China’s US$1.4 trillion sovereign wealth fund backs ESG investment while resistance hardens in the US
- Some 65 per cent of listed central state-owned enterprises issue ESG reports, twice the disclosure rate for all Shanghai- and Shenzhen-listed companies at end-2023
- Among SOE issuers in the MSCI World Index, a fifth of them received ESG upgrades last year, compared with 13 per cent that were downgraded
In the US, ESG has become a political wedge issue. In China, it’s a national rallying cry.
“Environmental, social responsibility and governance,” according to a promotional documentary running on Chinese state media, is a way of “using the power of corporations to achieve a more beautiful society.”
Spurred by Beijing, state-controlled enterprises are beefing up their voluntary ESG disclosures. Asset managers are introducing new products to appeal to the investing public. And Guo Xiangjun, deputy chief investment officer of China’s US$1.35 trillion sovereign wealth fund, declared at a forum last month that sustainable investing “will prevail.”
Beijing hopes the embrace of ESG will encourage investors at home and abroad. So far, the response has been mixed.
Still, China’s enthusiasm stands in marked contrast to the political attacks on the movement in the US. Many Republican politicians at the state and national levels have campaigned against ESG, and an alliance of about 20 states, led by Florida governor and presumptive presidential candidate Ron DeSantis, says it’s intent on banning ESG investing outright.