China’s ESG transformation has entered a new phase: strategy-driven, scalable, and unstoppable. At the 2025 Shanghai Forum, Professor ZHENG Qinqin of FDSM hosted the sub-forum “ESG and Environmental Innovation Cases in Corporations”, where industry leaders and scholars came together to explore how companies are reshaping sustainability with innovation.
In a follow-up interview, she highlighted a critical shift: from surface-level ESG compliance to a deeper, value-driven approach. This evolution, she argues, reflects ESG’s new role—not merely a responsibility, but a strategic engine for growth.
Q: What is the current focus in ESG-related discussions among enterprises and academia? Could you explain your research direction in this sphere?
Zheng: ESG in China has transitioned from a peripheral issue to a core concern for both scholars and practitioners. A growing body of research examines how ESG principles are institutionalized within corporate governance—particularly through adaptations in decision-making frameworks, performance metrics, and stakeholder engagement mechanisms.
A critical challenge remains the absence of unified ESG reporting and assessment standards in China, leading to fragmented practices across industries. Yet this very ambiguity has fostered fertile ground for academic exploration. My recent study addresses this gap by demonstrating how digital transformation enhances dynamic capabilities (e.g., data integration, agile governance), thereby improving both ESG performance and the reliability of its evaluation amid regulatory heterogeneity.
Q:Friedman once asserted that “the social responsibility of business is to increase its profits.” How does this claim hold in the ESG era? How does ESG help companies enhance their value?
Zheng: Actually, Friedman ‘held a basic assumption in his argument: the company is responsible and follows ethical rules. While Friedman focused mainly on profit, not social contribution, he did establish a bottom line that people often overlook. In reality, many companies, through practices like greenwashing or unethical behavior, violate this fundamental premise of Friedman’s idea. So if a company is truly ethical, it’s already being responsible, and profiting in that context is fine. We can never assume that companies must sacrifice profit just because they’re implementing ESG or social responsibility. ESG frameworks ensure that companies pursue profit ethically, sustainably, and inclusively. Corporate social responsibility is not antithetical to profitability; instead, it’s a long-term strategy to align economic goals with societal values.
Many Chinese companies are now realizing that ESG is not just about doing good—it’s about doing well. With global supply chains increasingly emphasizing sustainability credentials, companies with strong ESG performance are more likely to access international markets and financing. Additionally, younger employees and consumers are more ESG-aware, which in turn pressures companies to act more responsibly and transparently. Brand trust formed by ESG attracts socially conscious investors easily. Thus, it has become a way to align with broader societal values and unlock long-term business potential.
Q: What kind of corporate image does ESG help build from consumers’ perspective? How should we understand the relationship between enterprises and consumers in the ESG process?
Zheng: A strong ESG profile shows that a company is not just chasing short-term profits but is committed to long-term value creation. Such companies are often viewed as ethical, resilient, and socially engaged—attributes that enhance corporate reputation and stakeholder trust.
When narrowing it down to consumers, I would say that they are no longer passive recipients of products but active participants in shaping corporate behavior. The rise of digital media and real-time feedback mechanisms has empowered consumers to express preferences for sustainability, equity, and transparency—values that now influence a company's brand and strategy. In this sense, ESG is co-created through continuous interaction: enterprises align with consumer expectations, while consumers leverage purchasing power and public voice to promote responsible practices. Such reciprocity embeds ESG values into corporate identities—no longer as add-ons, but as core priorities.
Q: How does the ESG ecosystem—through synergies among supply chain actors (upstream/downstream) and collaboration with financial/consulting institutions—accelerate green transformation?
Zheng: That is exactly what is happening right now. ESG transformation is a systems-level shift that cannot be achieved by enterprises acting alone. Collective action is what make green transformation truly sustainable. The synergy emerges across the value chain, particularly among suppliers, clients, and service providers such as financial institutions and consulting firms, i.e., upstream suppliers must meet environmental standards, while downstream clients demand ESG accountability. Meanwhile, financial institutions provide incentives through green finance, and consulting firms help companies navigate evolving compliance landscapes. In this ecosystem, ESG becomes a shared language and a mechanism for coordinated innovation and risk control.
Q: How does digital transformation accelerate corporate green transition?
Zheng: In the past, ESG implementation was seen as difficult because collecting and verifying data manually was time-consuming and prone to errors. People felt that ESG was costly and didn’t seem to contribute much to a company’s value. But now, the tidal wave of big data analytics, cloud computing, and blockchain allows companies to materialize their anticipations in social responsibilities. AI is a true game-changer for ESG: it tracks operational energy use, monitors environmental impacts with precision, and optimizes resources—all while ensuring transparent reporting. At the sub-forum, one speaker emphasized how such digital tools provide traceable, verifiable data, which is now a baseline requirement for credible ESG disclosures.
Q: How do current tariff policies push companies to modify their profiting strategies in the context of ESG?
Zheng: Trade wars and tariffs are affecting quite a few Chinese companies. Some of our MBA and EMBA students worry whether it’s still worth doing ESG in such a challenging environment. It’s a valid concern. Trade disruptions will lead to profit losses. However, if a product is irreplaceable or highly valuable to consumers, its price premium can actually give companies a competitive edge. In other words, tariff policies linked to international trading essentially force companies to shift from cost leadership to quality-based, sustainable growth. Simply relying on cheap labor and low-cost manufacturing is no longer viable in an ESG-aware global market. Consequently, ESG has become a strategic imperative, helping firms future-proof their operations and maintain competitiveness in global value chains.
Every company needs to prioritize specific ESG aspects — this framework is simply too broad to tackle all at once. And with digital transformation in the mix, you’ve got to be even more focused about where to direct your efforts first. If you try to do everything simultaneously, you’ll exhaust your resources without making meaningful progress. That’s why I advocate for the leverage effect—putting minimum resources toward maximum impact areas. Identify which ESG dimensions are most relevant to your core business and most important to your key stakeholders. These are the areas where you should concentrate your energy and investments.
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Writer: ZHANG Xinyue
Proofreader: WANG Jingyang
Editor: WANG Mengqi, LI Yijie
