China’s goal of ESG standards with Chinese characteristics faces challenges in effectiveness, global recognition
- In July, Shenzhen Securities Information launched its CNI ESG Ratings Methodology, along with a set of indices based on the methodology
- Chinese alcohol giant Kweichow Moutai is one of the top holdings in the CSI 300 ESG Index for its efforts in poverty alleviation
China wants to set its own environment, social and governance (ESG) standards for the financial market, with an emphasis on the country’s “dual carbon” and “common prosperity” goals, but these efforts are being complicated by market volatility as ESG investors focus on short-term returns, according to analysts.
Moreover, challenges remain for localised ESG evaluation systems, in proving their effectiveness and being recognised by the international market and overseas investors, analysts said.
In July, Shenzhen Securities Information, a wholly-owned subsidiary of the Shenzhen Stock Exchange (SZSE), launched its CNI ESG Ratings Methodology, along with a set of ESG indices based on the methodology, with the aim of providing a set of ESG rating tools for the Chinese market.
Under the three pillars of environment, society and corporate governance, the methodology covers 15 themes and over 200 indicators, including several criteria around China’s national strategic goals, such as “carbon neutrality”, “rural revitalisation” and “common prosperity” for poverty alleviation.
“The current ESG assessment methods adopted by international institutions are mainly established for developed markets, and are not fully applicable to developing countries,” Yang Chengdong, general manager of the index division of Shenzhen Securities Information, told the South China Morning Post last week.