Since the concept of ESG investment was first proposed in the 2006 UN Responsible Investment Principles Report, the importance of ESG has been increasing globally, and it has become an indispensable part of corporate strategic planning.
As global environmental issues intensify and society's expectations for fairness, transparency, and responsibility increase, corporate performance in environmental protection, social responsibility, and corporate governance is increasingly becoming a key criterion for investors, consumers, and other stakeholders to evaluate corporate value.
Good ESG performance can not only help enterprises reduce operational risks and improve efficiency, but also enhance brand image and attractiveness, thereby attracting more investment and cooperation opportunities and enhancing the market competitiveness of enterprises. Furthermore, more and more regulations require companies to disclose ESG-related information, which has also promoted the spread of ESG practices.
In the field of financial leasing, Haitong Hengxin is an outstanding student in ESG practices. He has incorporated ESG concepts into his business and has received awards and commendations from many organizations, such as the “Best ESG Financing Award of the Year” in the “Jinquan Award” and the title of “Leading Company in Service to the Real Economy” at the Global Leasing Industry Competitiveness Forum's “Take-off Award”.
Recently, Haitong Hengxin released the latest 2023 ESG Report. From this, we can see some rough lines on how Chinese financial leasing companies can advance ESG construction with high quality.
1. Building a green leasing ecosystem
ESG is a concept with very broad connotations. In the highly differentiated cultural backgrounds of East and West, different institutions and investors often have different interpretations, but there is broad consensus on the importance attached to the environmental dimension.
Focusing on the domestic market, under the guidance of the “3060” national strategy, all industries are looking for ways to develop in the direction of a green economy. Specifically, in the financial sector, the development of green finance has become a consensus in the financial industry from the top down. Haitong Hengxin has adapted to this trend of industrial transformation and has taken the initiative to increase investment in the green leasing business.
In 2023, Haitong Hengxin's green leasing business invested more than RMB 13 billion for the whole year, accounting for about 23% of the investment. By the end of 2023, the scale of green leasing assets was about RMB 23.7 billion.
Looking closely, Haitong Hengxin has laid out fields such as green mobility, new energy, sewage and solid waste treatment, and is gradually building a green leasing industry ecosystem integrating multiple fields from point to line, line and surface.
Whether considered from the perspective of a dual-carbon strategy or based on current AI changes, the world will place higher demands on the scale of electricity and energy. The development of new energy will be one of the biggest industrial transformation directions in the next few decades, and it is also one of the key support businesses clearly proposed by Haitong Hengxin.
According to reports, Haitong Hengxin provides financial leasing services to companies such as distributed photovoltaics, monocrystalline silicon furnaces, photovoltaic silicon wafers, silicon rods, and silver paste for P-type batteries. A total of 95 related industrial chain projects have been launched, amounting to about 1 billion yuan.
For enterprises that are good at using their own endowments and have an innovative spirit, Haitong Hengxin will allocate more resources to help them complete industrial upgrading. Weifang, Shandong is rich in saline-alkali beach cover resources. A local enterprise invested in the construction of a “salt-light complementary” photovoltaic power plant integrating power generation, salt production, and energy storage according to local conditions, with a total installed capacity of 5.8 MW. With the help of Haitong Hengxin, the project was connected to the grid in October 2023.
In addition to investing heavily in infrastructure, terminal applications are also a top priority. For example, Haitong Hengxin provided a financial leasing service for 50 new energy electric buses to a public transport company in the Jiaozuo area, with a financing amount of nearly 30 million yuan.
In addition, Haitong Hengxin is also actively helping all walks of life achieve green industrial transformation. In 2023 alone, Haitong Hengxin launched 200 projects in the field of energy saving and environmental protection, with an investment amount of about 6.1 billion yuan.
II. Multi-dimensional service national strategy
From an industry perspective, following policy guidelines to promote a high degree of integration between finance and the real economy is a financial development path with Chinese characteristics.
However, as an important part of the real economy, small and micro enterprises play an irreplaceable role in invigorating the market, solving employment, and creating GDP. However, for a long time, the level of financial support received by small and micro enterprises was far from sufficient.
Financial leasing companies can give full play to their “financing+financing” characteristics, which can not only effectively control risks, but also meet the capital needs of many small and micro enterprises. Based on this, Haitong Hengxin proposed diversified financial solutions, bringing help to many small and micro enterprises and improving the quality and efficiency of inclusive finance development.
In 2023, Haitong Hengxin formulated four micro-project guidelines, including “Micro Mobility”, “Micro Logistics”, “Micro City Distribution”, and “Small Distributed Photovoltaic Power Plants”, to improve the efficiency of approval of small and micro projects. In the same period, Haitong Hengxin provided over 14.9 billion yuan in financial support to 7,623 micro, small and medium-sized enterprises.
In terms of specific industries, Haitong Hengxin's purpose of serving the national strategy has also been fully demonstrated.
In the current context of high-quality macroeconomic growth and industrial transformation and upgrading, new productivity such as advanced manufacturing and the digital economy should be favored by more resources. Haitong Hengxin consciously binds its business to these cutting-edge industries representing the direction of future economic development, and is actively building an industrial ecosystem with the characteristics of strategic emerging fields.
In 2023, Haitong Hengxin's advanced manufacturing business invested about RMB 16 billion for the whole year, accounting for more than 28% of the investment. By the end of 2023, advanced manufacturing assets were approximately RMB 22.6 billion.
In order to strengthen support for strategic emerging industries such as advanced manufacturing and the digital economy, Haitong Hengxin actively broadens financing channels and issues special bonds and asset securitization products to support the rapid development of related industries.
In April 2023, Haitong Hengxin successfully issued Science and Technology Innovation Company Bonds (Digital Economy) (Phase 1). This is also the first corporate bond in the financial leasing industry to support science and technology innovation enterprises in the digital economy. By the end of 2023, Haitong Hengxin had issued a total of 5 issues, with a total issuance scale of 6 billion yuan of asset-backed securities labeled as science and technology innovation.
III. Concluding Remarks
Using ESG as an important development strategy for the company may increase operating costs in the short term, but it actually nurtures the long-term competitiveness of the enterprise, and as ESG construction becomes more perfect, the probability of experiencing long-term risks decreases, making it easier to achieve steady and continuous growth in performance.
This is reflected in Haitong Hengxin. After being hit by the epidemic, Haitong Hengxin's performance quickly recovered, and the compound growth rate of the company's net profit from 2020 to 2023 reached 12.92%.
Supported by good performance, Haitong Hengxin provided investors with generous dividends. In 2023, the company paid an interim dividend and a final dividend of $0.09 per share. Based on the closing price on April 22, the dividend rate reached 11%.
Looking ahead, ESG is not an additional question; it is a must-answer question. Implementing the ESG concept in business development to achieve the resonance of commercial value and social value is not only the internal pursuit of modern enterprises, but also the outside world's measurement of their sustainable development. For an outstanding practitioner like Haitong Hengxin, the market should give a new judgment on its comprehensive value.