ESG Becomes Standard for Top Chinese Beauty Companies

In the fiercely competitive global environment, ESG can help companies demonstrate stronger sustainable growth capabilities and gain favor from more consumers and investors.

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In 2004, the United Nations Global Compact first formally proposed the concept of ESG. Specifically, ESG stands for Environmental, Social, and Governance. It is an investment philosophy and corporate evaluation standard that focuses on a company’s environmental, social, and corporate governance performance rather than traditional financial performance.

Nowadays, ESG and sustainability concepts have become an indispensable part of international corporate disclosure. In the fierce global competition environment, ESG can help companies demonstrate stronger sustainable growth capabilities and gain more favor from consumers and investors.

As early as 2020, L’Oreal proposed a new sustainable development commitment for the next decade, gradually transitioning to a sustainable business model and actively addressing social and environmental issues. Estée Lauder released its social impact and sustainability report in fiscal year 2021, showcasing its progress in social impact, sustainable development goals, and achievements.

As China’s capital market continues to integrate with the international market, and with the continuous promotion of policy forces and the improvement of corporate self-requirements, the ESG concept has also begun to take root in China. According to relevant data statistics, as of the end of September 2022, among the 5000 listed companies in China’s A-share market, 1459 companies disclosed ESG reports, accounting for 29.45% of all listed companies.

According to PROYA GROUP’s ESG report, in 2022, PROYA GROUP’s greenhouse gas emissions per 10,000 yuan of revenue were 12.42 kg of carbon dioxide, a decrease of 31.69% compared to the same period last year. In addition, PROYA GROUP also proposed that the proportion of clean energy used will reach 50% by 2025, achieving its own peak carbon emissions and achieving net zero emissions in its own operations by 2030.

BOTANEE GROUP implements the ESG concept in its green supply chain, using a holistic systems perspective to integrate the green supply chain into business processes such as product research and development, design, procurement, manufacturing, warehousing and logistics. In 2022, BOTANEE GROUP continued its empty bottle exchange program in offline chain pharmacies, accumulating a total of 183,800 empty bottles recovered and effectively raising consumer awareness of environmental protection.

According to a CITICS Securities Sector Commentary report, the beauty industry naturally has ESG characteristics of low pollution and low energy consumption, with a focus on marketing and research and development. Therefore, in fulfilling their environmental responsibilities under the ESG concept, beauty companies pay more attention to the efficiency of energy use and the management of carbon emissions. Secondly, green and environmentally friendly packaging is also a characteristic issue in the beauty industry.

An industry insider once said, “Annual financial reports summarize a company’s past, while ESG reports plan for a company’s future.” All signs indicate that practicing the ESG concept has become an unstoppable development trend for companies.

In addition, as Chinese beauty companies continue to grow and develop, the development of a multi-brand matrix and multi-regional layout will become an inevitable trend. Especially for some domestic beauty giants that hope to go global, increasing investment in ESG construction will promote the company to a higher level of governance and gain recognition from overseas investment institutions, laying the foundation for groupization and going overseas.