ESG requirements and Corporate Social Credit System in China

ESG (Environmental, Social, Governance)
ESG compliance (Environmental, Social, Governance) sets a global benchmark for environmental responsibility and social commitment in companies. Chinese companies recognize the need to have a positive impact on the environment and society in terms of ESG criteria and are also increasingly confronted with ESG criteria in their supply chains. ESG measures are actively committed to a more sustainable future, from renewable energies and environmentally friendly production processes to the promotion of diversity and social justice.

• Environment: Chinese companies are working intensively on green technologies and renewable energies in order to have a positive impact on the environment. We can protect our nature and clean our air and water by investing in clean energy sources and environmentally friendly practices.
• Social: Promoting diversity, equality and fair working conditions is crucial for a harmonious society. China’s companies are increasingly focusing on social initiatives, education and healthcare to improve the lives of their employees and the community in the spirit of modern “Danwei”.
• Corporate governance: Transparent corporate governance and ethical business practices are the backbone of a strong economy. Responsible corporate governance strengthens the trust of investors and stakeholders and promotes long-term growth.

ESG measures are above all an opportunity for positive change in China, including in customer perception. Take advantage of this opportunity, focus on responsible growth and ensure a positive external perception of your company.

CSCS (Corporate Social Credit System)
ESG compliance and the Corporate Social Credit System have one thing in common: They encompass the social and ethical responsibility of companies in the sense of full compliance, which affects all business areas.

But what is the Corporate Social Credit System? This is a system introduced by the Chinese government that aims to monitor, evaluate, control, punish and reward the business behavior of companies in order to improve the integrity of the business environment.

This system is part of the Chinese government’s efforts to regulate economic behavior, promote legality, counteract controls and strengthen consumer confidence.

The common feature of this system compared to the ESG criteria is that it evaluates not only economic factors but also the social behavior of companies and ultimately penalizes them for negative actions such as tax evasion, product counterfeiting, environmental pollution or violations of labor standards.

Conclusion
ESG compliance is based on industry-specific standards, frameworks and ratings that support companies in meeting their social and environmental responsibilities on a voluntary basis, while the Chinese Corporate Social Credit System is a state-controlled system in China that checks and evaluates companies for compliance with legal regulations and social standards. In summary, both concepts have something in common: They encompass corporate social and ethical responsibility in the sense of full compliance, which affects all areas of business.

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