Prioritizing Environmental, Social, and Governance Frameworks for China: Key Dimensions and Implementation Pathways under a Regulator-Driven Model

Li, Zehui; Liu, Qixuan; Ma, Yiming

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https://hdl.handle.net/2142/133325 Copy

Description

Title

Prioritizing Environmental, Social, and Governance Frameworks for China: Key Dimensions and Implementation Pathways under a Regulator-Driven Model

Author(s)

• Li, Zehui
• Liu, Qixuan
• Ma, Yiming

Issue Date

2026-04-14

Keyword(s)

• MSCI Rating(s)
• Systematic Bias
• State-Owned Enterprises (SOEs)
• SAIC
• East vs. West frameworks
• localizing ESG criteria for emerging markets
• Dual-Track Framework

Date of Ingest

2026-05-23T15:02:20-05:00

Abstract

Global ESG frameworks are predominantly shaped by investor-led governance models developed in Western economies, creating a structural mismatch with China’s top-down, regulatory-driven approach to corporate sustainability. This misalignment is especially pronounced in manufacturing, where high energy intensity, multi-tier supply chains, and mixed ownership structures generate ESG constraints that differ systematically from those in service-oriented sectors. Consequently, Chinese manufacturing firms lack clear domestic ESG prioritization, and existing rating systems may systematically misrepresent institutional constraints shaping firm behavior rather than reflecting genuine sustainability deficiencies. China’s manufacturing sector sits at the intersection of domestic policy ambition and global market pressure. With over 5,000 listed firms and manufacturing central to employment, exports, and industrial upgrading, the stakes of ESG misalignment are substantial. National priorities — including carbon neutrality targets and the common prosperity agenda — provide institutional anchors for ESG development, yet disclosure coverage and standardization remain uneven across energy- and supply-chain-intensive segments. Simultaneously, Chinese manufacturers face growing external compliance demands from international supply chains and capital markets, creating layered and often contradictory pressures. This proposal argues that policymakers should redesign ESG priorities and sequencing specifically for China’s manufacturing sector. Using Refinitiv ESG scores as a reference framework, dimension-specific performance gaps across environmental, social, and governance indicators are interpreted not as uniform deficiencies but as reflections of structural variation in energy systems, supply-chain organization, and governance arrangements. The recommended policy pathway proceeds from mandatory sector-specific disclosure, to domestically standardized rating criteria, to capital market incentive mechanisms — sequenced to remain compatible with global benchmarks while grounding priorities in China’s institutional realities. Key implementation actors include CSRC, SASAC, and PBoC, with manufacturing firms, foreign investors, and supply chain partners as primary affected stakeholders.

Type of Resource

Poster

Genre of Resource

conference poster

Language

eng

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