According to Zhitong Finance APP, the China Index Academy released the 2024 ESG evaluation research report for listed property service companies in China. The ESG information 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 15, the overall ESG report disclosure rate of listed property service companies reached 95.65%, up 3.23 percentage points compared to the same period last year.

Given the mandatory disclosure requirements of the Hong Kong Stock Exchange, 63 property companies listed in Hong Kong, except for JIAYUAN SER which has no disclosure due to suspension, the other 62 property companies have disclosed ESG-related information, including this year's listed companies HOLLWIN URBAN and KINGFARPROPERTY, which disclosed ESG information in their prospectuses; among the 6 listed companies in the A-share market, 4 released ESG reports, an increase of 2 compared to last year.

(1) The overall disclosure rate reached 95.65%, with some companies adopting dual standard disclosures.

In terms of disclosure format, 51 listed companies published independent ESG reports, an increase of 4 from last year, accounting for 73.91%, up 2.7 percentage points year-on-year, indicating that companies are increasingly valuing ESG information disclosure; 13 companies published specific chapters in their annual reports; HOLLWIN URBAN and KINGFARPROPERTY went public in May and July this year, and provided ESG information disclosure in accordance with relevant Hong Kong Stock Exchange regulations in their prospectuses.

The readability and detail of the report have further improved. Deepening the understanding of ESG, sample companies have established a comprehensive ESG strategy to ensure alignment with their main Business and support long-term sustainable development and value enhancement of the companies. Compared to 2022, the ESG reports disclosed by sample companies in 2023 are increasingly detailed, with content being more comprehensive and specific, allowing companies to disclose item by item according to relevant guidelines, as reflected in the number of pages in ESG reports. The number of reports exceeding 80 pages has significantly increased, indicating that companies are placing more emphasis on ESG and raising their own standards.

Most property service companies are listed on the Hong Kong Stock Exchange. Although the Hong Kong Stock Exchange does not mandate a specific language format for ESG report writing, in 2023, among the sample companies, 20 listed companies adopted both Chinese and English for their reports, an increase of one compared to the previous year. There were 43 companies that used a single language (Chinese), an increase of three from the previous year.

(2) The pass rate for sample companies exceeds 80%, with only a few showing outstanding performance.

Overall, the ESG performance of the sample companies has steadily improved. In 2023, the average ESG score for 63 sample companies was 67.16 points, an increase of 0.87 points from last year. Fifty-two companies scored over 60 points, achieving a pass rate of 82.54%, an increase of 4.57% from last year. The median ESG score for the sample companies was 69, up 2 points from last year, with a continuous upward trend in focus and overall performance getting better. The upper quartile score was 72, up 0.5 points from last year, while the lower quartile score was 62, up 1 point from last year.

The overall scores of sample companies are tending to concentrate and improve, but striving for excellent performance is not easy. In 2023, over half of the sample companies scored between 70 and 80 points, indicating overall progress and positive efforts made by property service companies in social responsibility, environmental protection, and corporate governance. By improving service quality, enhancing community involvement, optimizing resource use, and perfecting corporate governance, they aim to improve their ESG performance. However, despite the overall improvement, seeking sustainable outstanding performance remains challenging. In 2023, only three sample companies had total ESG scores exceeding 80 points, the same as last year.

In terms of improvement, in 2023, among the three primary indicators, the average score for the environmental (E) indicator was 16.11 points, an improvement of about 1 point from last year, showing outstanding performance. The main reasons include: first, property companies actively apply for relevant qualifications and certifications, including environmental management system certification, to seek continuous improvement in environmental practices, which also helps to enhance the company's competitiveness and image, thereby expanding market share; second, property service companies are placing more emphasis on identifying and responding to climate-related risks and opportunities, setting indicators and goals in a more scientific and reasonable manner; third, by introducing energy management systems, implementing waste sorting and recycling, and advocating green travel, property companies have achieved effective monitoring and management of energy consumption through intelligent construction, promoting energy saving and emission reduction as well as environmental protection. The average score for the social (S) indicator was 27.65 points, while the average score for the corporate governance (G) indicator was 23.4 points, marking a decrease of 0.18 points and an increase of 0.03 points from last year, respectively, remaining basically stable.

From the score rates of the three primary indicators (mean/indicator score, reflecting the overall performance of sample enterprises in this indicator), the score rate for the E indicator is 0.58, an increase of 0.04 compared to the previous year, but it is still the worst among the three indicators, indicating that although property service companies have improved practices regarding the environment in the past year, it remains a key area for future efforts. The score rate for the G indicator is 0.78, and the score rate for the S indicator is 0.66, showing stable performance.

From the standard deviations of the three primary indicator scores, the degree of dispersion for environmental and governance indicator scores is decreasing, with 2023 values at 3.88 and 2.24, down 0.23 and 1.14 from the previous year, indicating that the overall environmental and governance scores of property service enterprises are converging towards the average level, especially in ESG governance where scores are relatively high and consistent across different property companies; conversely, the dispersion in social indicator scores is increasing, with 2023 at 4.18, an increase of 0.31 compared to the previous year, indicating greater differentiation in overall social indicator scores among property service enterprises.

(3) Company governance performance is outstanding with minimal differences; the environmental dimension has improved comprehensively but shows significant differentiation.

In 2023, the score rates of 12 secondary indicators are ranked from high to low; the company governance (G) secondary indicators are mostly distributed in the upper-middle range, while most of the social (S) aspects are concentrated in the middle position. In contrast, environmental (E) aspects generally rank lower, and overall rankings have not changed significantly compared to the previous two years. This indicates that property service companies in ESG practices: First, the leadership values these practices, clearly integrating ESG goals with business strategies, establishing cross-departmental collaboration mechanisms, and engaging all stakeholders in promoting ESG strategy implementation. Second, property service companies can focus on customer needs, improve service quality, prioritize employee well-being, ensure smooth promotion channels, and actively participate in community public welfare, thereby enhancing their image as responsible corporate citizens, resulting in good overall performance in the social (S) aspect. Third, constrained by factors such as cost considerations, property service companies' performance in the environmental (E) aspect is relatively lagging. This is primarily reflected in insufficient investments in green technology and green buildings, the absence of an efficient energy management system, and a lack of necessary emissions monitoring mechanisms. Furthermore, grassroots property service personnel's understanding and awareness of the ESG concept are inadequate, and these factors collectively impact the enterprise's scoring in the environmental (E) aspect.

In 2023, looking at the coefficient of variation (standard deviation/mean, reflecting the degree of 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, falling for two consecutive years, indicating that the score differences among secondary indicators of property enterprises are further narrowing and the degree of differentiation is decreasing.

The variation coefficients of all secondary indicators are arranged from high to low, showing significant differences between the overall situation and the scoring rates. Specifically, the environmental (E) indicators mostly fall in the middle to upper range, indicating a notable gap in scores for property companies in environmental aspects, which is also a key factor in differentiating the overall ESG performance among companies. In contrast, the company governance (G) indicators rank lower, reflecting a relatively close performance in company governance among enterprises, with minimal differentiation, making it difficult to create gaps in this area. Meanwhile, the social (S) indicators tend to be positioned in the middle, suggesting that property companies have a balanced performance in social responsibility, but there is still room for improvement.

The environmental (E) indicators have improved comprehensively, with the scoring rate of 'Energy Management' showing the highest increase. In 2023, all four environmental (E) indicators saw an increase in scores, accounting for 44% of all rising indicators (9 out of 12 secondary indicators increased). The changes in 'Energy Management,' 'Environmental Management System,' 'Pollutant Management,' and 'Climate Change Management' were 0.0652, 0.0452, 0.0337, and 0.0086, ranking 1st, 3rd, 4th, and 7th in the Top Gainers list, respectively. The main reasons include: on the one hand, the historical baseline of property companies’ environmental performance was low, providing significant room for improvement; on the other hand, property companies have strengthened internal training to deepen employees' understanding of sustainable development, implemented energy-saving and emission-reduction measures, and continuously optimized resource utilization efficiency. Moreover, data disclosed due to regulatory requirements has been gathered more accurately, with calculations more precise, showcasing the positive achievements companies have made in environmental protection. For example, CHINA OVS PPT ensured the authenticity and completeness of data by collecting and analyzing data and supporting documents from over a thousand managed projects, conducting the first carbon inventory, and publishing related reports, laying a solid foundation for the subsequent 'dual carbon' work. Additionally, the company has conducted training related to sustainable development to enhance employees' awareness of ESG.

The differentiation within the social (S) indicators shows that 'Products and Services' has grown for two consecutive years. The scoring 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 increase rate, and demonstrating a commitment to returning to the essence of service for property companies. Based on the compliance of property companies with laws and regulations, actively obtaining quality certifications, and gradually improving quality supervision and management systems, they have optimized service processes, enhanced service quality, and accurately addressed owners' needs. Whether in daily cleaning, security patrols, or community activity planning, the focus on owner experience has increased to win customer satisfaction. Furthermore, complaints are handled efficiently, responses to customer demands and suggestions are prompt, and actions are taken quickly to ensure that issues are resolved properly at the first opportunity, enhancing corporate image and reputation.

The indicators for social (S) aspects that have seen an increase include 'Social Contribution,' reflecting significant efforts and notable achievements in poverty alleviation and Rural Revitalization, charitable donations, participation in community governance, and social investments. This not only illustrates the company's profound understanding and commitment to social responsibility but also earns the company a social reputation, promoting societal harmony, stability, and sustainable development.

'Employee Development and Care' and 'Supply Chain Management' have seen declines in their scoring rates, decreasing by 0.0305 and 0.0234 respectively. The decline in 'Employee Development and Care' arises from multiple factors, the most notable being the lack of personal safety assurance. In 2023, 16 sample enterprises reported on-the-job deaths, increasing by 5 from the previous year, resulting in 37 on-the-job deaths, an increase of 14 from the previous year. In terms of 'Supply Chain Management,' while most property companies have established supplier management systems covering crucial aspects such as supplier selection, incorporation, and exit, there is still insufficient performance in deeper management practices like supplier sustainability certification and on-site audits, revealing obvious shortcomings. Reasons include limited awareness and insufficient importance, lack of resources and expertise, inability to unify standards and systems, as well as issues with willingness to cooperate and coordination.

Governance (G) continues to optimize, while 'Internal Management Compliance' faces challenges. In the area of company governance (G), in 2023, the scoring rate for 'ESG Governance' reached 0.9436, rising by 0.0058 compared to the previous year. This indicator has ranked first among all secondary indicators for three consecutive years. Property service enterprises have established an ESG governance framework centered around the Board of Directors, ensuring that senior management plays a key guiding role in sustainability and facilitating the effective integration of corporate strategy with ESG objectives. Additionally, enterprises have enhanced communication and collaboration with stakeholders by publishing regular reports, engaging in community interactions, and using digital platforms for information dissemination, ensuring stakeholder participation in key issues, which has jointly promoted the increase in 'ESG Governance' scoring rates.

'Business Ethics' and 'Equity Structure' scored 0.7635 and 0.5730 respectively, increasing by 0.0194 and 0.0272 compared to the previous year. The improvement in the scoring rate of 'Business Ethics' is mainly attributed to property companies' lawful and compliant operations, strengthened tax management, improved risk management, reinforced internal audit supervision, cultivation of a clean culture, and enhanced Intellectual Property Protection. In addition, companies have implemented a 'zero tolerance' policy to combat corruption, establishing a comprehensive anti-corruption mechanism that includes secure reporting channels to ensure that all stakeholders can report misconduct anonymously, coupled with systematic anti-corruption training to enhance moral awareness and legal compliance among all employees. The increase in the scoring rate of 'Equity Structure' reflects a significant optimization of property companies' governance structures, which includes improvements in power balance (optimization of relationships with real estate affiliates), enhancements in decision-making efficiency (by streamlining organizational structures), protection of shareholder rights (such as increasing dividend rates), changes among senior management, and optimization of financial structure.

The score rate for "Internal Management Compliance" is 0.7354, ranking fourth among all secondary indicators. Compared to the previous year, it has decreased by 0.0584, becoming the secondary indicator with the largest decline. The reasons for the decline mainly include: shortcomings in information protection technology measures, insufficient awareness of CSI Information Security Index among employees, lack of ability to respond to emergencies, and inadequate compliance supervision and auditing work.