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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The Global Financial Centres Index 31 (GFCI 31)

The data on which GFCI 31 is based relate to the period up to the end of 2021. Overall the average rating was stable, less than one point lower than GFCI 30, following three consecutive drops in the average rating.