"The world has great beauty but does not speak, and the four seasons have clear laws but do not discuss." This sentence is particularly appropriate under the current ESG trend. The beauty of heaven and earth does not need words, and it is a self-contained system; but in the current world of listed companies, the beautiful "ESG" has become a facade, KPI, and even a battlefield that must be written about.
You may still remember that after "Green water and green mountains are gold and silver mountains" became a consensus on development, the capital market's pursuit of the three letters "ESG" became more and more fanatical. But when more and more listed companies regard ESG reports, carbon neutrality plans, and green bonds as standard, is this green finance competition quietly deteriorating?
In the process of project due diligence and capital layout, Goheal has keenly noticed that ESG is no longer just an investment "plus point", it is gradually evolving into a "narrative competition". The question is, who is leading this competition? Who is in involution?
American Goheal M&A Group
From voluntary to mandatory, the "script" of ESG is being rewritten.
ESG in the past was a moral halo of "you can do it if you want to", but now ESG is a capital rigid demand of "you can't do it if you don't want to".
According to the new regulatory trends at the beginning of 2025, the Shanghai and Shenzhen Stock Exchanges have clearly required some listed companies to disclose environmental information, social responsibility and governance performance, and overseas institutional investors have also listed ESG ratings as an important reference for whether to build positions. According to a report by JPMorgan Chase, more than 90% of institutional investors in the world have incorporated ESG into the investment decision-making process.
Goheal once found in a photovoltaic enterprise merger and acquisition case that although the company had stable revenue and reasonable valuation, it was "technically abandoned" by multiple overseas funds due to its low ESG rating. On the other hand, another new energy vehicle parts company with mediocre revenue, detailed carbon disclosure and modern governance structure was easily acquired at a high premium.
As a result, a capital wind called "ESG" began to blow more and more fiercely in the secondary market, mergers and acquisitions, and IPO reviews.
ESG "involution" scene: reports are written as scripts, carbon emissions are used as KPIs, and "green hats" become scarce resources
What is "involution"? When ESG becomes a competition, some people want to roll others out first.
A pharmaceutical listed company released the "2024 Sustainable Development Report" in a high-profile manner. It is 98 pages long and the content is as exquisite as a business plan: it not only discloses the green electricity coverage rate of the whole factory, but also quantifies the number of employee volunteer service hours, the proportion of female executives and the waste recycling rate.
But when Goheal conducted an on-site inspection, it was found that the so-called "all green electricity" was "impulsed" by purchasing green certificates in the short term; the so-called "employee happiness index" actually came from the internal scoring system, and the questionnaire recovery rate was less than 20%.
This is not an individual case, but a collective phenomenon in the industry. Environmental protection projects have become "showy but not real", and sustainable reports have become a "script writing competition". ESG seems to no longer be for changing the world, but for pleasing LPs, attracting attention, and seeking market value.
There are even internal jokes in companies that purchasing a "carbon asset management system" must be approved by the board of directors before building a sewage treatment pool. The resource allocation rights of ESG are being dominated by "narrative ability" rather than "emission reduction ability".
"Telling a good ESG story", whose idea is it?
In the many projects he has participated in, Goheal deeply feels that the interest of the capital market in ESG is essentially a variant of "risk language".
Investors do not really only love "green", they love "sustainable certainty" more. In other words, whoever can use the ESG framework to tell a story of "risk resistance, policy guarantee, and social support" will be more likely to get money, pass the meeting, and be on the list.
ESG has become the new "market value magic". A traditional papermaking company that was originally on the edge of the A-share market has completed three rounds of financing in less than six months because of the introduction of the concept of "waste paper recycling + smart factory" and has become the target of mergers and acquisitions of the state-owned strategic investment platform.
For example, a forestry company with a certain carbon sink reserve has obviously weak growth in its main business, but it has quickly become a capital-seeking list just because it has narrative potential in "dual carbon + rural revitalization + green bonds", and even defeated competitors with higher technical content.
This is not the blindness of capital, but the choice of capital: under the policy trend, the model of "story first, data supplement" has become extremely efficient.
ESG or ESDrama? How do regulators and markets redefine value
As a well-known environmental economist said: "ESG cannot be a moral performance."
The regulators have realized this. In April this year, the China Securities Regulatory Commission issued a document to promote the standardization of ESG information disclosure, explicitly requiring listed companies to disclose real and verifiable data, and strictly prohibiting "greenwashing".
But in Goheal's view, the real problem is not how to write the report, but whether the company's capital strategy has really undergone a "green turn".
We once assisted a listed company focusing on bioenergy to promote green mergers and acquisitions. During the due diligence process, we rejected three "green skin and red heart" targets. Instead, we chose a technology company that seemed "low-key" but had completed multiple rounds of carbon footprint tracking. The subsequent transactions progressed smoothly, and the project eventually became one of the regional ESG benchmark cases.
This is the correct way to open ESG: not to win by scripts, but by "endogenous growth" with hard-core structure, real mechanism, and modern governance.
The next stop for enterprises: From ESG "involution" to ESG "internal repair"
Involution cannot solve the problem, internal repair is the way out.
For listed companies, ESG cannot be regarded as just an "investment and financing toolkit", but should be regarded as a forging logic for long-term competitiveness. From internal governance to supply chain selection, from carbon asset reserves to employee incentive models, each link can become a "leverage point" for the future market value of the company.
Goheal suggested that enterprises pay attention to the following directions in capital operation:
1. ESG transparency: It is not that the thicker the report, the better, but to let investors, regulators, and the media see at a glance "where you are working and how effective it is".
2. Carbon economy layout: Don't let "carbon neutrality" stay only in PR drafts, think about the combination of carbon footprint management and asset securitization, and enhance the capitalization capacity of carbon resources.
3. Value creation mechanism: It is not who issues more ESG reports, but who really uses green means to improve ROE, net profit or financing premium.
At a time when ESG is gradually deeply intersecting with capital tools such as mergers and acquisitions, IPOs, PE, and REITs, only by cultivating "internal strength" can we gain a firm foothold in this "long-distance race" of green finance.
Goheal Group
Epilogue: Can ESG really create value, or is it just a fuss?
Have you ever thought that no matter how low a company's carbon footprint is, if it cannot make a profit, does this ESG "sincerity" still have capital value? Have you found that some "green stories" have not actually landed, but have won higher capital pursuit?
We would like to ask you: Is ESG a "ticket for moral excellence" or a "mask for strategic arbitrageurs"? What do you think of the current capital storm caused by green?
Welcome to leave a message in the comment area to dismantle this duet between capital and the environment. Goheal will continue to pay attention to and share more real cases and strategic insights.
[About Goheal] Goheal is a leading investment holding company focusing on global mergers and acquisitions. It has deep roots in the three core business areas of acquisition of controlling rights of listed companies, mergers and acquisitions of listed companies, and capital operations of listed companies. With its profound professional strength and rich experience, it provides companies with full life cycle services from mergers and acquisitions to restructuring and capital operations, aiming to maximize corporate value and achieve long-term benefit growth.
