Scenarios and Trends of Internal Control-ESG Integration in China’s Small and Medium-Sized Manufacturing Enterprises
Abstract
This study investigates the integration of internal control and ESG (Environmental, Social, and Governance) within China's small and medium-sized manufacturing enterprises, analyzing practical applications and developmental trajectories from 2015 to 2025. Findings reveal a strategic shift from "passive compliance" to "active value creation," driven by technological diffusion and policy evolution. Technology adoption demonstrates a distinct "trickle-down" effect, with IoT and AI solutions becoming accessible to SMEs through government subsidies and "small, fast, lightweight, and precise" toolkits. The policy landscape has evolved significantly, particularly with the 2025 Green Factory initiative, which replaces third-party mandates with stringent carbon footprint tracking requirements, thereby incentivizing firms to develop proprietary data management systems. Despite progress, SMEs face persistent challenges, including dynamic compliance burdens, technological integration barriers, and fragile governance frameworks.
Case analyses highlight divergent outcomes: while firms like Lenovo Group and Sunwoda Energy have achieved success through supply chain collaboration and data monetization, others, such as Jiuyou Investment, have faced severe risks due to the misalignment of ESG initiatives with financial controls. Looking ahead, ESG internal control is expected to become more democratized, regionally coordinated, supply-chain-centric, and globally standardized. To navigate this landscape efficiently, SMEs are advised to adopt a hybrid strategy combining phased implementation, policy leverage, and ecosystem partnerships. This research contributes a theoretical framework and actionable insights for building ESG-centric internal control systems in the manufacturing sector.
Keywords
References
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DOI: http://dx.doi.org/10.26549/mmpp.v7i1.35962
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