Report Release | Discovering "SV 99" in China (2022)
The 2022 Discovering "Social Value 99" in China:A-share Listed Company Social Value Assessment (henceforth referred as "SV 99") was released on December 20, 2022, by Angela Bai, CEO of SusallWave Digital Technology, founding secretary-general of CASVI and a member of UNDP China SDGs Impact Financing Technology Advisory Committee, at the 2023 Caijing Sustainable Development Summit. The report provides investors, listed companies, industry associations, regulators, research institutions, governments and media with samples to interpret the ESG management and practices of Chinese listed companies in a multidimensional manner.
The 2022 SV99 is the joint achievement of CASVI and SusallWave. Since the project’s launch in 2016, more than 300 experts at home and abroad have tracked CSI 300 companies for seven consecutive years using data models. Through quantitative evaluation of the comprehensive economic, social and environmental value, they have investigated the correlation between financial and non-financial performance and the interaction between listed companies, the capital market and macro policies. In July 2021, SV99 series won the 8th China Soft Science Award.
Examining the Performance Changes of SV 99 Companies
The 2022 SV99 has continued and developed the previous methods and techniques. Composed of five parts—General Report, Industry Report, Selected Topics, Technology and Appendix— it examines the changes in the performance of SV 99 companies, analyzes the overall management and external influence of China’s leading A-share companies in the past year in terms of economic, social, environmental and governance aspects, and projects the trajectory of market forces in embracing sustainable development.
The General Report summarizes A-share companies’ ESG performance in three chapters: Hindsight, Insight and Foresight. “Hindsight” describes the SV 99 ranking and rating, as well as the group profile and distribution of these companies. “Insight” explains how SV 99 relates to the national economy, social welfare, environmental protection, governance structure and information disclosure. Finally, the three major crises, dynamic evolution and internal impetus of sustainable development are reflected in “Foresight.”
The Industry Report delivers an in-depth analysis of the characteristics and contributions of the sustainable development of the car industry, computer, energy and financial sectors from industry portraits, evaluation results, value performance and development prospects. It also provides a detailed interpretation of their sustainable development value.
In Selected Topics, the book chose CSI 300 companies’ actions and performance in delivering the “double carbon goals” and aligning with the SDGs. This part uses data to analyze the policy environment, driving forces, innovative practices, social contribution and prospects of these companies in fulfilling their environmental responsibilities and responding to the SDGs.
The improvement and upgrade of the SV 99 evaluation methodology are discussed in Technology.
The Appendix shows the 2022 SV 99 ranking and rating, as well as the companies that were excluded, why they were excluded, and major sustainable finance events at home and abroad in the past year. Based on the quantitative and qualitative results of the 3A Model and FIN-ESG Model, the experts analyzed the comprehensive economic, social and environmental performance of the CSI 300 companies to form the list. According to the evaluation from 2020 to 2022, it is found that the sustainable development of SV99 companies has steadied, with a marked increase in the sustainable development value of publicly-traded companies off the list and a narrowing gap in between.
Foreseeing SV99: Forge Ahead amid Looming Crisis
The 2021 SV99 argues that the progress of global sustainable development has deviated from the set track. As of 2022, the wheel of global sustainable development has been set back amid the extreme climate, ongoing pandemic and Russia-Urkaine frictions. China is a staunch support of and active contributor to the UN's SDGs and A-share listed companies are a critical force of its efforts to implement the agenda. In 2021, SDGs were referred in the non-financial disclosures of 121 CSI 300 companies. Among them, 87 companies aligned with the SDG framework, 73 companies took measures concerned and 51 incoporated SDG-related targets into their development strategies. Specifically, SDG 3(Good health and well-being), SDG 8 (Decent work and economic growth), SDG 12 (Responsible consumption and production) and SDG 13 (Climate action) are what the top publicly-traded companies at home are most concerned and responsive about.
Ms.Bai delivered her analysis and summary of SV99 from the perspectives of economic performance, environmental impact and industry properities. The external value created by an enterprise is limited, and many real values have not been included in the profit-welfare conversion system, she concluded.
To prompt companies to pivot away from the growth-driven development paradigm with large carbon footprints and unhealthy profit pattern, we not only need to call for “ Doing well and Doing good,” but to develop a reward system for companies that deliver on their social commitments. The data from SV99 reveals that state-owned enterprises at the central level and leading companies in the benefited sector will be the first to respond if the national policy is rolled out without supporting measures; If the supporting incentives, funds and resources are well in place, large and medium-sized companies will become dedicated players in pursuing sustainable development; if a market system is established, a positive cycle will be formed in which market players can rake in greater profits by giving back more to the society, thus encouraging all business entities to fully act on the policy.The road towards a future of sustainable development will be less rockey when the mechanism is integrated with the virtue of " Doing Well and Doing Good."
Since SV99 was released in 2016, efforts have been put into improving the quantitative evaluation of the sustainable development of listed companies.
“We started the project in 2016. After three years of backtesting and six years of follow-up studies, we found that the SV 99 Index outperformed the SSE 50, CSI 300 and SSE Index, with a growth rate of 79.88%. It presented a strong excess rate of return and smaller pullbacks in the long run. A stock index with more than five years of data can be used as an economic cycle. Data tracking over nine years has shown how resilient it can be in the capital market,” Ms. Bai said.
Going forward, CASVI will work to build a refined international evaluation system and algorithms of SV99 with distinctive Chinese characteristics.