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Text/Ancient Twenties
Source/Technology News (ID: kejixinzhi)
If you want to find a “double-sided” manager for a company under the ESG rating standard, Musk is definitely the best candidate.
Recently, technology giants around the world have experienced frequent layoffs. The American social networking company Meta announced the layoffs of 11,000 people. This is the largest layoff since the company was founded in 2004. Zuckerberg also apologized for the matter.
But before that, Twitter, which had a relatively small number of layoffs, caused a bigger disturbance. After taking over Twitter in early November, Musk stated in an email that he planned to lay off 50% of the overall workforce, about 3,700 people.
On the one hand, Musk said that every dismissed employee will receive corresponding compensation, which seems to protect the legitimate interests of employees. On the other hand, the mental exhaustion caused by the strong layoff plan to employees still prompted the United Nations to send an open letter to Musk, asking him to make “protecting human rights” the center of his Twitter management work.
At the end of October, Musk said that Twitter planned to lay off 75% of its employees, causing employees to panic. Under pressure, many employees began to work overtime, working 7 days a week, 12 hours a day to involuntarily. Some ESG researchers said that Musk’s actions further weakened Twitter’s social responsibility credibility, caused employee dissatisfaction, and violated ESG requirements.
Long before Twitter, when Musk managed Tesla, he had a typical double-sided ESG performance. In the MSCI rating, which emphasizes more on the environmental impact of products, Tesla is rated A, but in Just capital, which emphasizes labor relations more, Tesla also has the lowest rating of 10%.
Across the highest rating and the lowest rating, it can be said that Tesla is almost one of the most polarized companies in the evaluation of ESG rating agencies. Therefore, in April this year, after Tesla was removed from the S&P 500 ESG index, Musk also posted that ESG is a scam.
Tesla, which has made industry-leading contributions to low-carbon energy, is also an out-and-out ESG student. Under the single dimension of emphasizing low-carbon and environmental protection, this kind of “Musk disease” has also appeared in China’s major Internet companies.
Partial big factory ESG
Musk’s contribution to environmental protection brought about by technological innovation is comparable to that of China’s Internet giants.
On November 30, at the 2022 Tencent Global Digital Ecology Conference, Tencent Cloud officially released the “Energy Carbon Factory”, an ecological aggregation platform for the energy industry. Based on energy connectors, it is an ecological aggregation SaaS workshop with the theme of “green development, energy saving and carbon reduction” in Tencent’s cloud business. Specifically, the Energy Carbon Factory includes a platform and an ecosystem that can provide scenario-based solutions for carbon management in the energy industry.
Coincidentally, Ali also stated in the carbon neutral action report that it will provide financial support for green innovation, explore related technologies, and carry out industrialization programs for direct air carbon capture and storage technologies to help clean energy consumption.
Baidu is focusing on smart transportation. At the “Green Double Carbon” forum of the Baidu AI Developer Conference, it stated that smart transportation can solve the problem of carbon emissions from the root, and it is expected that by 2030, Baidu will promote urban transportation to reduce carbon emissions by 70 million tons. .
Large factories are paying more and more attention to low-carbon energy. In addition to driving business goals through technological innovation, the sustainable development business value represented by low-carbon is another layer of intention. As the core quantitative indicators of sustainable business development, the disclosure of ESG reports and the ESG ratings of international institutions will reach a new height in 2022.
For companies listed on the Hong Kong Stock Exchange, listed companies need to follow the ESG guidelines of “disclose or explain” in 2022. After ESG has become a mandatory question, low-carbon reports have become a qualitative factor to see the ESG level of major Internet companies.
In July 2022, in the “Green Cloud 2022” report jointly released by the international environmental protection organization Greenpeace and the China Environmental Protection Federation, information disclosure and environmental governance, carbon neutrality goals and actions, renewable energy goals and actions, and influence Scoring the carbon neutrality performance of 24 leading Internet cloud service and data center companies in China in four dimensions.
In the ranking of Internet cloud service companies, Tencent ranked first, and received a high score for its comprehensive information disclosure, perfect carbon neutrality goals, and a large amount of green power transactions. Followed by Alibaba, Baidu, Huawei, JD.com and other Internet first-tier companies, the new force ByteDance, which was launched later, ranks slightly behind in the seventh place.
However, leading companies such as Tencent and Alibaba, which are leading in carbon neutrality in the cloud service market, have not achieved satisfactory results in ESG ratings.
As of January 2022, in MSCI’s ESG ratings, Meituan, the best performer, has only been rated AA twice in 2019 and 2021, while major Internet companies such as Alibaba and Tencent are rated B-BBB all year round. hovered between ranges. In MSCI’s 2021 ESG rating results, except for Huawei, none of the major domestic Internet companies is on the list.
Different from the U.S. market, Apple, Netflix, and Amazon have become the leading forces in the global ESG field. In terms of ESG performance of domestic companies, the financial industry, energy engineering, and real estate industries are rapidly transforming according to ESG standards. The Internet, which is the innovation soil of Chinese companies Big manufacturers, but failed to lead the way.
The context of big factories under the low-carbon cutting
However, for the soil of the Chinese market, which is still in the process of high-end industrialization, it is the only way for major Internet companies to go from partial undergraduates to comprehensive top students.
On the one hand, at the national level, the introduction of the dual-carbon strategy legalizes the environmental responsibility of enterprises and forms a unified and enforceable standard across the country.
In 2016, the China Securities Regulatory Commission issued a policy requiring listed companies in key carbon-emitting industries to disclose their carbon emissions in their annual reports. With the subsequent introduction of the “Double Carbon” policy and related laws, more and more Chinese companies will disclose carbon emission information and fulfill their emission reduction obligations.
In this context, the carbon emission statement may be listed alongside the three major financial statements of the enterprise and become the fourth necessary statement for the enterprise. Governments, business managers, investors, and other stakeholders can all see the environmental responsibilities undertaken by companies, forcing companies to increase investment in environmental protection and accelerate the transformation of green development.
Under the country’s dual carbon goals, the three responsibilities in ESG are hierarchical, and the three responsibilities are G, S, and E from bottom to top, showing the characteristics of layer-by-layer weakening. “Double Carbon” requires all enterprises to assume the highest level of environmental responsibility through national coercive force, and undertaking environmental responsibility (E) will drive enterprises to more actively undertake social responsibility (S) and corporate governance responsibility (G), and promote the development of ESG in Chinese enterprises. develop.
In the end, under the small incision of double carbon, we can improve the governance structure and social responsibility of Chinese enterprises from point to point. This is the general trend of ESG under China’s strategy.
However, under the international rating standards, the weight of carbon neutrality represented by E in the rating of energy engineering and other secondary industry companies is relatively high, while in the tertiary industry companies such as the Internet, the latter two often represent social responsibility represented by S and G represented by G. corporate governance occupies a higher rating weight.
This means that under the international rating caliber, for Internet companies, doing a good job in double carbon will help them improve their ESG ratings far less than that of secondary industry companies.
On the other hand, quantifiability is also the main reason why major Internet companies are more willing to invest in double carbon.
Due to the lack of unified standards, the current disclosure of ESG information by companies is mainly based on qualitative descriptions, supplemented by quantitative data for summary and display. Therefore, the available ESG data still have unstructured features and are not comparable.
However, the “dual carbon” established at the national level, with quantifiable corporate carbon emission indicators, as a comparable indicator, can clearly represent the level of environmental responsibility an enterprise undertakes. The indicators that the general public can feel are mainly concentrated in the environmental category, and the measurement of such indicators is relatively mature and reliable, so they are more valued by enterprises.
In addition to E, the other two items of S and G that need to be assessed are often difficult to accurately quantify. Items that are assessed solely by qualitative factors often have a relatively large room for subjective discretion, and they are also the hardest hit areas where the rating results are controversial. For example, morality and anti-corruption, independence of the board of directors, corporate governance level, etc., are generally judged by rating agencies based on past media reports and public opinion, but they are inevitably covered up under the operation of public opinion and public relations of various enterprises.
Different countries and different cultural backgrounds have different understandings of ESG, and naturally have their own emphasis. For Chinese enterprises that are still in the process of industrialization, the issue of environmental governance is much more important than a modern country or a post-modern country.
Therefore, under China’s low-carbon approach, companies will be given more weight in their evaluation of environmental governance. For American companies, they pay more attention to social responsibility and corporate governance, especially information related to employees and diversity. This is the difference between different companies in different stages of environmental development.
Ratings are a business too
Leaving aside the diversified soil to talk about the score, in addition to the E measured by the low-carbon index, S and G represent the promotion of diversification and sustainable development ESG, the rating may be another monopoly of the right to speak business.
Musk, who previously called ESG ratings “the incarnation of the devil”, although he is a partial student, Tesla pointed out in his annual report that the essence of ESG ratings is to serve money and to measure risks or returns. The value of the dollar does not care whether what the company is doing is good for the earth and society.
With the same point of view, at the end of last year, Bloomberg also issued a long article accusing MSCI, the most well-known ESG rating agency, saying that it “has no intention of measuring the impact a company can have on the world.”
In response to various doubts, the head of ESG and climate research at MSCI, a rating agency, said that they did not understand what ESG ratings are for. It is written on the official website that MSCI’s ESG score is designed to help institutional investors understand the financial risks of companies, better allocate assets, and maximize investment returns within their own limited time frame.
Another rating agency also focused on ESG ratings on “risk avoidance”. It stated on its official website that ESG ratings reflect the risks faced by a company in terms of environment, society, and governance, and whether the company can deal with them well. these risks.
The head of ESG at Jefferies Investment Bank also made similar comments, adding: “I hate to say it, but in the capital market, ESG is not used to make the world a better place.”
When ESG ratings, which measure sustainable development capabilities, become a neutral reference standard that can influence investment strategies, the financial attributes of ratings will become stronger.
On the capital side, many funds regard ESG as a flow password. British investment expert Kyle Caldwell mentioned in an interview with the media that in the past few years, there have been a large number of newly launched funds in the field of ESG funds, which are actually just modifications to existing funds. .
For the ESG market, which represents sustainable development, it was originally a standard to reduce information asymmetry and encourage good business operations, but when using financial instruments to promote ESG development, how to better supervise ESG evil under financial derivatives , which determines which side of the double-sided ESG will play a major market role.
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