2019 China SIF Week, which consisted of the 7th China SIF Annual Conference and a series of side events, was held at the Grand Hyatt Beijing from 2nd to 6th, December, 2019. The event was hosted by SynTao Green Finance（SynTao GF）together with Sina Finance, and co-hosted by the UN supported Principles for Responsible Investment (PRI), UN Environment Financial Initiative (UNEP FI), UN Sustainable Stock Exchange Initiative (UN SSEi), and Economic View Institute.
Themed with “Opening-up and ESG Investing”, the 7th China SIF Annual Conference was held on 3rd, December, featuring the most recent ESG development in China and aiming to explore implementation solutions for sustainable finance. The conference brought together domestic and international experts in the ESG field, sharing forefront information, trends and best practices of the global sustainable finance through keynote speeches, roundtable discussions and parallel sessions. Moreover, the opportunities and challenges faced by funds, insurance companies, banks, listed companies, stock exchanges, family office and asset management sector as a whole under the context of opening-up, became the focus of all discussions.
Welcome remarks were given by the Chairman of China SIF, Dr. Peiyuan Guo. He indicated that ESG investment could contribute to deepening the reform of China capital market, improving the quality of listed companies, accelerating the opening-up of the capital market, and encouraging more medium- and long-term capital to enter the market.
Peiyuan Guo, Chairman of China SIF
Senior Vice President of Sina, Qingxu Deng delivered the opening speech. He expressed that ESG investment became more recognized in China in 2019, an increasing number of companies, financial institutions and asset managers started to apply ESG in their business process. Facing the global sustainable development challenges, the younger generation is eager to direct their money to those investing opportunities more beneficial to environment and society. He also introduced how Sina Finance disseminated the ESG progress and achievements made Chinese enterprises and investment institutions, promoted the establishment of ESG evaluation standards suitable for China, facilitated ESG investment in asset management; and contributed to the realization of China’s sustainable economic development.
Qingxu Deng, Senior Vice President, Sina
Head of Asia Pacific, UNEP FI, Yuki Yasui stated that UNEP FI cooperated with over 300 financial institutions worldwide, hoping to better address the Sustainable Development Goals (SDGs) and goals of the Paris Agreement through sustainable finance initiatives. She said that we were at a rather important point of time currently, with only ten years left to achieve the UN SDGs by 2030.
Yuki Yasui, Head of Asia Pacific, UNEP Financial Initiative
In the subsequent keynote speeches, Board Chairman at Shanghai Finance Institute, Executive Director for China Finance 40 Forum, and Former General Manager at China investment Corporation, Guangshao Tu, described the ESG development by summarizing it with “one widespread global tendency, two profound historical backgrounds, three distinctive characteristics of the epoch, and four actions initiated in China”. The growing trend of ESG investment worldwide was well noticed. Both domestic and international contexts are driving the development of sustainable investment. Many Chinese institutions have built up their ESG awareness and started ESG investment initiatives; but they are not communicated in common language used in international market. He suggested that Chinese market practitioners should tell the story of responsible investment in China while stepping up efforts to build and promote responsible investment.
Guangshao Tu, Board Chairman of Shanghai Finance Institute; Executive Director, China Finance 40 Forum; Former General Manager, China Investment Corporation
Ex-Vice Chairman of National Council for Social Security Fund, Zhongming Wang, shared his insight in the logic of responsible investment. He indicated that asset-owners should incorporate ESG factors into their mandates to external managers, which would make asset management companies attach more importance to ESG and significantly promote the development of responsible investment.
Zhongmin Wang, Ex-Vice Chairman of National Council for Social Security Fund
Afterwards, regarding listed companies, Chairman of China Association for Public Companies, Zhiping Song brought forward three important points: governance, performance and responsibility. He considered governance as the foundation, performance as the goal, and responsibility as the bottom line of a company.
Zhiping Song, Chairman of China Association for Public Companies
As for the practice of responsible investment, Vice Secretary General of Insurance Asset Management Association of China, Chuankui Liu pointed out the inevitable trend of responsible investment in the insurance asset management industry. He further explained that given the substantial amount and nature of insurance funds, ESG could serve as a proactive way of risk management and a drive for sustainable development.
Chuankui Liu, Vice Secretary General of Insurance Asset Management Association of China
Board Secretary and Brand Director of Ping An Group, Ruisheng Sheng shared the philosophy and practice of ESG at Ping An, including the driving factors and their practice, not limited to Ping An’s work in economic growth, poverty alleviation, healthcare, technical innovation and environment protection.
Ruisheng Sheng, Board Secretary, Brand Director, Ping An Group
The very conventional and much anticipated part is the release of the most recent research results and initiatives, where the Institute for SDGs of Tsinghua University, Moody’s and SynTao GF signed the intention of tripartite cooperation; Head of Fiduciary Duty in the 21st century of PRI, Margarita Pirovska released the Final Report of Fiduciary Duty in the 21st Century; Managing Director of SynTao GF, Rui Zhang published the China Sustainable Investment Review 2019, summarizing the scale of responsible investment and public attitudes towards responsible investment in China.
Upper: Institute for SDGs of Tsinghua University, Moody’s and SynTao GF signed the intention of tripartite cooperation.
Bottom left: Rui Zhang, Managing Director, SynTao Green Finance
Bottom right: Margarita Pirovska, Head of Fiduciary Duty in the 21st century, PRI
After the release, there are two roundtable discussions featuring “Policy Dynamics: Trends of ESG and Green Finance Policy” and “Market Practices: Institutional Investors Moving ESG from Concept to Action” respectively. The first plenary roundtable was moderated by Wei Kong, the Convener of Green Finance Development Committee of Lujiazui Financial City Council and Partner of Zhong Lun Law Firm.
Margarita Pirovska, Head of Fiduciary Duty in the 21st century of PRI, pointed out that with the number of policies increasing these years, more than five hundred of policies had been issued to support the development of sustainable finance worldwide. Meanwhile, financial regulators have started paying more attention to the impacts of ESG factors on the real economy. According to Sean Kidney, CEO of Climate Bonds Initiative (CBI), 62% of central banks around the world have taken climate risk into account, which also leads to changes in their regulations, including those supporting the green finance development and promoting the ESG information disclosure standards. Social, governance, and environmental-related risk forecasting has been paid more attention, among which climate risk will become an important risk factor for fixed income and private equity investment.
Xufeng Zhu, Professor and Associate Dean of School of Public Policy and Management, and Executive Director of Institute for Sustainable Development Goals at Tsinghua University, considered that supports from the ESG investment shall be necessary for the achievement of the UN SDGs. Guojun An, Researcher at Chinese Academy of Social Sciences Institute of Finance and Banking, Deputy Secretary General of Green Finance Committee, and Deputy Chairman of China SIF, shared the top-down attempts to promote the development of green finance in China. She also pointed out the importance of fin-tech innovation, especially for the overall green growth and the transformation of low-carbon cities.
Plenary Roundtable 1: Policy Dynamics: Trends of ESG and Green Finance Policy
Themed with “Market Practices: Institutional Investors Moving ESG from Concept to Action”, the second plenary roundtable discussed the topics of “the mainstreaming of ESG investment” and “whether ESG could promote the two-way opening-up of China’s capital market”. Peiyuan Guo, Chairman of China SIF and SynTao GF, moderated the discussion.
The guests didn’t think the ESG investment could be a mainstream investment regarding its relatively small portion in the capital market at present. However, ESG investment has been recognized and accepted by an increasing number of market participants; thus it is developing to go mainstream. Meanwhile, the green bond, as a product responding to the needs of responsible investors, has already gone mainstream, which will attract more investors’ concern towards the ESG principle.
Ben Pincombe, Head of Active Ownership of Climate Change at PRI, believed that the ESG application in China’s asset management would encourage more international capital to flow into China. But he also mentioned the problem of the inconsistent information disclosure standards in China and the international market. Regarding the problem, Hao Shi, Managing Director of Moody’s Investors Service (Beijing), considered that standards should be aimed at promoting the development of responsible investment; therefore, both the Chinese and international standards would ultimately progress to a consistent result. Ricco Zhang, Asia Pacific Director of International Capital Market Association (ICMA), introduced the interaction between the China and international market with the example of the green bond development in China. Finally, Yonggang Zhao, Vice President of R&D from China Securities Index Co., Ltd., brought forward three functions of the ESG index. Firstly, the index could provide a public and transparent way for market participants to observe the long-term value of the ESG investment. Secondly, it would contribute to improve the quality of listed companies through the process of survival of the fittest. In addition, the index could also serve as a tool for institutions to practice ESG investment.
Plenary Roundtable 2: Market Practices: Institutional Investors Moving ESG from Concept to Action
In the afternoon, the conference was held in the form of parallel forum. Discussions were themed on the sustainable finance practices of asset management companies and banks, the opening-up of the capital market and the localization of ESG, and the communication between listed companies and investors.
The parallel forum of “ESG Integration in Asset Management Sector” was moderated by Nan Luo, Head of China at PRI. Gary Lau, Managing Director of Corporate Finance Group at Moody’s Investors Service Hong Kong, underlined the increasing significance of ESG in the global market in his speech. He also introduced how Moody’s incorporated ESG factors into its credit evaluation system to provide a more transparent rating for the market. Yuebin Yang, Equity Investment Manager at SPDB AXA Fund Management, described the application of ESG from the perspective of funds. He considered that the ESG principle could help avoid some industry risks and provide a quantitative method for corporate governance assessment.
In the roundtable discussion, the guests shared the ESG practices in their own institutions, from the management structure to products. Katherine Han, Head of ESG Research at Harvest Fund Management Co. Ltd., introduced the establishment of ESG research system in the company. Yixi Wei, ESG Analyst of Equity Research at E Fund Management Co. Ltd., elucidated the application of ESG principles in the A-share market. Zhongning Pan, Managing Director from China Asset Management Co., Ltd., shared how to organize ESG data, and help listed companies improve their ESG performance through communication. Both Evelyn Xia, Executive Director and Head of Greater China at RBC Global Asset Management (Asia) Ltd., and Xu Yan, Chief Investment Officer at Hwabao WP Fund Management, pointed out that ESG could provide another reference standard to value a company. When asked about the future expectation of ESG supervision, the guests expressed the desire to see the ESG information disclosure with higher quality.
Gary Lau, Managing Director, Corporate Finance Group, Moody’s Investors Service Hong Kong
Yuebin Yang, Equity Investment, SPDB AXA Fund Management
Roundtable Guests for the parallel forum of “ESG Integration in Asset Management Sector”
The United Nations Principles for Responsible Banking (PRB) was officially released in September 2019. 130 banks around the world signed the PRB, including Industrial and Commercial Bank of China (ICBC), Industrial Bank and Hua Xia Bank in China. The parallel forum of “Banking Sector and Sustainability” was held in the context, and the guests shared the thoughts and tendencies on sustainable finance in the banking industry. The forum was moderated by Xiuling Xu, Senior Vice President at CreditEase and Member of China SIF Board of Directors. Yuki Yasui, Head of Asia Pacific at UNEP FI, shared how PRB could help banks to promote the achievement of the UN SDGs and the goals in the Paris Agreement through the significant positive and negative impact management. Qingrong Wang, Director of Policy Research Bureau at CBIRC, introduced the environmental and social policy frameworks and international co-operations relevant to Chinese banks’ overseas businesses under the regulation of CBIRC and the former CBRC. She encouraged Chinese banks to learn from international practices and standards, and to enhance the management of environmental and social governance risks.
In the roundtable discussion, Dawei Wang, Head of Department of Securities Affairs at Hua Xia Bank, introduced the impacts of signing the PRB in terms of enhancing corporate governance, improving information disclosure and establishing internal culture. Xia Liu, Manager of CSR Department at China Industrial Bank, considered that, compared to the Equator Principles, the PRB was not limited to environmental and social risk management at the project and industry levels; but also provided a comprehensive framework for the sustainable development of banks, from strategies, businesses to communication and information disclosure with stakeholders. Muyuan Qiu, Analyst of Urban Finance Research Institute at ICBC, shared the experience of participating to formulate the PRB. He said it was also a process for Chinese financial institutions to communicate and share China’s good practices with the international community. Xiaying Fang, Assistant to General Manager of Green Finance Department at Bank of Huzhou, shared the bank’s innovation and practices in green finance from the perspective of a small urban commercial bank. Jun Yan, Partner at King & Wood Mallesons and Chairman of Constitution Committee at Society of Entrepreneurs & Ecology (SEE), introduced the work of SEE in collecting, monitoring and evaluating environmental data from the aspect of an environmental data provider. The guests agreed that environmental and social risk management should be a part of the risk management; therefore, supporting sustainable development should not be conflicted with the pursuit of economic interest in the long term.
Qingrong Wang, Director, Policy Research Bureau, CBIRC
Roundtable Guests for the parallel forum of “Banking Sector and Sustainability”
The parallel forum of “Localized ESG Drives Capital Market Opening-up” focused on the similarities and differences of ESG practices and tendencies between China and the international market. The forum was moderated by Grace Guan, Secretary-general at China SIF and Vice General Manager at SynTao GF. Zengtao Wu, Chief Marketing Officer from China Southern Asset Management, delivered a keynote speech. He introduced how China Southern Asset Management integrated ESG concepts in investment principles, organization management, investment research, business development and product launch. Moreover, he pointed out that ESG investment could lead to more obvious excess returns in emerging market. And practices have proved that products that incorporating ESG as an important factor into traditional investment and financial analysis would perform better.
Elaine Wu, Executive Director and Head of Asia ex Japan Power Utilities and Environmental Equity Research at J.P. Morgan, considered 2019 as a turning point for responsible investment. Firstly, the frequent occurrence of extreme weather events underlined the impacts of climate change. Secondly, some social events have made investors pay more attention to the internal governance of companies. Thirdly, with more policies issued to regulate the ESG information disclosure, the understanding of ESG investment has been deepened worldwide, especially in Asia. She thought that ESG investment would continue to play an important role in China; and contribute to the steady development of the capital market.
In the roundtable discussion, Flora Wang, Director of Sustainable Investing at Fidelity International Limited, pointed out a tendency of the ESG assessment, changing from a retrospective assessment to a forward-looking one. She also emphasized the importance of shareholder engagement after investment. Portfolio Manager of Equity Investment at China Southern Asset Management, Hui Zhang, considered that with an increasing number of black swan events related to corporate governance and more capital flowing into China, domestic investors’ awareness and acceptance of ESG investment increased these years. Weihua Wang, Chief Investment Officer from China Life Asset Management, shared his thoughts on ESG practices from the aspect of an insurance asset manager. He indicated that as long-term funds, insurance assets would be suitable for the ESG investment. Moreover, He considered corporate governance as the most critical issue; thus the insurance capital should play a more active role and participate in the shareholders’ voting. Kaifeng Zhang, Head of Capital Market of Asset Management at Hua Xia Bank, expressed that driven by capital, companies with better ESG performance also obtained more excess returns.
During the discussion, the guests mentioned the problem of inconsistent ESG information disclosure standards. Flora Wang suggested that new regulating standards should be based on the localized adjustment of existing ESG framework. Based on the practices of SynTao GF, Grace Guan added that investment institutions should first decide which factors to be included in fundamental analysis, then drive the generation of data. The guests emphasized the importance of governance. Kaifeng Zhang also mentioned the climate risk should be paid more attention in China’s ESG practices.
Zengtao Wu, Chief Marketing Officer, China Southern Asset Management
Elaine Wu, Executive Director, Head of Asia ex Japan Power Utilities and Environmental Equity Research, J.P. Morgan
Roundtable Guests for the parallel forum of “Localized ESG Drives Capital Market Opening-up”
The parallel forum of “Investors Engaging Corporates in ESG” was moderated by Hongfu Zhang, Head of Research Department at SynTao. Wei Liu from Shanghai Stock Exchange and Mark Mills, Partner of Generation Investment Management LLP delivered keynote speeches respectively. Wei Liu compared the investor relationship management of domestic and international listed companies in terms of historical development, practices and supervision. Mark Mills said that as asset owners, investors should take a long-term perspective. To achieve a sustainable development of business, it is particularly important to transfer information through communication.
In the roundtable discussion, Yanfeng Liu, Deputy Director of Corporate Governance at China Association for Public Companies, described the current circumstances of the investor relationship management in Chinese listed companies, of which he emphasized the importance of ESG information disclosure and the driving power of corporate executives. He also indicated that telling Chinese stories in international language was still a challenge for Chinese enterprises. Zhaowen Lin from IFC – Corporate Governance underlined the important function of the board of directors, social responsibility committee and strategy department in a company’s ESG practices. She hoped to understand the overall operation and risk management of a company through the ESG information disclosure and communication. Christine Chow, Head of Emerging Markets Stewardship at Hermes Investment Management, considered that communications between investors and companies would be necessary for responsible investment. A healthy closed loop in investment practices could be formed through an effective communication and interaction with companies. Bo Tian, Head of ESG Team at China Re., indicated that the communication and interaction with investors would contribute to improve companies’ awareness and management of ESG. Finally, Jon Edwards, Chief Representative of Beijing Office at London Stock Exchange Group, added that ESG could be a beneficial tool for the communication between investors and companies. And ESG practices on substantive issues could increase companies’ attractiveness to international investors.
Mark Mills, Partner, Generation Investment Management LLP
Wei Liu, Executive Director, Investor Service Department, Shanghai Stock Exchange
Roundtable Guests for the parallel forum of “Investors Engaging Corporates in ESG”
The China SIF Annual Conference have attracted over 500 participants from governments, investment institutions, banks and listed companies. The annual conference is one of the series events of the 2019 China SIF Week, other events will continue from 2nd to 5th December, including a number of thematic seminars covering topics of UK-China Climate and Environmental Information Disclosure Pilot Workshop, Investor Engagement and Climate Action 100+, ESG China–Training workshop of Financial Reporters, Responsible Investment in Family Wealth Management, ESG and Alpha in China, Development and Innovation of Green Bonds and Social Bonds, and Sustainable Stock Exchange Roundtable.