Chinese companies are paying more attention to environmental, social and governance (ESG) factors as the country gradually improves its record on responsible investment.
The assessment from the global head of ESG at Investec Asset Management may help to reassure investors who have been discouraged by China's relatively low take-up of ESG investment standards compared with other countries.
“Whilst engagement and advocacy work in China remains relatively more challenging than in other markets, we are witnessing a real interest from companies and other investment organisations – including domestic managers – to better understand which ESG data is relevant, which standards international investors are seeking, and how analysis is used,” said Therese Niklasson, global head of ESG, and Wenchang Ma, assistant portfolio manager, Investec All China Equity Fund.
Although there is no mandate for Chinese companies to report ESG scores, industry bodies such as the Asset Management Association of China have encouraged firms to make voluntary disclosures.
The country is also undergoing reform of its state-owned enterprises, which ought to result in more independent board directors and better governance.
Last week, Chinese asset manager Harvest Fund Management announced it had joined the United Nations-backed Principles of Responsible Investment, bringing the number of China-based signatories to nine. Henry Zhao, Harvest group chairman, remarked that responsible investment “has become an inevitable trend in China”.
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