ESG Gaining Momentumce
ESG investment has been a significant theme for the global asset management community in recent years. Although there is still a development gap, ESG is quickly gaining momentum in China.
By the end of 2020, 52 Chinese organizations had become signatories to the United Nations’ Principles for Responsible Investments, including 39 asset managers.[1] Of the Top 30 list, 10 asset managers are PRI signatories (see figure 14). The past year has seen significant ESG-related activities among leading Chinese managers, including the hiring of ESG analysts, the construction of ESG analytical frameworks and the launch of ESG themed investment products.
In developed markets, asset owners with a commitment to responsible investment have been key drivers of the ESG agenda and have exerted a substantial influence upon asset managers. In China, with a few exceptions, most asset owners have been much less likely to request ESG investment practices from their managers. However, as global asset owners increase their allocations to China, they have provided a substantial cross-border “ESG push” to the leading Chinese asset managers, who have been actively seeking investment mandates from global investors.
There is an increasing supply of ESG data from securities issuers in the market. In September 2020, both the Shenzhen Stock Exchange and the STAR Board (technology board) of the Shanghai Stock Exchange published guidelines to encourage listed companies to disclose ESG information. At that time, a total of 1021[2] Shanghai and Shenzhen-listed companies had already disclosed their ESG data.
Elsewhere, the China Central Depository & Clearing Co., Ltd., China’s bond market infrastructure, has recently started a project to build a Green Bond Environmental Benefit Disclosure Indicator System, aiming to quantify the environmental benefits of green bonds in China.[2] Source: Eastmoney Choice terminal.
In September 2020, China pledged to reach carbon emission peak by 2030 and carbon neutrality by 2060. This will provide further impetus to Chinese ESG investment.
[1] Source: PRI.
[1] Source: Eastmoney Choice terminal.
