The ESG Newsletter is prepared by SynTao Green Finance to provide readers with analysis and information on green finance, responsible investment and environmental, social and governance (ESG) issues.
Key Focus · STGF Insights · Policy Update · Market Update
ESG Investment Instruments Update · ESG Controversies
Key Focus
The 4th ESG Dissertation Competition Registration Open｜Closing Date March 19 (Chinese Only）
SynTao Green Finance, 2023.02.23
To encourage young students to engage in ESG academic research and help the development of sustainable finance in Chinese academia, China SIF, with the support of Huatai Securities, organised the 4th ESG Dissertation Competition. The aim is to promote more profound academic research in the field of sustainable finance and to explore a more substantive link between nature conservation practices and ESG.
SSCI Journal: Electronic Markets Call for Papers｜ESG and Online Markets
SynTao Green Finance，2023.02.10
This special edition aims to initiate and start a series of research to examine the key aspects of online markets from the ESG perspective in different sectors, e.g., business, service, tourism, and entertainment, and open up new possibilities for future research and managerial implications. The special edition also seeks to analyse the importance of each ESG factor in the online market. Contributions of both theoretical and empirical papers are welcomed.
STGF Insights
Domestic ESG Investment is on the Rise (Chinese Only)
GUO Peiyuan，2023.02.21
As global investors take ESG seriously, more and more companies are committing to ESG practices. Due to factors such as the economic downturn and geopolitical conflicts, global development challenges have increased in 2023.. What is the outlook for ESG investment? What challenges will Chinese companies face in their ESG practices in the face of the uncertainty of the general environment?
The Knowledgeable ChatGPT, How to View ESG Trends (Chinese Only)
GUO Peiyuan，2023.02.06
The widespread use of ChatGPT can create new problems. Typical problems that may arise include 1. providing incorrect information if used by users, which may result in damage. 2. the provision of unethical or even illegal information which may be misused. 3. Using ChatGPT tools to create forgeries and frauds. There is also the question of the ownership of the content generated by ChatGPT.
Capital Tender: From Proxy Voting to Engagement (Chinese Only)
GUO Peiyuan，2023.02.26
'Proxy voting' is gentler than divestment. 'Engagement' is even more so. Institutional investors should know how to apply engagement to ESG investment. Listed companies should understand how to respond to foreign institutional investors' communication enquiries on engagement, especially in relation to ESG, which is a new topic in investor relations management.
Policy Update
How will EU's 'Green Tariff' Impact China's Carbon Market?
China Dialogue, 2023.02.09
The Carbon Border Adjustment Mechanism (CBAM) will require non-EU companies to pay a carbon tax on certain emissions-intensive products. While several experts have said that CBAM will have a limited impact on China's exports to Europe at this stage, it is expected that in the future, the mechanism may prompt Chinese policymakers to improve the national carbon accounting system.
Hubei Increases Financial Support for Green Building Industry
Wuhan Science and Technology Bureau, 2023.02.17
The Wuhan Branch of the People's Bank of China and the Hubei Branch of the Construction Bank drafted the "Green Building Industry Loan Implementation Regulations". The Hubei Provincial Market Supervision Administration approved the Regulations on January 6 2023, as a local standard in Hubei Province.
Market Update
ESG Funds Line Up for Launch as Performance Picks Up in First Month of the Year
STCN, 2023.02.02
More than a dozen ESG funds were newly launched, in issuance or about to be launched in the first month of 2023. By type, active equity funds continue to be spotlighted. In terms of themes, environmental themes continue to dominate the market. The performance of ESG funds was stormy last year due to the shaky market. The performance of ESG funds has rebounded significantly in January, driven by the overall performance of the equity market.
National-Level Green Exchange Officially Launched
Sina Finance, 2023.02.05
The China Beijing Environment Exchange (CBEEX), currently the only national green exchange, is officially located in the Beijing Municipal Administrative Center and will be built as a national green exchange for the world, fully promoting the construction of a national green development demonstration zone in the Beijing Municipal Administrative Center.
Six Secirities Companies Are Granted Access to the Self-Managed Carbon Trading Business of the CSRC, Domestic Carbon Market Liquidity is Expected to Improve
JIEMIAN, 2023.02.07
China's carbon financial market is still in its initial stage, and the carbon market is mainly for spot trading. The six securities companies are permitted to conduct their carbon trading on legal trading venues in China. However, it does not mean they can now access the national carbon market, which only allows emission-controlled enterprises to trade carbon emissions.
HKSAR Government's Inaugural Tokenised Green Bond Offering
HONG KONG MONETARY AUTHORITY, 2023.02.16
Recently, The Hong Kong government announced it has successfully raised 800 million HKD ($102m) through the sale of digital green bonds, expanding the use of blockchain technology. It represents the first tokenised green bond issued by a government, with a yield of 4.05%.
"Carbon Neutrality" Heats Up as Institutions Focus on New Energy Industry Chain
WWW.CB.COM.CN, 2023.02.18
Since 2023, several carbon-neutrality-themed funds have been set up. There are two reasons why funds are actively laying out carbon-neutrality-themed funds. First, carbon neutrality aligns with the national development strategy and has been incorporated into the medium and long-term plans for economic and social development. Secondly, the industry has received policy support and high recognition from public investors. In addition, the carbon-neutrality theme contains many investment opportunities.
ESG Investment Instruments Update
February ESG Funds Ranking
Note: This list screens the top 10 ESG funds by the percentage of peer group fund interval returns. The peer group funds include Equity Blend, Common Equity, International (QDII) Equity, Flexible Allocation, Enhanced Index, Passive Index, and Balanced Blend funds.
Data source: Wind Data Terminal, compiled by SynTao Green Finance
New ESG Funds
Data source: Wind Data Terminal, compiled by SynTao Green Finance
ESG Indices
Based on a systematic assessment of the ESG performance of listed companies, SynTao Green Finance has developed a series of index strategies built around ESG factors. Within the CSI 300 and CSI 500, respectively, it has constructed a single-factor ESG meritocratic strategy index, preferentially selecting the top 20% of stocks; it has also constructed a weighting tilting strategy without changing the index components, tilting the weighting to companies with higher ESG score improvement companies and companies with higher ESG management scores.
As the end of February 2023, the excess returns of the CSI 300 ESG Single Factor Index, ESG Total Score Optimal Index, ESG Progress Optimal Index and ESG Management Optimal Index relative to the CSI 300 Index for the last six months were 1.3%, -4.0% and 1.6% respectively; the CSI 500 ESG Single Factor Index, ESG Total Score Optimal Index, ESG Management Optimal Index and ESG Risk Selective Index over the CSE 500 Index for the last six months: 2.2%, 3.1% and 3.0% respectively.
ESG Controversies
Environmental Controversies
· On February 5, the subsidiary of Lianhe Chemical Technology (002250.SZ) was fined 310000 yuan for environmental compliance issues.
· On February 18, Lujiazui's (600663.SH) indirect holding subsidiary was fined 5.42 million yuan for violating the comprehensive environmental management policies.
Social Controversies
· On February 9, Shandong Iron and Steel (600022.SH) subsidiary's illegal operation resulted in one person's death and was fined 700000 yuan.
· On February 10, Bank of Jiangsu (600919.SH) was fined 7.736 million yuan for violating account management regulations and other eight violations.
· On February 10, Huailai Mining Machinery Repair Plant of Jizhong Energy (000937.SZ) Zhangkuang Group was fined 700000 yuan for the "June 21" collapse accident.
· On February 14, Anke Innovation (300866.SZ) recalls 4671 "Anke" Brand Chargers.
· On February 16, Jizhong Energy (000937.SZ) Dongpang Mine was issued two tickets for violating the safety production law, with a total penalty of 3.52 million yuan.
· On February 17, Minsheng Bank (600016.SH) was fined 23 million yuan for 14 violations such as inaccurate loan risk classification.
· On February 17, Bank of China (601988.SH) was fined 16.8 million yuan for seven violations including inaccurate loan risk classification.
· On February 20, "Consumer complained about metal blade in bread", Toly Bread (603866.SH): has applied for investigation.
Governance Controversies
· On February 1, Wang Ye, former secretary of the Party Committee and president of China Construction Bank (601939.SH) Shenzhen Branch, was expelled from the Party and public office for serious violation of discipline and law.
· On February 1, Li Weiping, former Director of Personal Financial Business and General Manager of Personal Financial Business Department of ICBC (601398.SH) Head Office, was investigated for serious violations of laws and disciplines.
· On February 2, Liu Zhigang, former member of the Party Committee and Vice President of Bank of Communications (601328.SH) Sichuan Branch, was dismissed from the Party and public office.
· On February 2, Yuyue Medical (002223.SZ) was fined 2.7 million yuan for violating the price law.
· On February 7, Humanwell Healthcare (600079.SH) was publicly denounced by the Shanghai Stock Exchange for its controlling shareholders' capital occupation and illegal reduction of shares.
· On February 10, China Securities (601066.SH) was fined 13.88 million yuan for violating anti-money laundering regulations.
· On February 10, CITIC Securities (600030.SH) was fined 13.76 million yuan for violating anti-money laundering regulations.
· On February 11, Mr. Qu Dejun, director and co-president of Seazen Holdings (601155.SH), lost contact.
· On February 14, Jiang Xingbiao, consultant of China Communications Construction Company Ltd. (601800.SH) Regional Headquarters, accepted the supervision and investigation.
· On February 15, Topchoice Medical's (600763.SH) related party transactions constitute non-operating capital transactions, which were criticizedcriticisedby the Shanghai Stock Exchange.
· On February 17, China Construction Bank (601939.SH) was fined 125.5 million yuan for 38 violations, including non-compliance of corporate governance and internal control system with regulatory provisions.
· On February 20, the controlling shareholder and actual controller of HLGF (600346.SH) were criticizedcriticisedby the Shanghai Stock Exchange for illegal information disclosure.
· On February 22, Wu Xuewen, former Party Secretary and President of Ningbo Branch of CITIC Bank (601998.SH), was prosecuted.
· On February 23, the former chief financial officer of Hainan Rubber (601118.SH) is suspected of serious violations of laws and disciplines and is under investigation.
· On February 25, Li Xiukun, former secretary of the Party Committee and president of China Construction Bank (601939.SH) Hebei Branch, was investigated for serious violations of laws and disciplines.
SynTao Green Finance (STGF) is one of the first Chinese organizations specialized in providing green finance and ESG responsible investment services, starting ESG data collection and research as early as in 2009. STGF ESG data and research on ESG key issues are widely employed to support investment decisions, risk management, policy making, and sustainable finance product innovation. "STGF STαR ESG Data Platform" and "STGF ESG Risk Radar System" cover all A-share market, and Hong Kong stocks in the stock connect schemes, amounting to 5,000 listed companies. In 2020, STGF launched "STGF PANDA Climate Data Platform", providing carbon emission data of Chinese entities based on GHG protocol. STGF ESG ratings (SynTaoGF-ESG) has been onboarding on Bloomberg Intelligence, making it the first Chinese ESG rating agency to have its data displayed on Bloomberg.
STGF is the first signatory of Chinese service provider joining PRI, a member of the first Advisory Council of Green Bond Principles and Social Bond Principles of International Capital Market Association (ICMA), the founding member of China Green Finance Committee, the certified consulting agency for UK Green Investment Bank, the first China based Climate Bonds Standard (CBS) approved verifier, a member of the National Association of Financial Market Institutional Investors (NAFMII).
Disclaimer：The data used in this report, unless otherwise specified, is derived from the research institution's own research or collected through publicly available sources. The research institution is therefore not responsible for decisions made or actions taken based on the information in this report or for any losses arising from such decisions or actions.
This report does not provide legal, tax, accounting or specific investment recommendations. The report does not contain and does not constitute any offer or invitation to sell or buy.