(Yicai Global) April 7 -- A new environmental, social and governance section has been added this year to the annual performance reports of companies listed on Shanghai’s Nasdaq-like Star Market in order to standardize and encourage ESG-related information disclosure.

As of yesterday, 36 Star Market-listed firms, mainly in biomedicine, integrated circuits, new energy, energy conservation and environmental protection, and high-end equipment, had published separate ESG reports alongside their annual financial statements.

Together, these reports cover many corporate aspects such as performance, scientific research, products and services, governance structure, environmental protection, and social contribution, revealing the investment value of companies.

An ESG report should focus on how the company can change people’s production and lifestyle and be of reference value, according to Yin Zhiyao, chairman and general manager of Advanced Micro-Fabrication Equipment, a semiconductor maker.

It should not only reflect business highlights, but also a firm’s weaknesses to spur it to do better, Yin told Yicai Global, adding that in the future both Chinese companies and investors will pay more attention to ESG information, which is an inevitable development trend.

“The preparation and release of ESG reports enables investors to better understand the company, making the firm’s operation and governance more transparent, and also allows investors to advise the company from diverse perspectives,” said Liu Xiaoyu, AMEC’s board secretary. “We think it’s a very valuable practice.”

At present, foreign investors pay more attention to corporate ESG information disclosure than do their Chinese counterparts.

“Besides performance growth, overseas investors also take note of a company’s compliance operation and its responsibility towards the public and society,” said an executive at biopharmaceutical firm Sunshine Guojian, adding that Chinese investors are now paying increasing attention to ESG details.

Except for companies that disclose their social responsibility or ESG reports separately, all Star Market companies that have released reports for last year have included ESG chapters, touching on environmental and intellectual property protection, for example.

Editor: Peter Thomas