China begins to embrace global sustainable investment trend, but big names still missing, says China chief of UN-backed body
- Mainland companies’ environmental, social and governance performance starting to be weighed in investment decisions
- But lack of asset owners ‘leaves a major gap to be filled,’ says China’s leader of the drive
Mainland China is slowly embracing the global responsible investment trend, tripling in the past year the number of investment firms agreeing to systematically include companies’ environmental, social and governance performance in their investment decisions.
But a lack of asset owners – such as sovereign fund China Investment Corp (CIC), pension administrator National Council for Social Security Fund and insurance companies – among the signatories to the Principles for Responsible Investment (PRI) means much more work needs to be done, according to its first China head.
“This leaves a major gap to be filled … even as China has seen the fastest growth in signatories globally,” Beijing-based Luo Nan said in an interview.
“But I am excited that CIC has already started research and preparation to build an internal [environment, social and governance performance] investing system, and I can feel an increase in understanding of the investment approach in China’s investment community,” added Luo, who took the job in late 2017 to drive the initiative in the world’s second-largest economy.
Some 21 firms have become signatories of PRI, the world’s leading proponent of responsible investment and a non-profit organisation backed by the United Nations. One year ago, the number was only seven.
But the number remains small relative to the size of China’s economy, considering there were 161 signatories in Asia and 2,232 globally at the end of last year.
The 13-year old PRI is funded by asset owner and professional investor signatories globally with combined assets under management of more than US$80 trillion.
PRI signatories pledge to incorporate responsibility factors into their investment analysis and decision-making processes, demand entities they invest in make disclosures on such issues, and report on their implementation progress. The goal is simple: to encourage companies to engage in behaviours that protect the planet.