Since the large-scale outbreak of COVID-19 in early 2020 and the series of natural disasters that followed, industries across China have gone through their deepest pain, transformation and restructuring since the start of reform and opening up: weak consumer confidence, panic in financial markets, volatile commodity prices, threats to supply-chain security, growing pressure on social governance… These events have shown every industry how fragile economic and social governance systems are in the face of nature, and they lead us to ask: over the next decade, can "the economy above all" and "shareholders above all" still be all that defines a good company? How can companies create opportunities in a crisis, navigate uncertainty and stay ahead in the business competition of the next era? How should we develop sustainable social governance systems to meet longer-term challenges such as climate change? Answering these questions is a vast social undertaking that requires every industry to pool resources, apply its wisdom and work closely together across the three areas of environmental, social and governance (ESG).
In 2022, SASAC set up its Bureau of Social Responsibility and recently published its Work Plan for Improving the Quality of Listed Companies Controlled by Central State-Owned Enterprises, which calls for striving to achieve full coverage of dedicated ESG disclosure reports in 2023. Putting ESG principles into practice has thus become a central priority in implementing national policy and deepening state-owned enterprise reform. For capital markets, practising ESG has also become a key requirement and assessment criterion for listed companies and joint-stock enterprises. In recent years, as momentum behind sustainability has grown ever stronger, investors of all kinds have built ESG and impact investing into their portfolio strategies, and ESG ratings and the content of ESG disclosure reports have become important criteria for screening investment targets.
For governments and companies across sectors, ESG can help them fulfil their social responsibilities in full while also generating substantial economic returns. According to one analysis of nearly 2,000 corporate cases worldwide [1], the ESG framework captures the key factors behind lasting corporate success and has a significant positive impact on company performance and investment returns. Environmentally, although corporate growth is constrained by carbon emission and ecological policies, companies can find a "second growth curve" in carbon markets and carbon inclusion schemes. In corporate governance, as the economy and the environment change, and in particular as social culture and demographics shift, the "rules of the game" for future corporate development have changed; an internal ESG governance framework is an important lever for front-running companies to overtake competitors, build long-term barriers and achieve sound governance. In terms of sustainable development, the long-term growth of companies requires shareholders, employees, governments, regulators, the public and other stakeholders to build a harmonious, balanced and mutually beneficial sustainable development system that supports lasting success.
To seize the opportunities of sustainability and the ESG transition, how can financial institutions find, assess, invest in and manage the "green dark horses" of every sector? How can government officials and senior executives draw on international experience to formulate scientific and sound ESG transition strategies, protecting clear waters and green mountains while building enduring businesses? How should companies across sectors implement ESG practices, integrate them into their management systems and build a solid moat for their development? As John Muir put it, "The mountains are calling and I must go!" WeCarbon, a carbon neutrality and ESG technology company, has joined forces with the capital-market consultancy Pugu Advisory (PGA) to set up a co-branded joint-venture consultancy. Combining their long experience and distinctive strengths in ESG and capital markets, the new firm will serve the ESG transformation of capital markets, helping companies across sectors understand and meet capital-market ESG requirements and build businesses that last.
WeCarbon Pugu will provide clients across sectors with ESG capital-market services, including ESG disclosure report writing, ESG rating improvement, ESG investment due diligence and ESG management system transition strategy. The senior management and teams of both companies will combine their respective strengths and experience from China and abroad to deliver professional, forward-looking and practical services that help Chinese companies get ahead in the era of ESG transformation.
WeCarbon was founded by ESG practitioners with frontier R&D expertise and policy foresight gained in China and abroad. It is a technology company that provides SaaS solutions for carbon neutrality, such as a carbon neutrality management platform and a digital twin platform, as well as integrated solutions for companies across three lines: policy consulting, transition strategy consulting and executive training.
Pugu Advisory (PGA) is a professional firm providing financing and M&A transaction advisory, investment and financing due diligence, financial and tax advisory, business valuation and capital-market services. In the eight years since its founding, it has served more than 1,000 investment, financing and M&A transactions, with professional advisers in five locations across China providing clients with in-depth, value-adding specialist services.