What is the relationship between ESG and carbon?

ESG is a concept that has received widespread attention in the investment community in recent years, and dual carbon has become a major challenge facing the world. So what's the connection between ESG and carbon dioxide?

In terms of the definition of ESG, ESG includes three pillars: Environmental, Social and corporate Governance. It is an enterprise evaluation standard that focuses on corporate environmental, social and governance performance rather than financial performance, and it is also a value about how enterprises can develop healthily.

The concept of "double carbon" is familiar to everyone, "double carbon" is short for "carbon peak" and "carbon neutral", that is, carbon emissions and carbon absorption to achieve a balance, thus contributing to the control of global climate change and response to the environmental crisis. At the 75th session of the United Nations General Assembly in 2020, China proposed the goals of "carbon peaking" by 2030 and "carbon neutrality" by 2060. These are major strategic decisions made by China based on its responsibility to promote the building of a community with a shared future for mankind and the inherent requirements of sustainable development.

Although ESG and "double carbon" are two different concepts, they are interrelated to a certain extent. The proposal of "double carbon" is leading the development of ESG. In the process of realizing the goal of double carbon, enterprises need to strengthen environmental, social and governance management. Providing a variety of green financial products and incorporating ESG into the investment decision-making process can fully leverage the capital market's support for the "dual carbon" goal.

When "dual carbon" achieves emission reduction, it will inevitably improve the ESG rating of enterprises. For enterprises, enterprises with good ESG performance are more likely to achieve the dual carbon goal, increase ESG technology research and development and innovation in daily production and operation, and integrate the ESG development concept into the enterprise strategic system. It can achieve real long-term sustainable business benefits, and realize the long-term vision of the "dual carbon" goal while assuming corporate social responsibility.

In addition, in ESG investment, many investors also take dual carbon as one of the investment criteria, and only invest in enterprises that have positive contributions to the environment, society and governance, so as to promote enterprises to address climate change and environmental issues while achieving business objectives, and the combination of the two will promote and promote the common realization of "ESG" and "dual carbon" goals.