Sina Finance's ESG Rating Center offers 14 ESG services, including information, reports, training, and consulting, to assist listed companies in promoting ESG concepts and enhancing sustainable development performance.
Recently, Funeng Oriental and Guizhou Bailing were both subjected to special treatment (ST) due to false records in their annual reports.
Funeng Oriental disclosed in an announcement that the company will face special treatment (ST) because its 2020 and 2021 annual reports contained false records. It also received a preliminary penalty notice from the Guangdong Securities Regulatory Bureau proposing a fine of 6.5 million yuan. According to the facts stated in the China Securities Regulatory Commission's preliminary penalty notice, the aforementioned financial metrics include operating revenue, total profit, net profit, and asset or liability items on the balance sheet.
The issues at Guizhou Bailing are more severe. Not only did the company engage in financial fraud spanning four years—2019, 2020, 2021, and 2023—but it also failed to recognize current period selling expenses based on the accrual principle and the matching of revenue with costs and expenses. This led to underreported selling expenses from 2019 to 2021, resulting in cumulative profit inflation exceeding 650 million yuan and profit reduction exceeding 450 million yuan through improper recognition of selling expenses.
This public opinion incident points to failures in internal governance and financial internal control systems within the companies. Funeng Oriental's involvement in false records across multiple financial metrics like operating revenue and total profit directly impacts investors' assessment of the company's true operational condition. Guizhou Bailing's problems are more systematic. This practice of adjusting profits according to "needs" not only violates accounting standards but also exposes severe deficiencies in corporate governance, where supervisory mechanisms are ineffective and internal controls are seriously lacking.
Notably, such financial fraud cases are not isolated incidents. According to the "Q2 2025 Listed Company ESG Risk Report" (data source: Shanze Cloud Platform monitoring), governance-related risk events accounted for the highest proportion (797 incidents), with financial fraud disclosure violations reaching 204 cases, representing 52% of all disclosure violation incidents. This has become a "cancer" eroding trust in capital markets.
From an ESG perspective, these incidents represent failures in the "Governance (G)" dimension. According to core ESG rating standards, the essence of governance lies in the standardization of internal management mechanisms, the authenticity and transparency of information disclosure, and the protection of shareholder rights. The actions of these two companies have crossed this fundamental line.
The ESG ratings of Funeng Oriental and Guizhou Bailing can be queried on Sina Finance's ESG rating platform.
According to the latest rating results from domestic rating agency Huazheng Index on October 31, 2025, Funeng Oriental received an ESG rating of CCC, ranking 391st among 492 A-share listed companies in the machinery manufacturing industry, placing it in the lower-middle range. Breaking down the dimensions, the overall governance (G) score is only 72.02 (B). Although the governance rating is slightly higher than the environmental dimension, this incident of false financial disclosure directly impacts core scoring metrics in Huazheng's rating system, such as "governance risk," "disclosure quality," and "external penalties," which may lead to a decline in the governance dimension score.
Domestic rating agency CSI Index gave Guizhou Bailing a latest ESG rating of B, placing it in the lower-middle range among 265 A-share listed companies in the pharmaceutical industry. The CSI ESG evaluation system includes nearly 200 indicators, with governance dimension metrics like "compliance management," "authenticity of information disclosure," and "executive responsibility constraints" accounting for over 30% of the weight. The severe violation involving four years of financial fraud and cumulative profit manipulation exceeding 600 million yuan constitutes a "major controversial event" as defined by CSI ESG, which may lead to a decrease in the overall governance rating.
For listed companies, false financial information can mislead investors' decisions, causing investment losses and infringing upon shareholder rights. Trust from all stakeholders, including customers, suppliers, and creditors, will sharply decline.
To regain stakeholder trust, these companies need to implement stricter financial accounting and audit processes, ensuring absolute rigidity in accounting standard enforcement. They should also establish lists of related parties and real-time monitoring systems for fund transactions. Any non-operational fund transfers must be approved by a special committee where independent directors constitute the majority and be disclosed immediately. Additionally, regular compliance training and audit systems should be established.
To accurately track corporate ESG performance and assess the potential impact of ESG public opinion, Sina Finance's ESG Rating Center has introduced an "ESG Impact Level" with standardized qualitative criteria. It categorizes positive ESG舆论 into four levels: excellent, good, medium, and minor; and negative ESG舆论 into four levels: severe, serious, medium, and minor.
Sina Finance's ESG Rating Center is the industry's first Chinese-language ESG professional information and rating aggregation platform. It is dedicated to promoting and advancing sustainable development, responsible investment, and ESG (Environmental, Social, and Governance) values, disseminating corporate ESG practices and exemplary cases, driving the development of China's ESG sector, and facilitating the establishment of Chinese ESG assessment standards and the improvement of corporate ratings.
Leveraging the ESG Rating Center, Sina Finance has launched several innovative ESG indices, providing more options for investors focused on corporate ESG performance. Concurrently, Sina Finance established the China ESG Leadership Organization Forum, collaborating with leading Chinese ESG companies and partners to promote the development of an ESG evaluation standard system suited to China's characteristics and advance ESG investment within China's asset management industry.
