Consumer Enterprises' ESG Practice "Triple Differentiation" Academy of Social Sciences x Black Ant Capital Research Report: Grasp the Three Key Words
In recent years, the popularity of ESG concepts (ESG is the acronym for Environmental Environmental, Social Responsibility and Corporate Governance Governance) has led to a far-reaching sustainable revolution in all walks of life.
When we focus on the consumer industry, how is the ESG practice of consumer companies advancing in such an industry that closely follows the lives of thousands of consumers? In the face of new questions that create social value, what are the commonalities of the answers submitted by the consumer industry? How can consumer companies better move towards a sustainable future?
On October 19, at the consumer ESG closed-door salon with the theme of "Invest in the future, answer the future with the present" hosted by Black Ant Capital and co-sponsored by Daily Economic News, Black Ant Capital and the Institute of Sociology of the Chinese Academy of Social Sciences released "New Challenges, New Values and New Future: 2022 Research Report on the Social Value of Chinese Consumer Enterprises" (with a link to the full text of the report) at the end of the article, which is also the first research report focusing on the social value practice of consumer enterprises in China.
Through a year-long survey visit in 2021~2022, Black Ant Capital and the Institute of Sociology of the Chinese Academy of Social Sciences observed 166 representative consumer enterprises (including 107 listed companies). Through the analysis of social value of 166 consumer enterprises, the report pointed out that at present, consumer enterprises have experienced a "triple differentiation" of head-to-tail differentiation, industry differentiation and interest differentiation in social value creation, and emerging enterprises have made a lot of innovation and contributions in social value creation. However, if consumer enterprises want to move towards a "century-old business" in the future, they also need to grasp the three keywords of "agility, stability, and common benefit".
Triple factors affect the performance of enterprise social value, and the phenomenon of "triple differentiation" is obvious
With the ESG concept entering the critical period of implementation and the development and change of the industry ecology, the era has pointed out a new challenge direction for consumer enterprises - measuring a consumer enterprise is not only economic value, but also the social value it can create.
The report research group said that social value determines the long-term investable value of enterprises, is the "weighing machine" of company value, only enterprises and brands that take into account economic development and social value can go further in the future social and economic development.
The report analyzes the social value index of 166 consumer enterprises from 10 dimensions of "self-worth" and "synergistic value", and points out three important factors affecting the performance of corporate social value.
First of allIndustry veterans that were established or listed earlier are more advanced in creating social value.After focusing on 107 listed companies across the value model, the study found that companies in the earlier the market time interval had higher average scores for self-worth and social value. It can be seen that the listing time of the top five enterprises in social value score is concentrated in 1993~2011.
The report argues that although on the surface, there is no direct causal relationship between a company's time to market and social value, there is an intrinsic relationship between the two:
On the one hand, in order to obtain better valuation and more financing in the capital market, enterprises usually need to strengthen the attention and fulfillment of social value before listing, and increase the trust and support of investors and the public for enterprises;
On the other hand, listed companies need to disclose financial and operational information to the public and regulators, which prompts enterprises to pay more attention to the implementation of social values and the improvement of transparency, and with the accumulation of time for the public, enterprises can gradually establish a more sustainable development mechanism; At the same time, after listing, enterprises tend to focus on sustainability and long-term value, so they will pay more attention to and fulfill social value, so that enterprises can gain a better competitive advantage in the market.
The report also found thatCompanies with female directors have better social values, especially in corporate governance and cooperation with government organizations.
As shown in the figure above, 50.6% of the 166 companies surveyed in this report have female directors, and the largest number of individual companies have as many as six female directors. Further analysis found that companies with women on their directors scored higher on self-worth and synergy value. Research shows that women in leadership roles are more focused on the social and environmental impact of businesses and are more inclined to adopt sustainable and socially responsible business practices; They can also provide a more diverse, inclusive perspective, and more.
From the successful experience of skin care company Bethany in value creation, the higher proportion of female employees can promote the company to better assume social responsibility to a certain extent. For example, based on the characteristics of the company's large number of female employees, Bethany has opened 13 talent courses to improve the career satisfaction of female employees, and the company's trade union department will regularly visit the front line to collect the needs and opinions of female employees.
However, the report states thatMost industries ignore "environmental initiatives", "corporate culture", "cooperation with international organizations, social organizations and cultural media".
The results of the report show that in terms of self-worth, most companies focus on corporate governance scores, followed by employee rights and social responsibility, and lack environmental protection measures and corporate culture. In terms of synergistic value indicators, enterprises mainly focus on cooperation with government organizations, followed by cooperation with business partners, and lack of cooperation with international organizations, social organizations and cultural media. These three overlooked subdivisions are crucial to enhancing the competitiveness of enterprises and achieving sustainable development.
In addition, in the dimension of social value segmentation, there are significant differences in the development process of different industries.
In general, the pharmaceutical and biological industry pays attention to cooperation with government organizations and international organizations, the household appliance industry pays attention to cooperation with international organizations, business partners and social organizations, and the food and beverage industry pays attention to cooperation with cultural media.
By dividing the survey enterprises into three echelons (industry demonstration, steady development and poised for development), the report points out thatThere is an obvious "triple differentiation" phenomenon in the practice of creating social value for consumer enterprises: head-to-tail differentiation, industry differentiation and interest differentiation.
Specifically, leading enterprises form a leading advantage in social value; Among the subdivided industries, the social value scores of household appliances and pharmaceutical and biological industries are relatively leading; In terms of interest, enterprises in different echelons pay more attention to self-worth, and there is more room for the growth of collaborative value.
Combined with the data, the phenomenon of "triple differentiation" fully shows that consumer enterprises have begun to think diversifies and differentiated in ESG practice according to the characteristics of their segments, but there are still great differences in the current development process in creating social value.
Start-ups become role models, how can consumer companies move towards a sustainable future?
Since consumer enterprises are making different progress in implementing ESG concepts, and most industries are lacking in "environmental protection measures", "corporate culture", "cooperation with international organizations, social organizations and cultural media", how can enterprises that can provide reference for ESG practices in the whole industry do?
In order to portray the representative enterprises of the new generation of consumer industry, the report research group mainly refers to China's policy document "Accelerating the Cultivation of New Consumption Implementation Plan", the Global Industry Classification System (GICS), the industry classification standards of the China Securities Regulatory Commission, and the industry classification of Shanghai Shenyin Wanguo Securities Research Institute Co., Ltd., focusing on and analyzing some consumer enterprises listed on China's A-shares, some unlisted consumer enterprises and the overall trend of the consumer industry.
The report pointed out that through a series of surveys, due to the emergence of new consumer needs and the rise of new consumer segments, the practice of ESG and the creation of social value are no longer exclusive to traditional large enterprises or established enterprises, and emerging enterprises have made great innovations and contributions in social value.
For example, with the popularity of trendy play consumption among young people, "IP trendy play first stock" bubble mart (HK.09992) once became synonymous with fashion and trend, and its ESG practice is also at the forefront of the industry.
Beyond the binary relationship between enterprises and consumers, Bubble Mart has chosen to practice the path of multi-value co-creation. In terms of cultural value co-creation, Bubble Mart has promoted the development of international trend culture while empowering Chinese traditional culture by holding international trend toy exhibitions and joining hands with the Forbidden City to launch the MOLLY Palace Beast Series; In terms of social value co-creation, Bubble Mart has cooperated with a number of popular IPs to carry out public welfare publicity such as ecological protection and fire protection, creating multiple social values.
At the same time, in ESG practice, service robot company Cobos (SH.603486) has also adopted a dual-line parallel approach that combines product environmental friendliness and scientific and technological public welfare science popularization.
In terms of material use, Cobos not only pays attention to energy conservation and emission reduction at the production end, but also began the "old for new" activity in 2016; In terms of public welfare science education, since its establishment, Cobos has successively organized and carried out more than 100 social practice activities and theme activities for minors, and has received more than 100,000 research users, of which minors account for 70%.
As a new generation in the food and beverage industry, Yuanqi Forest has subverted the extractive development concept and model followed by the previous society, and turned to the new concept of zero carbon, with "environmental friendly", "user-friendly" and "social friendly" as the three goals of sustainable development of enterprises.
In recent years, Genki Forest has strived for zero carbon emissions in the production and packaging of raw materials, and its own factories have continued to create improvements in the process of operation. It is reported that in 2022~2023, 116 energy conservation and consumption reduction projects of enterprises will be promoted, and more than 65 million yuan of revenue has been obtained, and 26 patent projects have been completed or are being applied.
Similarly, Heytea, the "pioneer of new tea drinks", has also implemented a variety of low-carbon and environmentally friendly innovative ways at the production end to promote the green development of the new tea beverage industry, such as Heytea, which took the lead in the industry to develop and use PLA straws made of corn stover as raw materials.
In addition, Heytea has also set its sights on the upstream supply chain. Through the purchase of local agricultural products and donations, Heytea has provided product support and industrial support in raw material production bases such as Yunnan and Guizhou, improving and guaranteeing the economic income of local farmers and promoting the construction and development of rural revitalization.
The innovation vanguard of ESG practice provides many Chinese solutions for carbon reduction and social value, and the consumer industry needs such transformative ESG practices driven by endogenous dynamics. How to better move towards a sustainable future is a common question in front of all consumer enterprises.
The report believes that since the consumer industry directly faces end consumers and has a longer industrial chain than other industries, agility, stability and common benefit are the three keywords that consumer enterprises should pay special attention to in the process of "century-old business".
Agile.Compared with other industries, the consumer industry faces consumers directly, has a closer relationship with C-end users, and is therefore more directly affected by various emergencies. This characteristic determines that consumer enterprises must always maintain the agility of organizational structure, the agility of grasping social issues and social responsibilities, and the agility of establishing and adjusting overall strategies.
Robust.The consumer industry is not only directly oriented to end consumers, but also has a longer industrial chain, involving raw materials, production, supply chain, stores and other links. This characteristic determines that consumer enterprises must establish stable relationships with external partners such as governments, institutions, and business partners, and build a solid foundation for long-term development.
Bongye.In the process of creating social value, in addition to self-iteration, improving architecture, and doing a good job in healthy operations, consumer enterprises also need to open their imaginations, link ecological enterprises with actions, and unite the joint force of business for good, and jointly create more value.
The road of consumer enterprises to sustainable development is destined to be a road that requires continuous innovation and upgrading, and only by opening up the imagination and continuously exploring the endogenous driving force in the process of "business for good" can we go more solid and long-term.
Attached is a link to the full report:
Cover image source: Visual China VCG111345260042
