"Shareholder value is paramount" is perhaps the most important concept for investors in the past few decades. The management of a listed company should use various resources and methods within the scope permitted by laws and regulations to strive for the best interests of the company and shareholders. The management's ability often determines the company's value.
However, environmental, social and corporate governance (ESG) have prevailed in recent years. For example, it is advocating that enterprises also need to shoulder the responsibilities of "emission reduction", achieving "carbon neutrality", and giving back to the community.
Huang Mingwei, Director General of the Chamber of Commerce of Hong Kong Listed Companies, accepted an interview with "Hong Kong 01" and agreed that companies should pay more attention to environmental and social issues.
Huang Mingwei agrees that companies should pay more attention to environmental and social issues, and even more bluntly, "It is a good thing for companies to stop profiteering."
(Photo by Li Zetong)
ESG is becoming more and more popular. Huang Mingwei believes that "shareholder value" should not be the only value of the company. The management thinking needs to be changed. "In the past, it was about maximizing benefits, sometimes doing more for benefits, destroying the environment... , Yijia has to make a lot of things, and will always find a balance. Don't companies need to pay attention to shareholder value, there must be a balance in between."
There are two sides to a coin. Enterprises assume social responsibilities while paying more. For example, factories need to replace more advanced and energy-saving machines. Developers must also think about how to increase the use of green energy when building houses.
Huang Mingwei said that the promotion of ESG will indeed affect the company's short-term interests, but in the long run it has many benefits, creating a "win-win situation."
The impact of climate issues is becoming more and more serious. Petroleum companies such as Shell have become targets of environmental protectionists from time to time.
(AP, profile picture)
ESG index outperforms the HSI
First of all, to do ESG well can improve corporate reputation. He said that companies should "see the long-term perspective." Taking manufacturers as an example, some European and American customers attach great importance to the company's ESG level, depending on whether the production process is environmentally friendly and the employees Welfare and so on, to decide whether to hand over the business to the company, "If you do it, let’s make a business with a good reputation, there will be more people buying products or using services, so you will make money, it’s just a matter of time. Huh."
Secondly, it is favored by investors.
Huang Mingwei pointed out that in the past, funds and others have implemented Responsible Investment, which may not be involved in arms, gambling and pornography. Now they have further joined ESG. "If there is a bad industry (ESG), the fund must be careful. Indeed, the market is now paying more attention to the concept of "ESG" stocks. Huang Mingwei pointed out that the Hang Seng Index has risen by nearly 30% in the past five years. During the period, the Hang Seng ESG50 Index has risen by more than 44%. Buy; it will be easier for companies to raise funds in the future, and it will be beneficial to shareholders in the end."
The cost of "green credit" is lower
But for companies, everything is "money." According to the data quoted by the Hong Kong government, China hopes to gradually reduce coal consumption from 2026 to 2030 and achieve the goal of carbon neutrality by 2060. Low-carbon investment exceeds one hundred billion yuan, which leads to "green finance": companies can issue "green bonds" or borrow from banks. If the funds are specified for environmental protection and climate change projects, the cost of credit will be higher. Generally low loans.
Huang Mingwei pointed out that at present, funds and other secondary markets have invested more than 35 trillion US dollars in ESG-related enterprises and projects. In other words, if you borrow money to a company that has done a good job in ESG, even if the interest income decreases, the two achieve "mutual benefit", which can bring a virtuous circle.
Hope to build an ecosystem to make companies better "tell the story"
But what is a company with good ESG?
In recent years, the Stock Exchange has strengthened relevant ESG disclosures, requiring listed companies to make more disclosures on ESG, including scientific methods for companies to assess the impact of climate change on companies, and to set various goals.
Huang Mingwei believes that a good report should be fair, transparent, and the goal is sustainability. "A picture is worth a thousand words. ESG is human, and the numbers are cold. Use many vivid ways to express and bring out your life. The story is that a company clicks to connect with people and things around it, like telling the story."
However, small and medium-sized enterprises may not have enough resources to cope with the new guidelines. He hopes that the authorities can "do not do so quickly" and wait for the enterprises to adapt.
On the other hand, the industry also needs to establish an ecosystem (Ecosystems), which includes consultants, analysts, and investment professionals, but it is only in its infancy at the moment. Analysis; rating agencies should help with ratings, and when fund managers can evaluate the company's achievements, all of them are participants in the system."
The Chamber of Commerce of Listed Companies held the "Environmental, Social and Governance and Green Finance Opportunities Forum" on Wednesday (20th).
(Photo by Li Zetong)
After establishing a well-established ecosystem, with more effective supervision and guidance of funds, companies can also avoid the use of "greenwashing" (Greenwashing) to deal with, "But how many times do you get people? I borrow you, but If you don’t exchange the number, the market has a mechanism to punish you. If you don’t borrow from you next time, it is more likely to affect the credit after you are buried.”
In response to the "14th Five-Year Plan" and the United Nations Climate and Climate Conference, the Chamber of Commerce of Hong Kong Listed Companies will hold the "Environment, Society, Governance and Green Finance Opportunities Forum" on Wednesday (20th). Huang Mingwei believes that there will be more attention to environmental protection, climate and other issues. There are many new situations, and it is expected that more emissions reduction targets and regulations will be introduced, which also means that more funds will be directed to ESG projects. I hope to use the forum to remind the industry to be prepared.