With the deepening of the global green transition, the new energy industry is rapidly emerging. Globally, low-carbon energy transition has become a common pursuit of governments and enterprises.

At the same time, ESG (Environmental, Social and Governance) has evolved from a criterion for evaluating corporate responsibility to an important driver of corporate strategy and sustainable development.

ESG's strong ties to the new energy sector

New energy, including solar, wind, battery storage and hydrogen, is at a critical juncture in the global drive to become carbon neutral and move towards a low carbon economy. In this process, the link between new energy and ESG is extremely strong, and the substantive issues covered by the new energy sector are numerous and complex.

New energy companies have a great responsibility and mission, not only to continuously innovate and progress in technology to improve the production and utilization efficiency of new energy to meet the growing energy demand, but also to deeply practice the principle of sustainable development in their business philosophy. While pursuing economic benefits, ESG concepts must be comprehensively and deeply integrated into the operation and development of the enterprise.

I. Environmental Level (E)

New energy enterprises, like environmental pioneers, must accurately monitor and quantify greenhouse gas emissions, and vigorously promote the comprehensive transformation of green energy by continuously optimizing energy production and utilization processes.

1. Carbon Emission Reduction

The new energy industry plays a crucial role in global climate governance and has made great contributions to the global response to climate change. The practice of carbon emission reduction in China's photovoltaic and wind power industries mainly focuses on the provision of clean technologies and products and the strengthening of carbon emission management of the whole industrial chain.

Providing clean technologies and products: PV and wind power enterprises are committed to using clean technologies and products to promote global energy change and green low-carbon development. National Energy Administration statistics show that China's annual renewable energy generation is equivalent to reducing domestic carbon dioxide emissions of about 2.3 billion tons, the export of wind power, photovoltaic products for other countries to reduce carbon dioxide emissions of about 600 million tons, a total of nearly 3 billion tons of global emissions reduction, accounting for more than 40% of the world's carbon emission reduction of the same period of renewable energy conversion.

Strengthen the carbon emission management of the whole industrial chain: Although zero carbon emission, no noise and no pollution can be realized in the process of photovoltaic power generation, many production and operation links in the PV manufacturing industry chain will still generate carbon emissions, including upstream silicon material and silicon wafers, midstream battery modules, downstream power station construction and operation and maintenance, all of which need to be strictly controlled in terms of carbon emissions. Among them, silicon production, cell production, silicon rod preparation and slicing for PV modules are the three links with higher carbon emissions and energy consumption.

2.Three-waste treatment

Photovoltaic industry produces a large amount of “three wastes” in the process of production and decommissioning.

Photovoltaic wastewater mainly comes from fluorine-containing wastewater, alkaline wastewater and acidic wastewater generated during the manufacturing process of silicon materials, silicon wafers and batteries. Among them, fluorine-containing wastewater has strong corrosiveness and low biochemical degradability, and needs professional treatment.

Photovoltaic waste gas mainly comes from the cleaning, cutting and chemical vapor deposition processes of silicon wafers, cells and modules manufacturing, mainly including acid and alkaline waste gas, organic waste gas and special waste gas (such as silane, hydrogen and ammonia residues).

Photovoltaic solid waste, on the other hand, is mainly waste PV modules, containing recyclable glass, aluminum, semiconductor materials, silver, copper, etc., but also containing hazardous substances such as lead, fluorine, sulfuric acid and cadmium. These wastes need to be scientifically separated, categorized and recycled, and reasonably disposed of.

The methods of handling “three wastes” include recycling, purification, deep burial and centralized treatment, and specific measures are needed for special three wastes.

3.Water Resource Management

While the new energy industry is developing rapidly, it also puts forward new challenges and requirements for water resource management. 

The manufacture, cooling and maintenance of wind power generation equipment requires a certain amount of water, but its water demand is low compared to other industries (such as thermal power generation). Hydrogen production can involve a water electrolysis process, which requires a large amount of water resources. Water resources may also be consumed in the utilization of hydrogen, e.g., fuel cell vehicles require water as a coolant when using hydrogen as a fuel. The production process of photovoltaic modules also requires large amounts of water, including for cleaning and cooling purposes. Currently, water supply issues brought about by climate change may impose constraints on the development of new energy industries. Water resource management is therefore critical for the new energy industry.

Many photovoltaic companies have now taken measures such as improving production processes, reducing water consumption, and using water recycling systems to recover and reuse water resources.

Recycling: Wastes generated in the production process of the new energy industry can be utilized through recycling. For example, waste photovoltaic modules, batteries, fans, etc. can be recycled and reutilized, thus reducing resource waste and environmental pollution. PV module materials contain valuable components such as glass, silicon, silver, copper, aluminum, etc. Through appropriate recovery, these substances can be recycled and reused, effectively alleviating ecological and environmental pressures and reducing the energy consumption of the entire PV industry chain, further optimizing the green and energy-saving characteristics of the entire life cycle of PV modules. The composite materials of wind turbine blades are recycled in various directions of technology and reuse, including reuse technology, crushing and adding technology, cement kiln co-disposal, pyrolysis, chemical degradation, and mechanical-chemical method. The operation process after the construction of wind power stations and photovoltaic power stations can also adopt a circular economy approach, combining the characteristics of local resources and realizing the recycling of resources. For example, wind power stations and photovoltaic power stations can be deeply integrated with local agriculture, fishery and other industries, so as to achieve resource complementation and improve the efficiency of resource utilization through the sharing of water resources and land resources.

II.the social level (S)

New energy companies should not only ensure the transparency and fairness of their own supply chain, emphasize product quality, but also pay attention to employee welfare and promote diversified development within the company. At the same time, in the process of implementing renewable energy projects on the ground, it is particularly important to establish good communication and cooperation with the communities where the projects are located as well as other stakeholders, which is related to the smooth progress of the projects and the social image of the enterprise.

Product quality and service: Product quality and service are key ESG issues. Product quality covers the performance, reliability and durability of PV and wind power equipment, while service includes pre-sales, sales and after-sales support as well as customer satisfaction. These factors directly affect a company's reputation, market competitiveness and long-term sustainability. Strict quality management and excellent customer service help companies maintain a leading position in the global market.

Occupational health and safety: In the photovoltaic industry, the high-voltage equipment and cables in photovoltaic power plants may lead to electrocution accidents; employees may be involved in working at heights when installing and maintaining photovoltaic panels, which involves the risk of falling; there is a risk of being exposed to hazardous chemicals during panel cleaning and maintenance; and there is a risk that equipment in photovoltaic power plants may generate high-decibel noise during operation, which may cause damage to employees' hearing.

As for the wind power industry, occupational disease risks mainly come from industrial frequency electric fields, noise and sulfur hexafluoride (SF6). Although pure sulfur hexafluoride gas is non-toxic, once leaked, it easily reacts with other substances to generate harmful gases that are hazardous to human health.

Safeguarding the health and safety of employees is a fundamental obligation of an organization and part of its ethics and culture. A good occupational health and safety record can enhance a company's brand image and boost the confidence of consumers and investors. From an economic perspective, reducing workplace accidents reduces the potential costs to the business, including medical expenses, compensation costs, and lost production interruptions.

Supply Chain Management and Disputed Minerals: Supply chain management involves raw material procurement, production and transportation of finished products, sales and other links, covering a wide range of management difficulties, good supply chain management is conducive to the efficient deployment of resources, reduce costs, as well as to increase profitability and improve corporate resilience. Currently, the photovoltaic industry is basically towards the direction of vertical integration, from the acquisition of raw materials, manufacturing to product sales and distribution and other stages, to achieve business integration and unified management. This strategy can help companies reduce dependence on external suppliers and enhance control over the entire production process.

And China's wind power industry chain has formed a perfect system from the production of core components to the construction and operation of wind farms, the wind power supply chain has better strength and toughness, but also deepens the division of labor in the industry chain, forming a close value chain and industrial cluster effect. Under the demand for wind power cost reduction, the synergistic effect and innovation ability between the upstream and downstream of the supply chain is constantly improving.

III. Governance level (G)

New energy companies should continuously strengthen their corporate governance structure to ensure a high degree of transparency in the decision-making process, so that every decision is closely centered on the long-term sustainable development goals of the company.

Usually, new energy companies will set up ESG governance committees to promote the active participation of the board of directors in ESG affairs, and to ensure the effective implementation and execution of ESG concepts in corporate operations from the top-level design of corporate governance.

In short, new energy companies are faced with the dual task of achieving good financial performance, profitability and growth, as well as achieving significant results in non-financial aspects such as ESG.

Author: Liu Mengdi

CSO of PinJing Education, ESG consulting director, CFA ESG investment certificate, Certified ESG Senior Analyst holder, serving as ESG consultant for more than 20 large enterprises, ESG well-known lecturer.