Huawei spin-off Honor says ESG will play a big role in its IPO and is 'embedded' in its DNA

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  • "ESG is embedded into the company's DNA … since ... day one," Martin Xu, who is corporate senior vice president at Honor, says.
  • Xu argues that ESG is inextricably linked to his company's operations.
  • Definitions of ESG often vary and are hard to pin down, which can create a headache for businesses.

A senior executive at Chinese smartphone maker Honor stressed the important link between ESG and the firm's plans for an initial public offering during a discussion at CNBC's East Tech West conference in the Nansha district of Guangzhou, China.

"ESG is embedded into the company's DNA since ... day one," Martin Xu, who is corporate senior vice president at Honor, said Tuesday.

Xu added that the business is focusing on a number of ESG-related areas, such as accessibility, environmental protection and transparent governance. The firm is a spin-off from another Chinese company, Huawei, and since 2020 has been owned by Shenzhen Zhixin New Information Technology Co., Ltd.

Environmental, social and governance has become a hot topic in recent years, with organizations big and small seeking to boost their sustainability credentials through business practices they claim chime with ESG-linked criteria.

ESG and IPOs

Honor's Xu argued that ESG is inextricably linked to how his company functions and the business is certainly looking to make moves in the space.

Among other things, this year saw Honor publish its first ESG Report, and it has also pledged that its operations will be carbon neutral by 2045.

Xu went on to describe the smartphone sector as a "huge market" with a demanding set of consumers.

Customers, he said, mostly want "new technology" and are not happy with traditional tech, preferring things like 5G services and AIGC (artificial intelligence generated content).

"But how to satisfy people's requirements [and] demands on the new technology? We have to focus on the R&D but link … all these factors with the company's ESG methodology," Xu said.  

Referencing Honor's goal of becoming a public company in the coming years, Xu said this is "also the reason we publicly and proactively do a lot of the work on … ESG."  

As the discussion progressed, he returned to the topic and Honor's IPO plans.

"On the ESG perspective, I think we have the clear agenda," he said. "Because … in the next few, I think, months we are preparing, also, the IPO preparation."

While ESG-related commitments are becoming commonplace in the world of big business, there is a significant amount of skepticism about whether such lofty aims are actually achievable, with accusations of "greenwashing" increasing as scrutiny rises.

Today, corporations who label their products or services as being ESG, sustainable or similar are finding their business practices and claims examined in great detail by lawyers, the public, environmental organizations and regulators.

Collaboration crucial

Definitions of ESG often vary and are hard to pin down. That can create a headache for businesses looking to toe the line with regulators and authorities.  

As concerns about sustainability mount, efforts are being made to tackle this challenge and create a uniform set of standards firms can aspire to.  

In June 2022, industry body the GSMA launched ESG Metrics for Mobile. A white paper developed with EY and benefiting from collaboration with 20 mobile operators and the Yale Center for Business and the Environment, it aims to establish a "set of industry-specific environmental, social, and governance (ESG) reporting metrics for the mobile sector."

During Tuesday's discussion at East Tech West, Sihan Bo Chen, head of Greater China at the GSMA, hammered home the importance of looking at the bigger picture when it comes to ESG-related aspirations.

"When you talk about ESG, it's not just about your individual company, it's about the industry and it's about the universal world," she said.

"So GSMA's mission is connecting everyone and everything to a better future so sustainability becomes the critical factor of that."

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