Participants discuss China ESG practices and high-quality development
15 investors from 14 investment institutions with over USD8 trillion AUM attended Active Ownership for High-Quality Development in Beijing, 4-7 June 2024. Represented companies. including Allianz Global Investors, APG Asia, Invesco, and Fullerton Fund Management, attended presentations, discussions, and meetings about China’s market and ESG practices.
Benjamin McCarron , founder & managing director of ARE, gave the opening speech at the event and highlighted the importance of Active Ownership for high-quality development.
“There are strong overlaps between high-quality development and sustainable development. High-quality development is more closely linked to economic activity and business on achieving sustainable development goals. All stakeholders will benefit from high-quality development in China—Active Ownership and engagement with companies can support that development,” said McCarron.
As the China market releases more positive policy signals, ESG receives increasing attention. ARE took the trend as an opportunity to invite China domestic and international investors to a four-day event encompassing workshops, site visits, and discussion opportunities all with the aim of raising awareness, professionalism, and skills around Active Ownership.
Sessions showcased best practices in stewardship, discussed escalation actions, and addressed risk management practices in nature and climate. Additionally, ARE aimed to strengthen the role of the Asia Transition Platform among domestic and international institutional investors by creating a trusted space for synergy and dialogue.
“This study tour helps me to further understand the national viewpoints and attitudes on ESG-related issues from the perspective of national strategies and policies, provides a perspective of practical implementation to learn the challenges and confusions faced by domestic enterprises in promoting ESG, as well as support me to explore domestic and international investment’s practices in responsible investment. The whole experience is very rewarding,” said Ruolin N. Associate Director from Fullerton Fund Management.
Focus centred on environmental aspects of investment, particularly addressing climate change concerns, and enhancing nature and biodiversity as economies develop. Workshop topics included responsible investment and active ownership, energy transition in China, nature-related financial risk management, and China’s sustainable automotive industry and supply chain.
“ARE’s study tour with industry, policymakers, and regulators has highlighted investment opportunities from China’s green and transition trends. These trends could drive high-quality development of industry and financial markets in China especially as more Chinese enterprises capture export growth from climate transition. Exchanges with other asset owners and managers has also been particularly helpful in highlighting common challenges and best practices in sustainable investing such as on transition frameworks, stewardship approaches or assessing of nature-related risks,” said Alexander Ho-Young Chan ,CESGA Asia Pacific Head of ESG from Invesco.
Rainforest Foundation Norway (RFN) and Principles for Responsible Investment (PRI) provided technical support as knowledge partners. Beijing Green Finance Association, Yinhua Fund Management, and Harvest Fund Management played important roles as supporting organisations. Beijing Municipal Bureau of Financial Regulation also strongly supported the event.
Guest speakers from government authorities, financial institutions, and companies illustrated China’s policies on climate, green finance, energy, listed company disclosure, and sustainable transportation. Speakers also shared low-carbon transition paths and case studies in various sectors, including energy and power, mining, and automotive. Twenty-five representatives from 13 domestic top public funds as well as nearly 100 experts were invited to participate in the workshop. The workshops also showcased actions to address climate risk and halt risks among domestic investors.
Wang Ying, Deputy Director General of Beijing Municipal Bureau of Financial Regulation:
“Beijing strongly supports the concept of green development, continuously exploring new models for the development of green finance and paid efforts to build a global green finance and a sustainable finance center. Beijing welcomes exchanges on green finance and high-quality development, and sincerely invites international and domestic investors and financial institutions to conduct business in Beijing and promote high-quality economic and social development.”
Lyu Xuedu, Tencent’s Senior Advisor for Carbon Neutrality, former Chief Climate Change Specialist at the Asian Development Bank:
“All in-depth exchanges are very important for the international community to understand China’s contribution to addressing climate change. At the national level, the dual-carbon policy is having a positive impact on the green transition and development of various industries, while Chinese companies are also taking active actions. These actions and practices from China need a broader and open platform to find further cooperation with international partners.”
Wang Zhongmin, former Vice Chairman of the National Council for Social Security Fund (NCSSF), stated that high-quality development should also leverage the power of technology:
“Investors should not only focus on integrating ESG in their portfolios, but also learn more about how to imbed latest technology development into ESG practice. For example, AI can help improve the availability of ESG data, make ESG communication easier by making ESG data visualization more convenient. AI could also be utilized by corporates to better manage and plan supply chain resource for achieving better ESG practices of upstream and downstream of supply chains.”
Promoting Dialogue with SASAC
ARE offered a unique opportunity for dialogue between the core government department on ESG issues management and participating listed central and state-owned companies.
In China’s ESG practice, listed companies of central enterprises have played the role of “leading group” and “main force” in ESG information disclosure. On 7 June, relevant departments of the State-owned Assets Supervision and Administration Commission of the State Council (SASAC), central SOEs held a seminar together with ARE, with international investors invited by ARE, to have a deep discussion on leveraging ESG and responsible investment to promote high-quality development of central SOEs. Guest speakers from SASAC introduced the organisational structure and functions of SASAC; shared the latest policies and developments of the corporate social value in China; illustrated key points and achievements of state-owned enterprise reform; and explained ESG information disclosure, rating, and practices of listed companies controlled by central SOEs. Investors responded to several questions raised by SASAC and central companies, such as global ESG investment trends and outlook, how foreign investors evaluate the performance of state-owned listed companies, application and practice of ESG investment strategy.
“ARE provides a perfect bridge to connect asset owners, asset managers, policy makers, and corporates to exchange ideas and thoughts on energy transition, nature and biodiversity, and sustainable finance in China,” praised Yijin G. , ESG Research Analyst from Manulife Investment Management. “The meeting with State-owned Assets Supervision and Administration Commission of the State Council (SASAC) offered us insight to the practice of central enterprises in fulfilling their social responsibilities and the measures to achieve the ‘dual carbon’ goals”.
ARE catalyses corporate change through investor backed engagement to promote a sustainable and compassionate Asia. ARE’s high quality independent research, robust investor network, and engagement expertise, provide corporate leaders and financial decision makers with insights leading to concrete action. In the future, ARE will continue to promote international exchanges on active ownership, contributing to China’s high-quality development.
