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produced by huxiu esg group

author: chen yu, hu wei

header image｜visual china

this article is the 098th article in the #esgprogressobservation# series

on august 28, msci, a global authoritative index agency, announced the latest environmental, social and governance (esg) rating results. kweichow moutai rose two levels in the rating to bbb.

globally, there are many companies whose msci ratings are upgraded by one level in a year, but there are few companies that are upgraded by two levels in a row. this indirectly reflects the result of the continuous efforts of kweichow moutai, the big brother of domestic liquor companies, in the field of esg.

but unfortunately, even if kweichow moutai is upgraded to bbb level, it will be difficult to change the fact that domestic liquor companies generally have low international ratings.

according to huxiu esg statistics, the esg ratings of the top four a-share liquor companies, kweichow moutai, wuliangye, shanxi fenjiu, and luzhou laojiao, have been b for many years. the ratings of kweichow moutai and luzhou laojiao have been upgraded recently, but they are still far from the industry average. jinshiyuan, yingjia gongjiu, shede wine, and laobaigan are rated ccc, which are "poor students" among liquor companies.

among the 14 listed liquor companies with rating scores, esg ratings are mainly b and ccc, with 6 and 4 companies respectively, accounting for nearly 70%. the entire industry is facing great pressure to improve esg.

total market value of listed companies (billion yuan) msci esg rating kweichow moutai 17648bbb wuliangye 4640b shanxi fenjiu 2051b luzhou laojiao 1669bb yanghe shares 1154bb gujing gongjiu 878b jinshiyuan 489ccc yingjia gongjiu 408ccc kouzijiao 215b shuijingfang 160bbb laobaigan 160ccc shede wine 143ccc jiugui liquor 116b shunxin agriculture 110b

image source: huxiu map

looking back at history, chinese liquor companies have achieved some results in environmental protection, public welfare, energy conservation and emission reduction, and sewage treatment, starting from the disclosure of esg reports by moutai, wuliangye, gujing gongjiu, shuijingfang, and jinhui liquor.

but rationally speaking, domestic liquor companies started late in the esg field and are mostly located in economically underdeveloped regions, so they are still in the stage of establishing norms. the low esg score in the short term indicates that domestic liquor companies need to actively improve and strengthen their environmental protection, social contribution, and management efficiency.

first, let’s look at the focus that wine companies should have when doing esg.

“chinese wine itself is a product of the regional ecological environment"the protection and research of local water, soil, air, microorganisms and other environmental factors play a decisive role in the quality of liquor products," said cai xuefei, a liquor industry analyst, to huxiu.the scarcity of the ecological environment is the main source of premium for wine products。”

"the chinese wine industry spans the primary, secondary and tertiary industries, and involves a lot of esg work. however, at present, because water, soil and ecology are the foundation of winemaking, wine companies have a priority in terms of water consumption, carbon emissions and wastewater recycling treatment; followed by other projects such as corporate energy consumption and social welfare; and finally, employee management and decision-making mechanisms."

environmental protection and other tasks are part of the daily work of wine companies, and the two have natural commonalities.

in fact, msci esg rating sets specific evaluation indicators for different industries. for wine companies, their environmental responsibility weight accounts for a large proportion, and the main consideration under the e (environment) topic is:carbon emissions management, water consumption and waste management.

looking at the esg reports of domestic liquor companies in 2023, the most critical factor for the generally low esg ratings of domestic liquor companies is the esg information of chinese liquor.the completeness of the disclosed content and the uniformity of standards need to be improved.

after huxiu sorted out the 14 a-share liquor companies with msci ratings, it was found that in terms of carbon emission data disclosure, none of the 14 liquor companies disclosed scope 3 carbon emissions. although wuliangye disclosed scope 3 carbon emissions, it only included indirect emissions caused by transportation, which is far from the true scope 3.

among them, most liquor companies, including kweichow moutai, disclosed carbon emissions in scope 1 and scope 2, while five liquor companies, including shanxi fenjiu, yanjing gongjiu, shuijingfang, laobai gan liquor and jiugui liquor, did not disclose any carbon emissions based on scope 1, 2, and 3 in the report.

listed companies scope 1 scope 2 scope 3 kweichow moutai √√× wuliangye √√√ shanxi fenjiu ××× luzhou laojiao √√× yanghe shares √√× gujing gongjiu √√× jinshiyuan √√× yingjia gongjiu ××× kouzijiao √√× shuijingfang ××× laobaigan liquor ××× shede wine industry √√× jiugui liquor ××× shunxin agriculture √√×

image source: huxiu map

it should be pointed out that the failure to disclose carbon emissions based on scopes 1, 2, and 3 in the report does not mean that the company has not done any "carbon reduction" work. taking yingjia gongjiu as an example, it clearly stated in its 2023 social responsibility report that it reduced carbon dioxide emissions by 26,518 tons, but did not further list the classified data; while shuijingfang, laobaigan, and jiuguijiu either did not classify carbon emissions according to scopes 1, 2, and 3, or only disclosed the greenhouse gas emission intensity.

at the emission detail level,comprehensive energy consumption intensity, renewable energy consumption ratio and water resource consumption densityit can truly reflect the achievements of domestic wine companies in "green production", but after sorting out, huxiu found thatthe information standards disclosed by different companies are not uniform。

from the perspective of comprehensive energy consumption intensity, among the listed liquor companies, only kweichow moutai, yanghe shares, gujing gongjiu, jin shiyuan, kouzijiao, shunxin agriculture, and jiugui liquor have announced their consumption intensity, while wuliangye, luzhou laojiao, yanjia gongjiu, shuijingfang, shanxi fenjiu, shede winery, and laobai gan liquor have not announced this data.

energy consumption intensity of listed companies in 2022 energy consumption intensity in 2023 kweichow moutai 0.01 tons of standard coal/10,000 yuan revenue 0.018 tons of standard coal/10,000 yuan output value wuliangye no disclosure no disclosure shanxi fenjiu no disclosure no disclosure luzhou laojiao no disclosure 3.98 tons of carbon dioxide equivalent/million industrial output value yanghe shares 29.65 kwh/10,000 yuan revenue 30.87 kwh/ revenue of rmb 10,000 gujing gongjiu 0.03 tons of standard coal/rmb 10,000 output value 0.04 tons of standard coal/rmb 10,000 output value jinshiyuan 0.0313 tons of standard coal/rmb 10,000 output value 0.0297 tons of standard coal/rmb 10,000 output value yingjia gongjiu no disclosure no disclosure kouzijiao 0.05 tons of standard coal/rmb 10,000 output value 0.06 tons of standard coal/rmb 10,000 output value shuijingfang no disclosure no disclosure laobaigan liquor no disclosure no disclosure shede wine no disclosure no disclosure jiugui liquor 0.0263 tons of standard coal/rmb 10,000 output value 0.0526 tons of standard coal/rmb 10,000 output value shunxin agriculture 0.091 tons of co2 equivalent/rmb 10,000 output value 0.121 tons of co2 equivalent/rmb 10,000 output value

image source: huxiu map

it can be clearly seen that, in addition to the fact that many liquor companies have not disclosed the corresponding data, the energy consumption intensity of many liquor companies has increased in 2023, indicating that there are still problems with their own carbon emission management. among the liquor companies that have announced their comprehensive energy consumption intensity, kweichow moutai has the smallest intensity, which is confirmed by its latest bbb rating.

in terms of the proportion of renewable energy consumption and water resource consumption density,most listed liquor companies have not made complete disclosures.for example, wuliangye disclosed data on water reuse rate and water saving rate, but did not provide data on water resource consumption intensity; while gujing gongjiu disclosed water saving data, but did not clearly disclose water resource consumption intensity.

in the further disclosure of pollutant emission data, some liquor companies' "pollution" is expanding. take jinshiyuan (msci rating is ccc) as an example. its total energy consumption increased significantly in 2023, and its per capita energy consumption increased.

source: jinshiyuan 2023 esg report

jin shiyuan's emissions of various wastewater pollutants and solid waste in the past year also increased significantly compared with 2022. among them, the increase in "general solid waste" was underreported. the actual increase of about 70,000 tons was written as about 50,000 tons, which was nearly half of the actual increase in 2022.

therefore, on the one hand, the information disclosure is not complete enough and the standards are not unified, and on the other hand, the disclosed data has a "deteriorating" trend, which has become an important reason why the esg scores of domestic liquor companies are generally low.

an industry insider told huxiu about this situation: "this reflects thaton the one hand, esg of domestic liquor enterprises is still in its infancy, there may be problems such as the lack of relevant regulatory data standards and norms, as well as the lack of corresponding statistical quantification tools. the sensitivity and awareness of relevant data are relatively weak, and there is no initiative; on the other hand, energy consumption is directly related to process flow, season, batch, etc., and is closely related to the efficiency of enterprise resource utilization and the overall level of local resource utilization. (high energy consumption) to a certain extent reflects the degree of industrial development of the enterprise, and is also closely related to the attitude of the local government, which leads to difficulties in the implementation of supervision by some wine companies. "

there are many esg lists, and huxiu wants to be the one that is most worthy of application. after launching the "sustainable brand model" list for the first time in 2023, huxiu will start the selection of the 2024 "sustainable brand model" list from september 1, 2024 - this is a relay and a new start.

in addition to listed companies headquartered in china, the new list selection scope has been expanded to include foreign companies in china, and the listing threshold has been removed. in order to make professional evaluations of the audit, certification, governance structure, and compliance of companies, the jury has gathered experts and scholars from top global institutions and well-known universities such as kpmg, tsinghua university, sgs, king & wood mallesons, bain, the university of hong kong, and beijing normal university. we have also formed an observation group to supervise the selection process throughout the process to further enhance the credibility of the list.

click on the picture below for the topic page and registration link. thank you for your attention and look forward to your application. let us work together to promote corporate esg that is perceptible to the market and visible in value.

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