In the past few years, there has been an increasing number of Chinese A-share companies choosing to voluntarily disclose Environmental, Social and Governance (ESG) information. These changes are mainly motivated by the heightened expectations of both customers and investors. Leading the change in ESG practices in China, Alibaba, Ping An, and A Living Smart City Services have demonstrated significant commitment to reducing their environmental footprint, contributing value to society, and establishing fair and transparent governance systems.
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Alibaba at the forefront of Environmental (E) initiatives
In September 2021, in response to President Xi Jinping’s commitment to achieving “Common Prosperity” in China, Alibaba pledged to invest RMB 100 billion by 2025. The company directed these funds towards initiatives such as providing subsidies for small and medium-sized enterprises and enhancing insurance protection for gig economy workers, including couriers and ride-hailing drivers.
Alibaba’s emission reduction scopes
Besides their strong commitment to social issues, Alibaba is also heavily invested in environmental initiatives. In November 2023, the company joined the World Business Council for Sustainable Development (WBCSD), a group of more than 200 businesses that works together to reinforce efforts aimed at increasing sustainability within their value chains. By joining the WBCSD, Alibaba not only demonstrates its commitment to the environment but its willingness to bring valuable platforms and technological capabilities to the council’s collective efforts to broaden decarbonization.
In 2021, the company promised to achieve carbon neutrality by 2030, targeting both its direct emissions (Scope 1) and indirect emissions (Scope 2). In Scope 3, the company additionally pledged to halve carbon intensity, measured as the amount of carbon per unit of revenue, by 2030. These emissions encompass the broader value chain, including areas such as transportation, purchased goods and services, and waste.
A closer look at Alibaba’s Scope 3+: mobilizing customers
In pursuit of its carbon reduction goal, Alibaba has launched a group-level carbon ledger named Carbon88 (88碳账户). The user-friendly and visually engaging platform seeks to educate individuals about the environmental consequences of their actions while also incorporating a gamified approach to encourage eco-friendly behaviors. Users can showcase their efforts to reduce their carbon footprint by uploading pictures of themselves buying energy-efficient appliances, recycling boxes, and refusing disposable ustensils when ordering takeout on Ele.me, among other practices. By doing so, they can unlock digital badges by accumulating points in the carbon ledger program and receive discounts on Alibaba’s various e-commerce platforms.
In 2016, Alibaba pursued a similar initiative by launching Alipay’s Ant Forest. It rewards users with “green energy points” for eco-friendly actions, such as buying sustainable products, embracing paperless alternatives, and riding a bike. These points allow users to plant digital trees in the Ant Forest, with each planting contributing to the planting of a real tree. With over 600 million users as of August 2021, the project has planted 326 million real trees since 2016, creating jobs and generating income by collaborating with farmers on tree planting and organic products.
Social (S) initiatives in Chinese companies: Ping An’ commitments to the society
Ping An leads the way in ESG practices in China
In 2023, the financial services company Ping An earned a spot among the “Best 1% of Chinese Companies in S&P Global ESG Score”. Ping An has stood out among approximately 1,600 Chinese companies by showcasing its commitment to long-term sustainability and exceptional ESG practices. It has also earned an A rating in the MSCI 2022 ESG Ratings thanks to its performance in ESG and risk management. Additionally, it has received a low ESG risk rating from Sustainalytics, outperforming other insurance companies in mainland China.
Beyond its impressive rankings, Ping An showcases its leadership in ESG practices through its commitment towards shaping China’s first ESG disclosure standard. In 2022, Ping An incorporated its own CN-ESG evaluation system framework into the country’s ESG disclosure standard, offering a standardized and scientific method for ESG disclosure. In addition to this, it provided valuable insights on international standards coverage, the incorporation of indicators specific to China, and relevance to diverse industries. This demonstrates Ping An’s commitment to advancing ESG practices in China.
Emphasis on data security and personal information protection
Remaining committed to customer-centric practices, Ping An aims to reinforce the safeguarding of personal information and consumer rights. As of December 2022, 93% of Ping An’s operations had received certification under the ISO/IEC 27001 Information Security Management System, the world’s best-known standard for information security management systems. Moreover, in 2022, Ping An conducted more than 50 training sessions and education campaigns for all employees and relevant third parties, addressing data security.
Ping An’s Rural Communities Support Program
Ping An has made substantial investments in the development of rural communities. In 2017, the company allocated RMB 10 million to launch an online educational platform featuring classes, aids, and a library, specifically tailored to support rural elementary schools. They also helped by repairing and renovating schools, introducing audio-visual equipment to classrooms, and donating books.
Building on this commitment, Ping An introduced the Rural Communities Support Program a year later, mobilizing 570,000 employees and agents as volunteers to support health and education in rural areas. During this program, 370,000 volunteer hours were dedicated to supporting rural schools. In line with China’s commitment to achieving “Common Prosperity,” it also launched the Rural Communities Support Program. This initiative aimed to boost Small and Medium Enterprises (SMEs) development.
Governance (G) initiative: A Living Smart City Services
A company setting the example for ESG practices in China
A Living Smart City Services is an investment holding firm that specializes in providing property management services. Its services encompass security, cleaning, greening, and gardening, as well as repair and maintenance services. It has established its presence in over 27 cities and regions throughout China, with a focus on the Guangdong province.
As of January 2023, A Living holds a “Negligible Risk” according to Sustainalytics’ ESG risk rating. This suggests that the company faces minimal material risks in terms of ESG factors and manages existing risks well. Moreover, in 2022, A Living was in the top two for “Excellent Property Management Companies in ESG Development in China”.
A clear corporate governance system
The company’s ESG report provides comprehensive insights into its governance structure, providing a detailed overview of all reporting lines. Specifically, the report highlights the missions of its audit committee, such as conducting a thorough review of accounting policies and assessing financial information. Moreover, the committee actively evaluates the resources, qualifications, and experience of employees working in accounting and financial functions.
An oath against corruption
To enhance the fight against corruption, A Living regularly collects information about the integrity of its leadership team. All senior management members must sign the Letter of Responsibility for Integrity Management. Likewise, new employees must sign the Employee Integrity Commitment, where they commit to act ethically. These new hires also receive training on the hands-on aspects of maintaining integrity in their day-to-day tasks.
Every year, the Group organizes a summary conference, making it a tradition for everyone present to pledge an anti-corruption oath. This joint commitment acts as a powerful reminder, strengthening employees’ understanding of the crucial role integrity plays within A Living.
Protecting and rewarding whistleblowers
A Living has established multiple channels for reporting integrity violations, including the official website, emails, tip-off hotlines, and letters. When a report is received, the company swiftly reaches out to the whistleblower. Moreover, they receive a monetary reward of at least RMB 2,000 for verified reports. As of August 2022, reports can also be sent to the president’s mailbox, for direct reporting of corruption-related information.
To protect whistleblowers’ rights, the company guarantees their anonimity, whether the reported misconduct is verified or not. There is a strict no-retaliation policy against whistleblowers, and anyone found involved in such actions may be subject to demotion, transfer, demerits, or even dismissal.
ESG practices in China: setting the standards with Alibaba, Ping An and A Living
- Alibaba is committed to ESG initiatives, pledging RMB 100 billion by 2025 for various projects, including subsidies for SMEs and insurance protection for gig economy workers.
- Alibaba aims for carbon neutrality by 2030, with detailed reduction goals across Scope 1, Scope 2, and Scope 3 emissions, showcasing achievements and actions taken.
- Ping An has excelled in ESG rankings, focusing on data security, personal information protection, and implementing initiatives like the Rural Communities Support Program.
- A Living Smart City Services, specializing in property management, has a transparent corporate governance structure and a proactive audit committee contribute to the company’s governance excellence.
- Robust anti-corruption measures, including employee commitments, education, and a whistleblower protection program, demonstrate the company’s commitment to ethical conduct.
