technology to a wide range of traditional industries such as urban security, retail and agriculture. To improve ESG disclosure by startups, firstly, we need to work on expanding the spread of ESG concepts and provide full-cycle ESG empowerment and coaching to our startups. Secondly, we need to have ESG disclosure guidelines for startups. Finally, we should establish a connection between primary and secondary market disclosure, so that start-ups can continue to focus on ESG disclosure, which will also help them to grow and develop.

About ESG Investing Frontiers Forum

“ESG Investing Frontiers” is jointly initiated by China Development Research Foundation, ChinaSocial Investment Forum, China Alliance of Social Value Investment, Shenzhen Green Finance Association, and National School of Development at Peking University. Under the guidance of Shenzhen Municipal Local Financial Regulatory Bureau, the monthly public welfare sharing focuses on ESG investment practices at home and abroad.

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