Foxconn chairman Young Liu. Credit: DIGITIMES
Foxconn chairman Young Liu has revealed the company’s plans to establish an ESG (environmental, social and governance) green energy fund with the goal of helping other companies invest in sustainability. This came on the heels of China’s recent power cuts in Sichuan, further highlighting how ESG is now a key factor in the supply chain.
The need to invest in ESG has become a new challenge for industry management worldwide. However, businesses need to first have sufficient profits before they can support investment in ESG. Thus, Liu proposed a sustainability formula of EPS (earnings per share)+ESG. In order to further expand the influence of the sustainability formula on the supply chain, Liu revealed that Foxconn plans to establish an ESG green energy fund to advocate and implement ESG, and to accelerate the development of environmental technology.
The EPS+ESG formula is proposed because if a company is not profitable, it renders all other things pointless, stated Liu. If a company does not have the corresponding revenue and profits, it will not be able to make plans for ESG.
ESG and EPS are not mutually exclusive, according to Liu. For instance, Foxconn is very optimistic about the future of electric vehicles (EV) and has actively planned to be part of the EV industry. However, Foxconn’s investment in EVs is not only about the industry’s potential but also its ESG traits.
An example from the other direction is China’s recent power cut in Sichuan due to high temperatures caused by extreme weather, and the power cut has affected the supply chain located there. When asked about the power cut, Liu admitted that it has affected Foxconn’s production, though estimates suggest that it will not be major.
Liu emphasized that people should care and focus more on issues caused by global warming. Even though this power cut occurred in China, the drought caused by warming is global.
Liu mentioned that for an industry to grow, platformization is one of the requirements. To promote the development of ESG, a platform is required as well, with a major enterprise leading everybody. Therefore, on top of promoting ESG within the company, Foxconn also hopes that the establishment of the ESG green energy fund can guide the industry and supply chain to develop as well.
Liu said that the main focus of the fund will be to invest in sustainable green energy-related projects such as renewable energy, new environment technology, power stations, and more. This is because green energy plays a key role when implementing ESG. However, the cost to purchase green energy is rather steep for many small-and-medium enterprises (SMEs). Therefore, the hope is that the establishment and investment of the green energy fund can assist SMEs in obtaining clean energy.
