Private enterprises are actively embracing the transformative era
The term 'ESG' first officially appeared in the report by the United Nations in 2004, titled 'Who Cares Wins.' It represents an investment philosophy and corporate evaluation standard. ESG focuses on a company's performance in environmental (E), social (S), and governance (G) aspects, rather than just financial performance.
In specific terms, the environmental aspect primarily encompasses issues related to environmental protection and sustainability. The social aspect involves matters concerning social responsibility, while governance mainly pertains to topics such as corporate management structure, compensation, and compliance. ESG is gradually becoming a new standard for measuring brand governance, sustainable development, and long-term profitability. Major corporations are also considering it as one of their core focus areas. Particularly in the secondary market, many publicly traded companies have started disclosing ESG reports as a 'second financial report.'
From 2017 to 2022, the number of ESG reports disclosed by A-share listed companies increased from 851 to 1,812, with an annual growth rate of 16%. The disclosure rate rose from 24.55% to 35.76%. And private enterprises played a significant role in this trend. They are a vital driver of the market's dynamism. From a macro perspective, private enterprises contributed over 50% of tax revenue and more than 60% of the domestic GDP. They also accounted for over 70% of technological innovations and more than 80% of urban employment. Moreover, they constituted over 90% of the total number of enterprises.
Recently, ZePing Macro released a comprehensive market assessment of ESG performance among private enterprises in China. The evaluation covered eight major industries, including electric equipment, electronic semiconductors, non-banking financials, household appliances, machinery equipment, beauty and healthcare, pharmaceuticals and biotechnology, and non-ferrous metals. It selected the top 20 companies with the highest composite evaluation index.
Notably, more than half of the selected companies belonged to the electric equipment and pharmaceuticals and biotechnology sectors, with 13 of them concentrated in the Yangtze River Delta, the Pearl River Delta, and the Beijing-Tianjin region. Prominent companies such as Longi Green Energy(601012:SH), Haier(600690:SH, 6690:HK), Midea(000333:SZ), Sany Heavy Industry(600031:SH), and CATL(300750:SZ)were among the selected enterprises.
In our effort to provide a comprehensive analysis of the foundational profiles and advancements in the ESG domain for the companies featured in the aforementioned shortlist, we have initiated a series of review articles.
In the preceding two sections, we examined a total of 13 companies across five major industries. This marks the concluding part of our series, where our attention turns to three significant sectors: beauty and healthcare, pharmaceuticals and biotechnology, and non-ferrous metals. Within these sectors, we will delve into the profiles of 7 companies, including Imeik and WuXi AppTech.
Imeik Technology Development Co., Ltd. (300896:SZ) was set up in Beijing in 2004. The company focuses on the research, development, and transformation of biomaterials for soft tissue repair. As a leading innovator in the field of biomaterials for soft tissue use in China, Imeik has successfully commercialized its hyaluronic acid filler series products and facial implant threads. Committed to independent research and innovation, Imeik has repeatedly addressed gaps in the domestic market, driving technological advancements in the local industry. In the first half of 2023, Imeik reported a revenue of CNY 1.459 billion , marking a year-on-year surge of 64.93%; and a net profit of CNY 961 million in the second quarter, reflecting a growth of 64.27% compared to the previous year.
Imeik empowers public welfare through new media channels, focusing on the growth and employment of college students.To tackle challenges like job hunting and initial workplace uncertainties for graduates, Imeik offers "Resume Diagnosis" live broadcasts, free career conselling services, and job empowerment events, aiding many in their transition to the workforce.
Livzon Pharmaceutical Group
Founded in 1985, Livzon Pharmaceutical Group Inc. (000513:SZ, 1513:HK) is an integrated pharmaceutical group specializing in R&D, production, and sales. Livzon has made significant advancements in the fields of raw materials, chemical drugs, traditional Chinese medicine, biopharmaceuticals, and in-vitro diagnostic reagents. Their products span across various therapeutic areas including digestive, cardiovascular, reproductive endocrinology, and neuropsychiatry. The company continues to focus on innovative drugs and complex formulations, launching major products like Lianpingrilin and Esomeprazole, achieving substantial growth in the digestive and reproductive sectors. In 2022, the company reported a revenue of CNY 126.3 billion, a net profit of RMB 19.09 billion, and invested CNY 14.01 billion in R&D. In the first half of 2023, the company's revenue reached CNY 66.9 billion, with a net profit of CNY 11.35 billion, marking a 5% year-on-year increase in net profit and a 16% year-on-year growth in second-quarter revenue.
In 2023, Livzon became the first company in the Chinese pharmaceutical industry to receive the highest MSCI ESG rating of AAA. The company has consistently published ESG reports for seven consecutive years, taking the promotion of inclusive health and public well-being as its mission. Livzon continuously focuses on unmet clinical needs, steadily advancing product innovation, and enhancing product accessibility and affordability. The company genuinely practices the philosophy of green and low-carbon operations, actively engages in energy-saving and emission reduction, increases the proportion of clean energy usage, and continuously optimizes energy efficiency. Livzon also proactively assumes social responsibilities, actively carrying out public welfare activities such as chronic disease prevention and treatment, rural revitalization, and industrial assistance.
Shenzhen Mindray Bio-Medical Electronics Co., Ltd. (300760:SZ) initiated its journey in 1999 and primarily engages in the research, development, manufacturing, marketing, and service of medical devices. Its main products span three major areas: life information and support, in-vitro diagnostics, and medical imaging. According to its official webite, the company has over 50 overseas subsidiaries in more than 30 countries across North America, Europe, Asia, Africa, and Latin America. Domestically, it boasts 17 subsidiaries and over 40 branches, creating an extensive global network for R&D, marketing, and services. In the first half of 2023, Mindray reported a revenue of CNY 184.76 billion, a year-on-year increase of 20.32%; and a net profit of CNY 64.43 billion in the second quarter, up 21.79% from the previous year.
Mindray reinforces its quality culture and regulatory requirements through various means such as annual quality meetings, weekly meetings, and periodic reports on medical device policies and regulations. Additionally, with a systematic training framework in place, the company provides regular general quality training sessions to all its employees annually. By the end of 2022, the general course titled 'Quality Management and Product Safety' had trained approximately 15,500 individuals globally, covering 96.3% of the group's members. In 2022, Mindray Medical underwent 90 quality management system audits from government regulatory bodies and external audit institutions, achieving a 100% pass rate.
Pharmaron (300759:SZ,3759:HK) is a leading international life sciences R&D service company. Since its establishment in 2004, Pharmaron has been dedicated to talent development and facility construction, creating a comprehensive R&D and production service system that spans drug discovery, pre-clinical, and clinical development for various therapeutic drugs, including small molecules, biologics, and cell and gene therapies. Pharmaron operates in China, the US, and the UK, employing over 14,000 staff. The company offers R&D solutions to partners in North America, Europe, Japan, and China, maintaining strong collaborative relationships. During the initial six months of 2023, Pharmaron registered revenues of CNY 5.64 billion, showcasing a growth of 21.70% from the preceding year. The company achieved an operating profit of CNY 910 million, and its core business gross margin climbed to 36.35%, an enhancement of 1.32% year-on-year.
Under the guidance of the environmental goals set by the board of directors and the Science Based Targets initiative, Pharmaron actively explores and collaborates with energy experts to seek carbon reduction pathways. The environmental management system (ISO14001) and occupational health and safety management system (ISO45001) of various R&D centers and production bases are also under continuous development. Previously, the company was honored with the Excellence in Social Sustainability Award at the 2023 ESG Awards hosted by Ming Pao Newspapers Limited in Hong Kong, reflecting the high recognition from various sectors of society for the company's performance in environmental, social, and governance aspects. In the latest Sustainalytics rating, Pharmaron was rated as a 'low-risk' enterprise. At the same time, it also passed the verification of ESG information disclosure by the third-party institution, SGS.
Chongqing Zhifei Biological Products
Chongqing Zhifei Biological Products Co., Ltd. (300122:SZ) entered the biopharmaceutical industry in 2002 and became the first privately-owned vaccine company to be listed on the Growth Enterprise Market in 2010. It is an international, full-industry chain high-tech biopharmaceutical company integrating vaccine and biological product R&D, production, sales, distribution, import, and export. Its main product, the human vaccine, is one of the country's seven strategic emerging industries with a broad development prospect. In the first half of 2023, the company achieved a revenue of CNY 244.45 billion and a net profit of CNY 42.6 billion, representing a year-on-year increase of 14.24% in net profit. The total assets reached CNY 478.61 billion.
During the pandemic, Zhifei was constantly attentive to and responsive to vaccine demands both domestically and abroad. The company accelerated the research and supply of the COVID-19 vaccine, providing over 300 million doses of the recombinant novel coronavirus protein vaccine to the world, continuously injecting Chinese momentum into the construction of a global immunity barrier. At the same time, recognizing the uneven medical standards worldwide, the company spared no effort in promoting universal and accessible healthcare. Zhifei's professional market team serves more than 30,000 grassroots health service points across the country, and through reliable and high-quality vaccine products, protects tens of millions of eligible women and infants in China. Upholding the principle of "social benefits first, corporate benefits second," the company ensures vaccine supply, makes charitable donations, collaborates in disaster relief, revitalizes rural development, and supports children's health, among other initiatives.
Wuxi Apptec Co., Ltd. (603259:SH) was inaugurated in Wuxi in 2000 and offers comprehensive, end-to-end drug research, development, and production services to the global biopharmaceutical industry, with operational bases across Asia, Europe, and North America. The company's primary business segments include chemical services, testing services, biological services, cell and gene therapy CTDMO services, and domestic new drug R&D services. Their service spectrum covers the entire process from concept inception to commercial production. In the first half of 2023, Wuxi Apptec reported a revenue of CNY 188.71 billion, marking a 6.28% year-on-year increase in the second quarter. The net profit for the second quarter stood at CNY 53.57 billion, reflecting a 14.57% growth compared to the previous year.
Through responsible operations, Wuxi Apptec collaborates with various sectors to promote sustainable development in society and the environment. To curb commercial bribery and corruption, Wuxi Apptec's internal audit department conducts annual reviews at all operational bases, ensuring the effectiveness and compliance of the internal control system. During the reporting period of 2022, Wuxi Apptec carried out a total of 27 business ethics audits.
CMOC Group Limited (603993:SH, 03993:HK) went public on the Hong Kong Stock Exchange in 2007 and on the Shanghai Stock Exchange in 2012. The company operates in the non-ferrous metal ore mining and processing industry, primarily engaged in the mining, selection, and metallurgical processes of base metals and rare metals, as well as mineral trading. Currently, the company's main operations are spread across Asia, Africa, South America, Oceania, and Europe, making it a global leader in tungsten, cobalt, niobium, and molybdenum production, as well as a significant copper producer. Additionally, CMOC Group is a leading phosphate fertilizer producer in Brazil and ranks among the top three in global base metal trading. In the first half of 2023, the company recorded a noteworthy operating revenue of CNY 86.626 billionand a cmmendable net profit of CNY 615 million.
CMOC Group's primary mining assets are located in the Democratic Republic of Congo (DRC), China, Brazil, and Australia, while its metal trading operations extend to over 80 countries worldwide. To ensure the stability of mineral mining operations, CMOC Group has adopted a talent strategy that emphasizes localization and diversity in its workforce. Sixty percent of its 120 million global employees are based overseas, fostering close ties between employees and local communities. Through the 'Maize Credit Program,' CMOC Group provides agricultural training, fertilizers, and seeds to 644 farmers in the TFM mining area of the DRC, covering a cultivation area of 640 hectares.
Leveraging its existing presence in Africa, South America, and Southeast Asia, CMOC Group actively searches for, screens, and conducts research on high-quality projects related to new energy industries and domestically scarce resource varieties. They are increasing their investments and mergers and acquisitions efforts in these areas. CMOC Group adheres to a regular audit mechanism conducted by members of the HSE Committee, facilitating efficient knowledge sharing among mining units. They are aligning tailings dam management with the international tailings management standard ICMM, enhancing the operational and maintenance standards of existing and new tailings dams across all mining areas. They are also accelerating the development of 2030 carbon peaking and carbon reduction implementation plans at the mining area level, taking the lead in the company's overall dual-carbon target plan.