Index Research Institute: The overall disclosure rate of ESG reports for listed property service companies has reached 95.65%.

The China Real Estate Research Institute has released a research report on the ESG evaluation of Chinese property service companies that are expected to go public in 2024. The ESG disclosure rate of listed property service companies has steadily increased, and companies are paying more and more attention to ESG-related work. As of December 15th, the overall ESG disclosure rate of listed property service companies has reached 95.65%, an increase of 3.23 percentage points compared to the same period last year. Due to the mandatory disclosure requirements of the Hong Kong Stock Exchange, out of the 63 Hong Kong-listed property companies, all except for JIAYUAN SER, which is suspended, have disclosed ESG information. This includes newly listed companies this year such as HOLLWIN URBAN and KINGFAR PROPERTY, who disclosed ESG information in their prospectuses. Among the 6 A-share listed companies, 4 have released ESG reports, an increase of 2 compared to the previous year. (1) The overall disclosure rate has reached 95.65%, with some companies adopting dual-standard disclosure In terms of disclosure format, 51 listed companies have released separate ESG reports, an increase of 4 from the previous year, accounting for 73.91% and a 2.7 percentage point increase. This indicates the increasing importance companies are placing on ESG information disclosure. 13 companies published ESG information in specific sections of their annual reports. HOLLWIN URBAN and KINGFAR PROPERTY, which went public in May and July this year, disclosed ESG information in accordance with Hong Kong Stock Exchange regulations in their prospectuses. The readability and detail of the reports have further improved. Companies have deepened their understanding of ESG, and sample companies have developed comprehensive ESG strategies to ensure alignment with their core business to support long-term sustainable development and value enhancement. In comparison to 2022, the ESG reports disclosed by sample companies in 2023 are more detailed and comprehensive, indicating an increase in the importance placed on ESG and higher self-requirements. Most property service companies are listed on the Hong Kong Stock Exchange. Although the Hong Kong Stock Exchange does not require a specific language format for ESG report writing, facing global investors, 20 of the sample companies in 2023 used both Chinese and English in their reports, an increase of 1 from the previous year. 43 companies used a single language (Chinese) for their reports, an increase of 3 from the previous year. (2) Pass rate of sample companies exceeds 80%, with outstanding performance still a minority Overall, the ESG performance of sample companies has steadily improved. In 2023, the mean ESG score of the 63 sample companies was 67.16, an increase of 0.87 from the previous year. 52 companies scored above 60, with a pass rate of 82.54%, an increase of 4.57% from the previous year. The median ESG score for sample companies was 69, an increase of 2 points from the previous year, indicating an overall improvement in performance. The upper quartile score was 72, an increase of 0.5 points, while the lower quartile score was 62, an increase of 1 point from the previous year. While the overall scores of sample companies are concentrated and trending towards improvement, achieving outstanding performance is still challenging. In 2023, over half of the sample companies scored between 70-80 points, indicating the overall progress and efforts made by property service companies in social responsibility, environmental protection, and corporate governance. By enhancing service quality, strengthening community engagement, optimizing resource utilization, and improving corporate governance, these companies are committed to enhancing their ESG performance. However, despite the overall improvement, only 3 companies in the sample achieved a total ESG score of over 80 in 2023, the same as the previous year. In terms of improvement, in 2023, the environmental (E) aspect had an average score of 16.11, an increase of about 1 point from the previous year. This significant improvement is attributed to property companies actively seeking relevant qualifications and certifications, focusing on climate-related risks and opportunities, and implementing energy management systems and green practices to monitor energy consumption effectively, promote energy efficiency and environmental protection. The social (S) aspect had an average score of 27.65, and the corporate governance (G) aspect had an average score of 23.4, with a slight decrease of 0.18 and an increase of 0.03 from the previous year, respectively, maintaining stability. In terms of rate (mean/score), the E score rate was 0.58, an increase of 0.04 from the previous year, indicating that although property service companies have improved their environmental practices over the past year, there is still room for improvement. The G score rate was 0.78, and the S score rate was 0.66, showing stable performance. Looking at the standard deviation of the scores, the dispersion of the environmental and governance scores decreased in 2023, with scores of 3.88 and 2.24, respectively, representing a decrease of 0.23 and 1.14 from the previous year. This suggests that the overall environmental and governance scores of property service companies are approaching the average level. Especially in terms of ESG governance, various property companies have high scores and consistent performance. The social score dispersion increased in 2023, with a score of 4.18, representing an increase of 0.31 from the previous year, indicating a greater differentiation in the overall social scores of property service companies. (3) Governance performance is prominent with minimal differences, while the environmental dimension shows overall improvement but significant differentiation In 2023, the distribution of the secondary indicators was analyzed. The governance (G) secondary indicators were mostly in the middle to the upper part, while the social (S) indicators were mostly in the middle position. In comparison, the environmental (E) indicators were generally ranked lower. Overall, the ranking remained consistent with the previous two years, indicating that property service companies give importance to ESG practices: corporate governance indicators are mostly at the forefront, social indicators are mostly in the middle, while environmental indicators tend to rank lower. This shows the ongoing efforts of property service companies to improve their ESG practices and focus on areas that require more attention.It is able to integrate ESG goals with corporate strategy clearly, establish cross-departmental collaboration mechanisms, and work together with stakeholders to promote the implementation of ESG strategies. Secondly, property service companies are able to focus on customer needs, improve service quality, focus on employee well-being and promotion channels, actively participate in community welfare, and strengthen their responsible corporate citizen image, hence showing good overall performance in the social (S) aspect. Thirdly, limited by cost considerations and other factors, property service companies lag behind in the environmental (E) aspect. This is mainly reflected in insufficient investment in green technology and green buildings, the lack of an efficient energy management system, and the absence of necessary emission monitoring mechanisms. In addition, the understanding of ESG concepts among grassroots property service personnel is inadequate, and these factors collectively affect the company's environmental (E) score.In 2023, from the perspective of the coefficient of variation (standard deviation/mean, reflecting the dispersion of indicator scores), the average coefficient of variation for all secondary indicators is 0.2556, a decrease of 0.038 from the previous year, continuing a two-year decline. This indicates that the gap in scores for secondary indicators in property enterprises has further narrowed, and the degree of differentiation has decreased. The ranking of all secondary indicators by coefficient of variation shows significant differences in the overall situation and score rates. Specifically, environmental (E) indicators are mostly distributed in the middle and front, indicating a significant gap in environmental scores for property enterprises and serving as a key factor in the overall ESG performance gap between companies. In contrast, corporate governance (G) indicators are ranked towards the bottom, reflecting that companies' performance in corporate governance is relatively close, with little differentiation, making it difficult to widen the gap in this area. Social (S) indicators are mostly in the middle positions, indicating a relatively balanced performance in social responsibility for property enterprises but with room for improvement. The environment (E) indicators have shown comprehensive improvement, with "energy management" showing the largest increase in score rates. In 2023, the scores for all 4 environmental (E) indicators increased, accounting for 44% of all indicators with improvements (9 out of 12 secondary indicators showed an increase in score rates). "Energy management," "environmental management system," "emission management," and "climate change management" increased by 0.0652, 0.0452, 0.0337, and 0.0086 respectively, ranking first, third, fourth, and seventh in terms of increases. This improvement is due to the low base of past environmental performance in property enterprises, which offers significant room for improvement, and the companies' efforts to enhance internal training, deepen employees' understanding of sustainable development, implement energy saving and emission reduction measures, optimize resource utilization efficiency, and provide more accurate data for disclosure as required by regulatory agencies, demonstrating positive results in environmental protection. There has been internal differentiation in the social (S) indicators, with "products and services" showing growth for two consecutive years. The score rate for "products and services" is 0.7222, ranking fifth among all secondary indicators, with an increase of 0.0459 compared to the previous year, ranking second in terms of growth, and maintaining growth for two consecutive years, demonstrating the determination of property enterprises to return to the essence of service. By improving service processes, enhancing service quality, meeting the needs of homeowners accurately, and focusing on customer experience in daily cleaning, security patrols, and community event planning, companies have won customer satisfaction. Efficiently handling complaints, responding promptly to customer concerns and suggestions, and taking swift action to resolve issues promptly have enhanced the company's image and reputation. There has been an increase in the score rates of social (S) indicators for "social contribution," demonstrating the positive efforts and significant achievements of property enterprises in poverty alleviation and rural revitalization, charitable donations, community governance participation, and social investment. This not only reflects the companies' deep understanding and implementation of social responsibility but also earns them social reputation, promoting social harmony, stability, and sustainable development. However, two social (S) secondary indicators, "employee development and care" and "supply chain management," have seen a decrease in score rates, by 0.0305 and 0.0234 respectively. The decline in "employee development and care" is mainly attributed to inadequate protection of personal safety. In 2023, among the sample companies, 16 companies had incidents of work-related deaths, an increase of 5 from the previous year, with 37 work-related deaths, an increase of 14 from the previous year. In the case of "supply chain management," although most property enterprises have established supplier management systems covering key aspects such as supplier selection, inclusion, and exit, there are still shortcomings in deeper management practices such as sustainable development certification for suppliers and on-site audits, due to limitations in awareness, insufficient resources and professional capabilities, lack of unified standards and systems, and issues with willingness and cooperation. Governance (G) has continued to optimize, but "internal compliance management" faces challenges. In the field of corporate governance (G), in 2023, the score rate for "ESG governance" was 0.9436, an increase of 0.0058 compared to the previous year. This indicator has ranked first among all secondary indicators for three consecutive years. Property service companies have established ESG governance structures centered on the board of directors to ensure that senior management plays a key role in sustainable development and integrates corporate strategy with ESG goals effectively. Companies have also strengthened communication and collaboration with various stakeholders by releasing regular reports, engaging in community interactions, and using digital platforms for information sharing, ensuring participation from key stakeholders in critical issues and contributing to the improvement in the score rate for "ESG governance." The score rates for "business ethics" and "ownership structure" were 0.7635 and 0.5730 respectively, with increases of 0.0194 and 0.0272 compared to the previous year. The improvement in the score rate for "business ethics" is due to the legal and compliant operation of property enterprises, strengthening tax management, improving risk management, enhancing internal audit supervision, fostering a culture of integrity, and protecting intellectual property rights. Companies have implemented a policy of "zero tolerance" to combat corruption, established comprehensive anti-corruption mechanisms, including setting up secure reporting channels for whistleblowers so that stakeholders can report misconduct anonymously, and conducted systematic anti-corruption training to enhance ethical awareness and legal compliance for all employees. The increase in the score rate for "ownership structure" reflects a significant optimization of corporate governance structures in property enterprises, including improvements in power balance (optimization of relationships with real estate-related parties), efficiency of decision-making (streamlining organizational structure), protection of shareholder rights (increasing dividend payouts), executive turnover, and adjustment of financial structures. The score rate for "internal compliance management" is 0.7354Ranked fourth in all secondary indicators, compared to the previous year, it dropped by 0.0584, becoming the secondary indicator with the largest decrease. The reasons for the decline mainly include: shortcomings in information protection technology measures, insufficient employee awareness of information security, lack of ability to respond to emergencies, and inadequate compliance supervision and auditing."Bonjour, comment a va?"