In 2022, China Securities Regulatory Commission (CSRC) released the Working Guidelines for Investor Relations Management of Listed Companies (2022), which included ESG-related information in the communication items of investor relation management for the first time. In recent years, an increasing number of enterprises have adopted ESG as an anchor for sustainable and high-quality development. However, some enterprises pay no care or attention to the commercial implications represented by ESG. What exactly does the rise of ESG bring to industry change? How does business education respond to the new propositions posed by ESG?

At the "9th International Business School Shanghai Conference" organized by Antai College of Economics and Management (ACEM), Shanghai Jiao Tong University Jiaotong University (SJTU), the reporter from National Business Daily ("NBD") interviewed Yin Haitao, Associate Dean of ACEM SJTU, to analyze the new tasks and missions of business education under the guidance of the sustainable development concept represented by ESG.

[Interview Record]

On Business Model: Model Innovation Without ESG Has No Long-term Vitality

NBD: How do you see the implications of ESG as a new concept? How can ESG be incorporated into business education in business schools?

Yin Haitao: From a business school perspective, ESG teaching is relatively more challenging than other disciplines as it is a trend that has not evolved to the point where it becomes the consensus of everyone.

Some students don't recognize ESG as a necessary interest for companies at this stage of their development. Especially for some small businesses, they may just see ESG as a direction that big businesses need to consider, a concept that provides value to society, rather than something that needs to be considered from a business perspective. To some extent, this phenomenon is an important challenge in business education today.

In fact, ESG must be taken into account when we make a lot of business decisions, whether in business development or in investment. Why? Because only the development direction matching with ESG is the one with long-term commercial competitiveness.

As we all know, ESG focuses on several areas: E is for environment, S is for society, and G is for corporate governance. In terms of implications, G mainly concentrates on how well the company itself is doing. You'll see with careful thinking that this business model is not sustainable in case of poor performance in E and S.

P2P, for example, is essentially a business model generated in the wave of Internet innovation. The business model itself is not particularly problematic, since capital always flows into fields with high returns on investment after all. However, in order to make money, P2P targets some groups with a low-risk tolerance, such as college students, and even resorts to violent collection tactics instead of normal financial risk control measures when borrowers can't repay their debts, causing social problems and damaging social benefits.

Consequently, the lack of an in-depth grasp of E and S issues is exactly the reason for many sectors' lack of long-term development vigor.

NBD: How can we use the ESG concept to find industrial mega-trends and analyze industrial opportunities?

Yin Haitao: For example, the current development of new energy vehicles (NEVs) also requires addressing E and S issues,

which are concentrated on the recycling of NEV batteries. The sales of NEVs were relatively low before 2019 and they hit a scale of 1 million units in 2019. Therefore, technically speaking, most new energy vehicle batteries have not yet reached retirement age. When these batteries reach retirement age and if we don't have a mature business model to deal with them, then there will be an E-related issue, or battery pollution.

The recycling of NEV batteries also involves the processing of raw materials that include heavy metals. Lithium prices have gone up several dozen times in recent years. The reason for that lies in the high demand and the imbalance between supply and demand. Resources will only be less and less in constant consumption without recycling. Of course, we can see that the power utilized by new energy vehicles is still primarily derived from coal. From the perspective of E in ESG, the development of NEVs is still quite uncertain before these issues are solved.

Additionally, from the perspective of S, the safety of NEV batteries is also worthy of attention. With the growing base number of NEVs and the aging batteries, how to ensure the safety of NEVs parked on the roadside or underground garage deserves our further attention.

NBD: That is to say, we should look at their sustainability from the perspective of ESG when implementing technological innovation and business model innovation?

Yin Haitao: Standing at the current time point, we should clearly understand that any industry that does not conform to sustainable development can never really succeed in the end.

In the past, the only thing we should do while building an industry or evaluating a technology route was to study the feasibility of its business model, that is, whether it can make profit. But now you have to consider it in a multidimensional way: will it cause environmental and social problems while making money? I believe this is a new industry research methodology and research mode.

If ESG problems can be resolved successfully in terms of technology roadmap and business logic, it will usher in a booming development. For example, if the E and S problems associated with EV batteries can be resolved, it is expected that not only will the future of electric vehicles be clear, but also new industries such as battery recycling will be derived.

On Business Education: Setting up Industry Community Classes for Different Industry Categories

NBD: we also see the continuous progress of China's business development from the birth of ESG concept, then how to carry out curriculum innovation in business education so as to make it empower our practice in a more effective way?

Yin Haitao: First of all, we have done a lot of work on industry research. On the one hand, we have a solid and fundamental business education system and we will design various courses such as financial accounting, investment and M&A, and supply chain management, etc. On the other, we have set up industry community classes for different industries. For example, in my smart energy class, we will introduce students to the main business issues encountered in innovation process in the energy industry.

Of course, we will also invite executives from leading enterprises in the industry to introduce the cutting-edge development of the industry. By virtue of some industry resources, we can strengthen interaction and communication between our students and teachers and the industry.

In addition, I would like to emphasize the teaching of corporate social responsibility. Business education has evolved far beyond helping companies learn how to make money. Our goal, in Huawei's words, is to make enterprises survive with quality. Moreover, high-quality survival means a particular emphasis on E and S.

In closing, our curriculum system will be designed in combination with the special advantages of SJTU in science and engineering. Although technology is the future, not all scientists are commercially minded and of course, those having an aptitude for business are not necessarily able to properly understand science and technology. Therefore, it is especially required to combine business and engineering in the curriculum to achieve the mutual empowerment of business and technology. Just for this purpose, ACEM developed a new positioning of "New Business Education, New Technology” for its EMBA program this year.

NBD: As a result of the ongoing and closer international business exchanges at present, an increasing number of international companies prefer to invest in China and collaborate with Chinese companies. Then, how can we make the world better aware of China's business philosophy and culture in order to foster more exchange and cooperation?

Yin Haitao: We all know that globalization is a trend that can't be stopped. It is vital to increase mutual understanding and trust among the people of the world, whether through commercial exchanges or scientific, technological or cultural exchanges. As a China-based business school with a global outlook, it is our social responsibility to promote business and economic exchanges on a global scale.

How to make foreign companies better understand China's politics, economy and culture? How to comprehend the business culture and diverse business models in China? This requires us to tell the story of China in language, logic and methods that foreigners can understand.

In order to achieve this goal, we've launched the "Doing Business In China" (DBIC) program in English language. The program is designed to explain the Chinese business environment to Westerners in their language and logic, so that they can understand Chinese culture, Chinese thinking and Chinese business rules. This program imposes extremely high requirements on the development team, since it requires developers to have an in-depth understanding of both Chinese and Western business mentalities, and also be able to communicate clearly and vividly in English with foreigners. I believe the team of ACEM has exactly this combined competence and advantage. Therefore, we are very confident that we can build DBIC into a platform for telling China business mentalities and Chinese business stories.