on March 8, haohai shengke (688366.SH), known as one of the "three swordsmen of medical beauty" in a shares, released its 2023 environmental, social and governance report (hereinafter referred to as "ESG report"), ahead of huaxi biology (688363.SH) and amike (300896.SZ).

up to now, except 2022, haohai biological department has released ESG reports every year, and the first ESG report was released as early as July 2017.

Compared with the 2021 ESG report, the latest 2023 ESG report released by Haohai Biosco is more focused on the disclosure of corporate social (S) subject content in the overall framework. In addition, the report discloses key indicators in ESG risk management, value creation, and the concepts, systems, and measures to promote ESG work, with strong integrity.

However, the report does not fully disclose sensitive information such as penalties for violations, lawsuits, and corrective measures. Regarding the disclosure of the above-mentioned negative information and corrective measures, Times Business School sent an email to Haohai Health Science Department on March 13, but as of press time, the company has not responded.

Time Business School will analyze the 2023 ESG report of Haohai Biotech from the two dimensions of the main content of the ESG report and the key indicators of the ESG report, combined with the latest institutional ESG rating of the enterprise.

The framework of the report is the same as that of the previous work, and the main content is more focused on the social level (S)

in terms of space, the 2023 ESG report of haohai health science has 38 pages, which is divided into five specific chapters: "corporate governance", "products and innovation", "environmental protection", "harmonious team" and "caring community.

The ESG report for 2021 is 40 pages. In contrast, in the 2023 ESG Report, the "Content Index of the Hong Kong Stock Exchange ESG Reporting Guidelines" in the appendix section is 3 pages long, 2 pages less than in 2021.

In addition, the 2023 ESG Report will no longer design a separate "Into the Sea" chapter, the main content of the 2021 ESG Report includes the company introduction, financial performance, corporate honor three parts, a total of three pages. The 2023 ESG report consolidates this section into "Performance Highlights", which is four pages long and precedes the main content.

Overall, the 2023 ESG report is slightly less extensive than the 2021 report, but in the five key chapters dealing with environment, society and governance, the two reports are basically the same in terms of content richness.

is divided into chapters. first of all, in 2023, haohai biotech's practice at the "social" (s) level is mainly reflected in the three chapters of ESG report, namely "caring community", "product and innovation" and "harmonious team", with a total length of 16 pages.

From the perspective of specific topics, in the chapter of "caring for the community", Haohai Biotech mainly introduces its contribution to the community and its contribution to the industry. Among them, the community contribution includes the company's donation in 2023, social welfare activities and key industrial projects, and the industry contribution includes the company's academic exchange activities and academic achievements in the current year; the chapter "Products and Innovation" mainly introduces the company's R & D and innovation capabilities, supply chain and product quality control, responsible customer service and brand promotion; the chapter of "harmonious team" includes the company's employee recruitment, training and salary and welfare system in 2023, as well as the construction of corporate culture and production safety.

Secondly, at the level of "environment" (E), the 2023 ESG report of Haohai Health Science Department is presented in the chapter of "environmental protection", with a total of 7 pages, which is subdivided into three parts: "addressing climate change", "energy and resource management" and "emission management.

From the perspective of specific topics, the "response to climate change" part mainly includes two key topics: environmental management, climate change risks and opportunities; "energy and resource management" discusses energy management, water resources management and packaging material management respectively; and "emission management" includes the management of different emission categories such as waste, wastewater, exhaust gas and noise.

Finally, at the "governance" (G) level, in the 2023 ESG report, Haohai Health Science is discussed through the chapter on "corporate governance", which is 6 pages in total.

In terms of specific topics, the "Corporate Governance" chapter mainly includes the company's compliance measures such as risk control, integrity, information security and privacy protection, and ESG governance structure, ESG major issues and other ESG management content.

to sum up, the most important content in the 2023 ESG report of haohai biotech is the social (s) part. In terms of chapter division and content focus, the report follows the overall framework of the 2021 ESG report.

Comprehensive energy consumption still needs to be improved, and negative information cannot be objectively disclosed

Times Business School reviews the 2023 ESG Report of Haohai Health Science from five key indicators, including report completeness, materiality, comparability, balance, and accessibility.

2.1 integrity: comprehensive coverage of key performance indicators

In terms of completeness, the ESG report needs to meet the completeness of the disclosure of industry ESG general disclosure indicators and key performance indicators, and include in the report the concepts, systems, measures and performance to advance ESG work.

According to the 2023 ESG Report of Haohai Biotech, the report covers the general disclosure indicators and key performance indicators listed by the HKEx in the relevant guidance documents in the three major categories of environment, society and corporate governance.

Compared with companies in the same industry, Huaxi Bio's 2022 social responsibility report has insufficient disclosure of key performance indicators in the environmental category, only disclosing emission types and related emission data, ignoring key performance indicators such as total packaging material use, total water consumption and density, and power consumption.

In addition, Haohai Shengke's 2023 ESG Report discloses its ESG governance structure, board responsibilities, stakeholder communication mechanism and ESG major issues formulation and other ESG work concepts and systems in the corporate governance section.

As a result, Haohai Bio's 2023 ESG report is more fully disclosed in terms of completeness.

2.2 materiality: no disclosure of substantive progress on operating results, litigation and other matters

On the substantive side, ESG reports should include comprehensive and in-depth disclosures on key topics that have important and substantive implications for stakeholders.

According to Haohai Shengke's 2023 ESG Report, its stakeholders mainly include customers, shareholders, government/regulatory agencies, employees, suppliers, communities, etc., focusing on key issues such as product quality, business performance, compliance management, compensation and benefits, supplier management, and community communication.

Among them, Haohai Shengke did not disclose the operating results that investors/shareholders may be concerned about in the 2023 ESG report. In the 2021 ESG report, the company disclosed specific metrics such as revenue and percentage, gross margin, net income attributable to the company, and earnings per share for its major product lines.

According to the annual report, in 2023, the two most important products of Haohai Health, plastic surgery and wound care products, accounted for 39.82 percent and 34.97 percent of revenue, respectively; in 2021, the two products accounted for 26.22 percent and 38.17 percent of revenue, respectively. In 2023, for the first time, Haohai's revenue exceeded that of ophthalmic products, and investors/shareholders need to pay attention to the change in the focus of the company's main business.

in terms of commercial disputes that suppliers may be concerned about, investigations show that on April 3, 2023, haohai shengke was sued by Shanghai qilang marketing co., ltd. for service contract disputes. On November 16, 2023, Shanghai qilang marketing co., ltd withdrew the lawsuit. In the 2023 ESG report, Haohai Health did not disclose the specific reasons and development process of the lawsuit.

In summary, the key issues of stakeholder concern, such as business performance, important business changes and commercial disputes, were not disclosed in the 2023 ESG report, making the report deficient in substantive aspects.

2.3 comparability: comprehensive energy consumption still needs to be improved

The comparability of ESG report disclosures is mainly reflected in the comparison with the historical performance of the enterprise for many years, as well as the comparison with comparable companies in the same industry in the current year.

Haohai Shengke's 2023 annual report shows that the company is a scientific and technological innovation enterprise engaged in the research and development, production and sales of medical devices and drugs. Its main products include ophthalmic products, medical beauty and wound care products, orthopedic joint cavity viscoelastic supplement products, anti-adhesion and hemostasis products.

In terms of environmental performance, including energy consumption and greenhouse gas emissions, as well as the use of water resources and packaging materials, and the emission data of waste water, waste gas and solid waste in the production and operation process, the report selects 2021-2022 Historical data are compared, and the statistical methods and statistical calibers of relevant indicators are also explained accordingly.

data show that in 2023, haohai biotech's comprehensive energy consumption density (kg standard coal/10,000 yuan revenue) and water consumption density (tons/10,000 yuan revenue) will be 33.48 and 1.39 respectively, down 13.73 and 10.9 respectively from 2022 and 31.56 and 39.57 respectively from 2021.

In terms of comparison with comparable companies in the same industry, peers have not yet released the latest data for 2023. According to the data of the 2022 ESG report, the comprehensive energy consumption density (kg standard coal/10,000 yuan revenue) of Aimee is 6.48, which is 80.65 and 83.3 lower than that of Haohai Biotech in 2023 and 2022 respectively. Huaxi Biology did not disclose relevant energy consumption data in the 2022 ESG report.

As shown in Figure 2, although all indicators such as water resources, electricity resources, natural gas resource consumption density and carbon emission density improved year-on-year in 2023, they are still relatively higher than the level of all indicators of comparable peer company Aimee in 2022.

2.4 balance: negative penalty information disclosure is lacking

In terms of balance, ESG reporting should be fair performance.In addition to the positive impact of the enterprise, it is necessary to disclose the deficiencies in the performance of the enterprise's responsibilities and corrective measures in the current year in a pertinent and objective manner, so as to provide complete and balanced information for the decision-making and judgment of the stakeholders.

Public information shows that on December 27, 2023, the Shanghai Regulatory Bureau of the China Securities Regulatory Commission issued an administrative penalty decision to Lou Guoliang, the fourth largest shareholder of Haohai Shengke.

The document shows that Haohai Shengke shareholder Lou XX conducted two illegal reductions in May-June 2021. The reasons for the violations were the failure to disclose the reduction plan in advance and the early reduction of the reduction within 15 trading days after the disclosure of the reduction announcement. The accumulated reduction amount was 58.3365 million yuan, and the illegal income was 7.0954 million yuan. Therefore, the Shanghai Securities Regulatory Bureau gave him a warning, confiscated his illegal income and imposed a fine of 5 million yuan.

According to the 2023 annual report, as of the end of 2023, Lou Guoliang held 6.1512 million shares of Haohai Shengke, with a shareholding ratio of 3.59, making it the fourth largest shareholder of the company.

In the 2023 ESG report, Haohai Shengke did not disclose information about the administrative penalties imposed on its significant shareholders in the current year, nor did it respond to and explain its corrective measures in terms of untimely information disclosure and internal control failures, so the report violated the principle of balance.

2.5 accessibility: disclosure on the same day as the annual report, strong timeliness

The accessibility of ESG reports is mainly reflected in whether they are time-sensitive, whether they are separated from the current year's financial report, and whether they are easily accessible in the distribution channels and access methods, so that users can obtain the report in a timely, convenient and fast manner.

On March 9, Haohai Biotech released both its 2023 Annual Report and the 2023 ESG Report, which was released ahead of comparable listed companies in the same industry and is available on the HKEx's official website, the SSE's official website and Haohai Biotech's official website. Therefore, the report is timely and convenient in terms of accessibility.

ESG performance is divided among major agencies, with the worst rating being C

As of the latest rating date, the ESG rating agencies have clearly diverged in their evaluation of the ESG performance of Haohai Biotech, with Rank Ding giving the highest rating of AA, while Huashi Carbon Neutralization gave the lowest rating of C.

compared with its peers, in the ratings of MSCI (Morgan Stanley international capital company), Wind, China securities index and Shang Dao ronglu, haohai shengke is in grade B, grade a, grade a and grade a respectively, while its peers are in grade B, grade a, grade a and grade a respectively, and huaxi biology is in grade B, grade a, grade B and grade B + respectively. In contrast, in the-share "medical beauty three swordsmen", the ESG rating performance of Haohai Biotech is not as good as Aimee, but is comparable to the ESG rating performance of Huaxi Bio.

In addition, Huaxi Bio and Aimee were also included in the rating system of Lufute, the National Securities Index and the China Finance Green Gold Institute, but Haohai Biotech was not included.

From the changes in the ESG rating of Haohai Biotech, as shown in Figure 3, according to the Sina ESG Rating Center data, Rank Ding has the highest rating of Haohai Biotech's ESG performance, but in the latest rating, Rank Ding has lowered its ESG rating of Haohai Biotech. In the first quarter of 2024, the agency gave Haohai Biotech a composite score of 76.45 for its ESG performance, with a rating of AA; in the fourth quarter of 2023, the agency scored 77.86, slightly higher than the first quarter of 2024, with the same rating of AA.

Similarly, the latest ESG rating of Haohai Biotech has been downgraded by the China Securities Carbon Neutral Rating System. On October 31, 2023, the agency gave Haohai Biotech a rating of C with a score of 59.03. On October 91, 2022, the agency gave Haohai Biotech a rating of CCC with a score of 65.67.

and the ESG rating of Haohai Biotech has not changed significantly. In the first quarter of 2024, the second quarter of 2023, the third quarter of 2023 and the fourth quarter of 2023, the agency gave Haohai Biotech a rating of AA.

In terms of the ESG rating of the healthcare industry, Haohai Biotech is in the top 1/3 of the industry. For example, among the 697 listed companies counted by Wind ESG, Haohai Biotech ranked 150th; among the 508 listed companies counted by the China Securities Index, Haohai Biotech ranked 8th; among the 83 listed companies counted by Shang Dao Rong Green, Haohai Biotech ranked the top 29.

From the ESG rating of the biotechnology industry, Haohai Biotech is also in the top 1/3 of the industry. For example, among the 143 listed companies counted by Wind ESG, Haohai Biotech ranked 39th; among the 108 listed companies counted by the China Securities Index, Haohai Biotech ranked 4th; among the 21 listed companies counted by Shang Dao Rong Green, Haohai Biotech ranked the top 6.

[Reference]

1. "China Enterprise ESG Report Rating Standard (2023)". China CSR Report Rating Expert Committee

2. How to prepare an environmental, social and governance report. HKEx

3. Environmental, Social and Governance Report 2023 of Shanghai Haohai Biotechnology Co., Ltd. SSE

4. "Aimeike 2022 Corporate Social Responsibility Report". SZSE

5. Social Responsibility Report 2022 of Huaxi Biotechnology Co., Ltd. SSE