ESG Investment: Global Trends and China Opportunities

On 2021 Shanghai Stock Exchange Global Investors Conference (SSE GIC 2021), multiple International Financial Centres including Shanghai, New York, London, Hong Kong, Paris, Luxembourg and nearly 100 financial institutions shared their best practices and insights through their C-suites speakers. SSE GIC 2021 has over 1,000 international investors to participate online and on-site.

In this year’s conference, ESG arises to be a hot topic discussed by global and Chinese investors. On an important panel, four female leaders from leading financial institutions with diversified backgrounds shared their thoughts and leadership on the global trends and China’s prospect around ESG investment.

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Nandini Sukumar

CEO of the World Federation of Exchanges (WFE)

Stock exchange is in a unique position to connect investors, companies and regulators, and plays a key role in promoting responsible investment and sustainable development. Currently, it is quite inspiring that China is planning to advance the mandatory information disclosure of ESG investment and promises to reach Carbon Neutrality by 2060. The launch of China’s Carbon Market is also among these strong efforts. Globally, a good number of countries are capitalizing on carbon market to reduce emissions by deploying economic incentives as well as penalties like credit, tradable carbon allowance, etc. It is highly suggested for asset managers to adapt to China’s business and policy environment, reaching their global goals of ESG in the most suitable way.

Julia Wu

Chairman, Managing Director, Greater China Operation Decision Committee, MSCI

ESG investment has become a global mainstream trend that can effectively manage risk and create long-term benefits. Companies with better ESG management tend to have a better performance in managing risk and grasping opportunity. Over past years, trillions of dollars have crowded into the ESG funds and are expected to continue the fast growth in the future. Since MSCI includes A-share with ESG rating in 2018, the overall quality of Chinese companies’ ESG information disclosure has continued to improve. China is highly expected to issue its ESG Guidance as soon as possible to promote further development of this sector.

LI Yimei

CEO of China Asset Management Co., Ltd (China AMC)

ESG investment is gradually becoming the mainstream of global assets management. ESG rating system needs to be adjusted with localization consideration, and AMCs must include the ESG factors reflecting the development of local markets into their own investment management. With over 20 years of local experience in China market,China AMC holds the belief that current global mainstream ESG system cannot fully reveal the real ESG performance of Chinese companies. The most fundamental investment philosophy of China AMC lies in that ESG is not just a label, but needs to rise to the values of investment and the underlying logical framework. China AMC has been actively communicating with senior management of listed companies to help them improve the sustainability of business development, encourage them to participate in ESG information disclosure and improve the quality of ESG disclosure. China AMC believed that ESG investment does not mean the loss in investment return. It can create return.

LUO Nan

Head of China of UN Principles for Responsible Investment (UN PRI)

ESG investment is not optional any more with the backdrop of carbon neutrality targets and limited natural resources. Investors have to actively research ESG factors including its impact on investment. Investors have to actively manage the risks in relation to sustainability in win-win mindset by using diversified tools. Investors have to identify the investment opportunities in low-carbon and sustainable development, and create positive impact to the whole environment and society through investment. This exclusively is the single helpful way that we approach sustainable development of society and capital market.

Calvin Fu

Chief Economist of IFC•IIC Federation APAC

Global Sovereign Wealth Funds and institutional investors may place more of their portfolio allocation on equity and stock markets, and continue to increase their investment on China’s carbon neutrality and green technology sector. They may invest more on the companies related to environment technology and carbon emission reduction technology on SSE STAR Market. The SWFs and institutional investors can also launch special funds around China and Asia market. The investment opportunities in China’s carbon emission trading will bring long-term benefits for the investors.

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H.E. Mr. WU Jianli: Implementing the New Development Concept to Foster a Sustainable Investment Landscape

In line with China’s current economic development stage, sustainable investment is an investment approach and concept that integrates environmental protection, social responsibility, and corporate governance. It emphasizes economic and social benefits and is a practical manifestation of the new development concept “innovation, coordination, green, openness, and sharing” in investment practices. Sustainable investment is a powerful tool for promoting economic transformation and upgrading to achieve high-quality development and has broad development prospects.

H.E. Mervyn King: Global Inflation and Resources Redistribution under Radical Uncertainty

We live in a world of radical uncertainty. We hope that governments and central banks can rise to the challenge, ensuring prosperity in the years ahead. Many of these challenges will require greater understanding and cooperation between countries. Despite the rising tensions between the United States and China, the future of the world depends on greater collaboration between them to ensure the growth of prosperity of all countries in the world. The responsibilities of the United States and China are both great, but the rewards are greater still.

H.E. Mr. LOU Jiwei: Innovative Exploration for the Development of Sovereign Wealth Funds in China

China Investment Corporation (CIC) is recognized as a sovereign wealth fund that conforms to international norms. Over the past 15 years, the CIC has been following mechanisms: to diversify investment centered on asset allocation; to adhere to financial investment and responsible investment; to establish a transparent and standardized management system, and a investment decision-making and risk management mechanism; and to implement a long-term investment philosophy. The CIC aims to fulfil its duty as a SWF that seeks higher returns over a longer period and takes higher risks. On the international front, CIC actively implements the governance in transparency and standards.

H.E. ZHOU Yanli: Expanding China-EU Financial Cooperation for Mutual Benefit

In the context of the sluggish economic recovery, the world is challenged with the triple whammy of climate change, regional hotspot issues and the adversities against economic globalization. Chinese President Xi Jinping pointed out that to resolve the contradictions arising in the process of economic globalization, all countries should strive to achieve more inclusive global governance, more effective multilateral mechanisms, and more active regional cooperation. This China-EU Innovation Investment Conference is of significance to discuss the expansion of China-EU financial cooperation and promote the high-quality development of service trade.

H.E. Ms. Suzanne Streit:Financial Regulation-Encouraging to Innovate and Anticipate

Switzerland is aiming at combining its traditional strengths, such as high productivity, stability, security and trust, with an openness for new technological and international developments, such as fintech, artificial intelligence and sustainable finance. Previously, a working plan has been adopted to help enhance the bilateral financial market cooperation between Switzerland and China. Further cooperations in bank and wealth management as well as in insurance and reinsurance are also under discussion between China and Switzerland.