Construction of ESG evaluation index system of state-owned listed companies: Analysis based on the perspective of comprehensive corporate value

• Main Author: SUN, Yiping
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2023
• Subjects: Chinese state-owned enterprises; ESG evaluation system; enterprise comprehensive value; Business Administration, Management, and Operations; Strategic Management Policy
• Online Access: https://ink.library.smu.edu.sg/etd_coll/573; https://ink.library.smu.edu.sg/context/etd_coll/article/1571/viewcontent/GPBA_AY2018_DBA_Sun_Yiping.pdf
• Institution: Singapore Management University

In this paper, I explore the applicability of environmental, social, and governance (ESG) evaluation systems to Chinese state-owned enterprises (SOEs). I assess these ESG evaluation systems in terms of the overall value of Chinese SOEs and point out that these enterprises do not have their own evaluation system. Establishing an ESG system for Chinese SOEs can encourage them to disclose quantifiable indicators, thus objectively demonstrating their comprehensive ESG performance and helping to enhance their overall value. I examine the current ESG evaluation systems in detail and find that there are many problems in applying the main international evaluation systems to domestic enterprises. First, in terms of current rating agencies, various areas require improvement, such as transparency in disclosing the benchmarks of specific assessment methods and assumptions, standardising the evaluation process, and inconsistencies in the rating results from different agencies for the same enterprise. Second, international ESG evaluation systems lack localised indicators and have a relatively low correlation with China’s central policies. They do not consider the characteristics of Chinese SOEs or clearly incorporate the mandatory ESG requirements set by the government, such as the “dual carbon” goals (carbon peaking and carbon neutrality), rural revitalisation, or common prosperity. To establish an ESG system for Chinese SOEs, I take non-SOEs as a reference in this study. Assuming that the established model will mainly be used to evaluate Chinese SOEs, I use corporate social responsibility (CSR) reporting data from the database of GoldenBee Research to conduct a textual analysis of the CSR or ESG reports of Chinese SOEs and non-SOEs, and identify several factors that may have a major impact on the ESG evaluations of these enterprises. I find that there are differences in the ESG concerns of Chinese SOEs and non-SOEs, which leads to differences in enterprise performance. Therefore, I propose that for SOEs with different systems from those in the West, a more consistent model is required to reflect the correlation between a specific combination of indicators and overall business performance. Finally, I interview Chinese entrepreneurs from both SOEs and non-SOEs to discuss the initial results and explore through empirical verification whether the ESG concerns identified earlier are the key concerns for Chinese SOEs and non-SOEs. I ultimately identify the primary factors influencing the ESG performance of Chinese SOEs. Based on this, I establish an ESG evaluation system for Chinese SOEs, which can be applied in their ESG management and practice.