Building a high-impact ESG system

Angel Sze FCG HKFCG(PE), Company Secretary and Head of the ESG Management Committee, Fosun International Ltd, explains how the company embeds ESG governance into every layer of decision-making and disclosure.

Highlights

• a multitiered structure is key to embedding ESG across strategy, oversight and execution
• transparency and stakeholder dialogue go hand in hand, enabling materiality-driven disclosures that earn trust and relevance
• ESG ratings are the levers for benchmarking, internal engagement and long-term system improvement

Placing governance at the forefront

In the ESG narrative, governance is often overshadowed by its more visible siblings, environmental and social. But at Fosun International, we believe that governance should come first, because sound governance is the cornerstone of high-quality ESG development and internationalisation.

Fosun International has established a multitiered governance framework. At the ESG governance level, we have created an ESG Board Committee to assist the Board in guiding and monitoring the implementation of the Group’s ESG work. At the decision-making level, we have set up an ESG Executive Committee to provide decision-making support for the execution of ESG strategies. And, at the execution level, we have also initiated an ESG Management Committee and an ESG Working Group to ensure that appropriate and effective ESG risk management and internal monitoring systems are in place for the full achievement of the Company’s relevant actions.

Transparency as a strategic imperative

Transparency is integral to our strategy. Beyond statutory disclosure, we strive to communicate our ESG story with clarity and precision, from data accuracy and assurance to dialogue with stakeholders.

In addition to the company’s financial condition and operating performance, we fully disclose the specific content of our various ESG practices and have thoroughly integrated transparency into our upgraded ESG strategy, emphasising clear and accurate sustainability disclosure, as well as data verification, in order to build social trust.

We also continue to communicate with our stakeholders, listen to their voices, respond to their concerns and establish a relationship of mutual trust. We communicate in a ‘multidimensional, multidirectional and multichannel’ manner, including ESG reverse roadshows, and engage in exchanges with academic and financial institutions’ sustainability teams. The feedback we receive informs our materiality assessment analysis of ESG issues, and subsequently assists us to further optimise our ESG work and disclosure.

Aligning with global and local standards

Along with the requirements of Hong Kong’s Main Board Listing Rules, our reporting is aligned with international benchmarks. We incorporate the United Nations’ Sustainable Development Goals, the Global Reporting Initiative reporting standards and mainstream ESG ratings methodologies into our ESG reports, and have steadily improved the content and quality of our ESG reporting disclosures.

We have also issued a Climate Information Disclosures Report for each of the past three years, benchmarked against Part D of Appendix C2 (Climate-related Disclosures) of the Listing Rules. These reports also make reference to the recommendations of the Task Force on Climate-related Financial Disclosures framework, as well as the International Financial Reporting Standards’ Climate-related Disclosures Requirements (IFRS S2).

In terms of the Chinese mainland, the latest domestic ESG regulatory disclosure requirements are strongly aligned with those of the International Sustainability Standards Board, while also embracing local characteristics, particularly in the areas of rural revitalisation and technological innovation. We closely monitor and respond to the mainland’s evolving regulatory requirements.

By aligning with both global and local standards, we believe that efforts to improve the width, depth and transparency of our ESG reporting will result in a greater level of stakeholder trust, as well as boost our reputation.

Creating a strategic framework

To put ESG into action, we have developed a strategic framework called Create IMPACT. This sustainable development strategy focuses on six key directions – innovation-driven, mindful operation, people and partner oriented, advanced governance, climate and planet positive, and transparency.

Through this framework, we strive to create a more positive impact and to promote sustainable growth. Each of the six pillars serves as a guiding force for our ESG strategies, targets and actions across the Fosun Group. For instance, we are driving technological innovation to develop sustainable business solutions, enhancing responsible operational practices, and strengthening engagement with stakeholders and communities. We also highlight sound governance, proactive climate action and ethical transparency to support long-term value creation.

Overall, Fosun International has constructed an ESG practice system that encompasses both international norms and local characteristics through strategic integration, alignment of standards and transparent communication, and we disclose these in detail in our ESG reports. 

ESG ratings as tools for growth

As society’s expectations of the role of companies intensifies, investors and consumers are placing increasing emphasis on ESG performance. Rather than viewing ESG ratings as merely a tick-box compliance task, we treat it as a strategic management tool. ESG ratings are a valuable resource to help stakeholders better understand a company’s corporate ESG practices.

Participating in market ESG ratings helps companies benchmark against their industry peers and attain a more comprehensive grasp of international standards. In fact, many ratings agencies set criteria that exceed regulatory requirements. For example, Hong Kong’s Corporate Governance Code now requires at least one director of a different gender on the board, whereas most international ESG ratings providers call for a minimum gender diversity ratio of 30% or more.

“As society’s expectations of the role of companies intensifies, investors and consumers are placing increasing emphasis on ESG performance.”

Fostering internal engagement

By acknowledging the value of ESG ratings, companies can enhance the management of their ESG systems. With the help of ratings tools, they can stay informed about international best practices and gradually optimise their internal regulations and risk management processes.

Many ESG ratings requirements go beyond simply stating whether or not a company has relevant ESG policies in place – they also require evidence of concrete implementation and continuous improvement. ESG ratings are not just about passively responding to questionnaires and obtaining scores, instead, the ratings methodology is about examining the gap between the pace of a company’s ESG practices and market expectations that surpass regulatory compliance. This process encourages companies to identify areas for progress and improvement, while ensuring their internal frameworks are effectively and comprehensively carried out to achieve genuine ESG risk management and control.

As a company’s ESG ratings improve and market recognition is gained, employees at all levels tend to develop a stronger sense of mission and engagement. This, in turn, further reinforces the organisation’s commitment to advancing its ESG journey.

Angel Sze FCG HKFCG(PE), Company Secretary and Head of the ESG Management Committee

Fosun International Ltd