Impact Of ESG Disclosure On Corporate Debt Financing

Environmental issues have been receiving significant attention recently from all spheres of society,including the state,enterprises,and the general public,as a result of China’s economy and society’s high quality development.ESG information disclosure,as a microcosm of the corporate level of the sustainable development concept,is a crucial road for firms to accomplish green transformation and high quality development.ESG has also increasingly become a hot topic in practice and academics.Recent years ESG has only recently begun to gain traction in China compared to the rest of the world.However,in recent years,thanks to the combined efforts of government regulators,stock exchanges,and industry associations,China’s ESG system has made some progress.However,a comprehensive ESG disclosure system that is consistent with local conditions has not yet been established.The ESG performance of businesses is receiving more and more attention from people from all walks of life,and it is becoming more and more crucial in the process of corporate finance in a setting where national regulations take the lead and pertinent institutions monitor the implementation.Non-ferrous metal mining industry as one of the heavily polluting industries,is the impact on the environment can not be underestimated,so it is also more important to fulfill environmental responsibility,social responsibility and improve the ability of corporate governance to contribute a share of their strength.In light of the aforementioned context,this paper first draws upon the information asymmetry theory,sustainable development theory,stakeholder theory,and signaling theory.It then uses the literature analysis method to organize the external and internal factors that influence ESG information disclosure,and it summarizes the economic effects of ESG information disclosure from the perspectives of corporate risk,corporate value,and financing activities.After that,a case study methodology was used,with CMOC—a pioneer in the nonferrous metal mining and selecting sector—chosen as the study’s subject.First,a summary of current issues is given along with an overview of ESG disclosure in its sector.The benefits of strong ESG disclosure in CMOC’s financing activities,such as bond financing,bank credit financing,commercial credit financing,and government subsidies,are then thoroughly examined from a financial perspective.The conclusion finds that,as a heavy polluting industry,the quality of ESG information disclosure in the non-ferrous metal mining and processing industry is currently uneven,and there is more room to improve the quality of disclosure.However,CMOC has performed well in ESG information disclosure,which has sent positive signals to stakeholders and enhanced the company’s reputation capital,and the advantages or benefits gained are reflected in the following five aspects.First,it improves the profitability of enterprises,satisfies their needs for endogenous financing to a certain extent,and reduces their reliance on exogenous financing.Second,good ESG information disclosure reduces the information gap between banks and enterprises,reduces the cost for banks to collect environmental information of enterprises,and creates good conditions for bank credit approval.Not only does it help improve the availability of bank borrowing and increase the amount of bank credit,but it can also take the lead in cooperating with banks,such as derivatives transactions or bank pilot projects that include ESG provisions,etc.Third,CMOC is better able to meet the needs of creditors for non-financial information than other companies in the industry,and has certain advantages in issuing green bonds and overseas bonds.Fourth,it can encourage businesses to get additional commercial credit financing by influencing changes in the cycle of commercial credit financing.Finally,it has an advantage in obtaining and allocating resources such as government subsidies,and can turn them into green innovation outputs.Based on the above findings,this paper puts forward the following two recommendations,hoping to play a reference and demonstration role in ESG disclosure for enterprises in China’s non-ferrous metal mining and processing industry.First,in terms of increasing indicators,the amount invested in environmental protection,negative environmental events and other related indicators can be added to reduce the degree of information asymmetry;for the existing indicators of emissions,the degree of relevance to business should be enhanced;for compliance with regulations,more detailed indicators should be described.Second,strengthen the audit of third-party institutions to improve the level and quality of ESG reports.