Sustainable development strategies have become one of the key development strategies for all industries and sectors around the world. China set a peak carbon-neutral target in 2020 (referred to as the double carbon target) and is committed to forming a new energy structure by 2030 with a focus on non-fossil energy and natural gas ^[1][1]. Under the double carbon target, China’s power industry, as its main energy-consuming sector, was the first to be included in the carbon emissions trading target, and the first compliance cycle for the power generation industry in the national carbon market was also officially launched in 2021, making the green and low-carbon transformation of the power industry imperative ^[2][2]. As independently operated economic entities, the sustainability level of power enterprises directly restricts the development level of the entire power industry while significantly affecting the sustainability of national economic and social development ^[3][3]. In the current environment of energy scarcity, enhancing the competitiveness and achieving the sustainable development of electric power enterprises have become urgent. Therefore, the sustainable development performance of electric power enterprises is of great concern. The realization of such sustainable development requires the establishment of a set of effective evaluation mechanisms in order to assess the sustainable development performance of each enterprise and understand and analyze the performance of an enterprise to facilitate the enterprise’s sustainable development management and provide reference advice to stakeholders.

As a sustainable development evaluation that takes into account economic, environmental, social, and governance benefits, the ESG framework is an investment philosophy that pursues long-term value growth and adheres to a corporate governance mindset focusing on the big picture and a comprehensive approach ^[4][4]. The ESG evaluation system is based on ESG information disclosed by enterprises or provided by third parties and is based on three perspectives of the environment, social responsibility, and corporate governance. The ESG evaluation system, serving as a tool for measuring corporate sustainability performance, has received much attention from stakeholders in recent years. The ESG framework provides tools and methods for integrating governance considerations into enterprise-level sustainability. As tools and methods, ESG scores provide readily available data on corporate sustainability performance, and ESG scores, ESG ratings, and ESG evaluation systems are widely used in the literature to measure the sustainability performance of firms ^[5].[5]。 Some scholars have directly adopted existing ESG rating systems, such as those produced by Bloomberg ^[5] [5]and Morgan Stanley Capital International (MSCI), into their studies ^[6][6].

2. Corporate Sustainability Performance Evaluation

An important extension of the concept of sustainable development is the concept of corporate sustainability. Corporate sustainability is the application of the concept of sustainable development at the corporate level ^[7][11]. Due to the complexity of sustainability, researchers have proposed theories such as environmental sustainability, eco-efficiency, business ethics, and the three bottom lines in an attempt to define corporate sustainability, which has led to the development of different frameworks for corporate sustainability performance constructed based on various theories. Researchers have developed many methodological frameworks in order to make corporate sustainability more easily quantifiable ^[8][9][10][12,13,14]. Initial sustainability assessments focused on the evaluation of single dimensions of sustainability, such as corporate environmental performance ^[11][12][15,16], as well as corporate social performance ^[13][17]. Measurement frameworks based on the environmental dimension cover indicators that measure corporate emissions of pollutants, resource use, erosion of biodiversity, and climate-warming impacts ^[14][18]. The measurement framework for the social dimension covers indicators for employees, supply chain management, equity, occupational health, and human rights ^[15][19]. In the economic dimension, the measurement framework measures the profitability, operating capacity, growth capacity, and credit-worthiness of a business with financial indicators, aiming to maximize wealth ^[16][20]. The shortcomings of one-dimensional measurement frameworks are not limited to their measurement of only one aspect of corporate sustainability ^[17][21]; there are also problems such as a lack of standardization techniques ^[12][16] and a lack of measurement of specific companies or sectors ^[18][22]. Triple performance was proposed to systematically measure the performance of the three perspectives of sustainability, and many researchers and institutions have conducted extensive and in-depth research on corporate sustainability based on triple performance ^[19][23]. The first edition of GRI’s Sustainability Reporting Guidelines (G1) was published by the Global Reporting Initiative and applied triple bottom line theory to provide a core framework for the measurement of an organization’s economic, environmental, and social performance ^[20][24]. Specifically for the evaluation of sustainability in the power generation sector, Qazi sought to analyze the impact of reform measures, such as structural transformation, institutional development, and policy advancement, on the sustainability of Pakistan’s power sector by using different indicators to measure the developmental performance of Pakistan’s power generation, transmission, and distribution sectors ^[3][3]. Wang applied the material element extension approach to economic, environmental, technological, and social aspects to establish a sustainability evaluation framework to assess and analyze the sustainability of five Chinese power generation industries ^[21][25]. Deng constructed a data envelopment analysis (DEA), hierarchical analysis (AHP), and dynamic evaluation system based on data envelopment analysis (DEA) to determine the economic sustainability performance of Chinese nuclear-related enterprises ^[22][26]. Gopal assessed the degree of sustainability and trends in the power sector in India using 11 indicators corresponding to three dimensions: economic, environmental, and social[27] ^[23]. Simone assessed the sustainability performance of the Brazilian power sector based on the Global Reporting Initiative (GRI) energy sector indicators by applying the directed distance function (DDF) as specified by data envelopment analysis (DEA) ^[24][28].

3. Application of ESG in Corporate Sustainability

The above literature has generally considered three dimensions of sustainable development: economic, environmental, and social. In recent years, with the rise of responsible investment, governance, serving as a new dimension of sustainable development, has received the attention of many researchers ^[25][26][29,30]. Whether at the sectoral, national, or international levels or at the corporate level, governance is key to achieving sustainable development ^[27][31]. The ESG framework provides tools and methods for integrating governance factors into sustainable development at the corporate level. ESG scores provide readily available data on corporate sustainability performance, and ESG scores and ESG evaluation systems are widely used in the literature to measure corporate sustainability performance ^[5][5]. Some scholars have directly used existing ESG evaluation systems, such as those offered by Bloomberg (Bloomberg) ^[5][5], Morgan Stanley Capital International (MSCI) ^[6][28][6,32], Thomson Reuters ^[29][30][33，34], and Refinitiv ^[30][34], for their studies. Some researchers have also adopted measurement frameworks similar to international measurement methods, adapting specific indicators in the evaluation framework based on the research context ^[31][32].[35,36]。 The ESG framework can analyze and assess the ability of companies to incorporate environmental, social, and governmental sustainability principles into their policies ^[33][37]. However, as more and more companies, NGOs, and other organizations begin to offer their own views on the composition of indicators and the number of rating and ranking products continues to expand, several problems have emerged with regard to using the ESG framework for measuring corporate sustainability performance. First, the differences in the ESG evaluation frameworks belonging to different organizations cannot be underestimated because the specific connotations of ESG are not clearly defined. The shortcomings of evaluation frameworks are reflected in various aspects, such as topic selection, indicator selection, weight positioning, evaluation methods, and data sources ^[34][35][36][7,38,39]. The ESG evaluation frameworks also suffer from problems such as a lack of transparency ^[37][40], substitutability between criteria ^[38][41], and failure to meet all stakeholders’ expectations ^[39][42]. Although the development of the ESG rating system in China occurred later than in Western and developed countries and the advanced techniques of ESG evaluation abroad can be utilized, the divergence of ESG rating agencies still exists. Min Liu analyzed the ESG rating data of Chinese A-share-listed companies based on SynTao Green Finance, Sino-Securities Index CASVI, WIND ESG, FTSE Russell, and Rankins (six Chinese ESG rating agencies) and found that the six rating agencies had a low correlation, although quantitative disclosure could reduce the disagreements between the rating systems ^[40][43]. “The basic question “which indicators or measures are the best” is not easy to answer, as they still lack uniform definitions and evaluation criteria ^[35][38]。. However, the indisputable fact is that the comprehensive ESG evaluation framework has gained general acceptance. The second problem in the existing ESG evaluation frameworks is whether ESG evaluation can determine the true level of corporate sustainable performance. Escrig-Olmedo et al. divided the sustainability principles in the evaluation into four categories and carried out a comparative descriptive analysis based on publicly available information. They found that ESG rating agencies have incorporated the new criteria into their assessment models but have not fully integrated sustainability principles into their corporate sustainability assessment process ^[41][44]. More studies have analyzed existing sustainability evaluation frameworks in terms of strong and weak sustainability. Weak sustainability allows for adaptation to environmental issues without sacrificing economic growth and relinquishing power and control ^[42][8]. Landrum argued that current corporate sustainability and evaluation practices revolve around weak sustainability ^[43][45]. This implies that businesses are not truly sustainable and that the productivity of businesses is not changing in order to meet human needs ^[43][45]. Strong sustainability entails that economic and social relationships are closely related, but maintaining the economy is equally as important of a sustainability dimension as the environment and society ^[43][45]. ESG studies consider the economic benefits of corporate sustainability as an additional result of its environmental, social, and governance performance ^[44][46], failing to view corporate sustainability in terms of the sustainability economy and, therefore, failing to actually meet the definition of strong sustainability. Third, ESG evaluation focuses greatly on the non-financial performance of enterprises, such as the environmental, economic, and social elements, but lacks an evaluation of economic aspects ^[45][47]. The economic performance of corporate sustainability is considered an additional result of its environmental, social, and governance performance, and a significant amount of research on ESG in corporate economic performance can be found in the literature. However, the relationship between ESG and economic performance has not been uniformly addressed, and various relationships have been found, such as a significant positive correlations ^[46][47][9,48], negative correlations ^[48][49][10,49], non-significant relationships ^[42][8], and indirect relationships ^[50][50]. However, whichever framework is adopted, common problems, such as a lack of standardization, reliability issues, and structural failures, cannot be ignored. Establishing a universally accepted framework to measure corporate sustainability performance is a difficult task because the concept of sustainability encompasses a variety of complex terms and components from different scientific fields ^[51][51]. Therefore, measuring the true sustainability level of a firm through ESG evaluation requires optimization of the existing ESG evaluation frameworks.

4. ESG Integration with Sustainable Development Goals (SDG)

The use of ESG frameworks to measure corporate sustainability performance would not be as prevalent as it is today if only governance factors were included in corporate sustainability evaluations. In 2015, the United Nations (UN) 2030 Agenda for Sustainable Development identified 17 goals and 169 sub-goals of the Sustainable Development Goals (SDGs), which not only emphasize the important role of business in the process of achieving sustainable development ^[52] [52]but also have far-reaching implications for corporate sustainability evaluation, including the inclusion of many human rights, cultural, and ethical factors in the assessment of sustainable development ^[53]. [53]ESG evaluation acts as a tool for the implementation of the SDGs at the enterprise level and contributes to a better understanding of the contribution of organizational commitment to the SDGs. Some studies have used ESG frameworks to link corporate sustainability to the SDGs and have demonstrated the feasibility of using the ESG framework to measure corporate sustainability levels based on measuring corporate contribution to the SDGs through aspects of ESG ^{[54][55][56][57]}[54,55,56,57]. DeMates and Phadke first used a mapping approach to map 30 SASB ESG categories to 17 SDGs, linking corporate sustainability activities to the SDGs [57]. Betti mapped 30 SASB ESG issues to SDGs and found that some ESG issues were more relevant to SDGs and their goals than others issues ^[54][54]. Similarly, Consolandi mapped SASB ESG questions to SDGs to examine how healthcare companies contribute to SDG 3 ^[55][55]. Khaled mapped/linked SDGs to Refinitiv ESG scores to contribute to the emerging research on SDGs, helping companies to identify and prioritize what is most relevant to their sustainable business practices based on the most relevant SDGs and indicators ^[56][56]. In terms of ESG–SDG relationships, the current research is limited to linking ESG topics to elements of the SDGs. There is a lack of research on linking the SDG indexes and the method of building the index base for ESG evaluation.