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
ESG Practices by Norwegian Investors – Joint Webinar Series by NorSIF and China SIF (Chinese Only)
China SIF, 2023.03.03
NorSIF and China SIF jointly organized the 2nd round of the Joint Webinar Series on Responsible Investment. The topic of the online webinar was how investors in Norway work with different aspects of ESG.
SynTao Green Finance, 2023.03.31
Dr. GUO Peiyuan participated the annual meeting of the ESG Committee of the Insurance Asset Management Association of China (IAMAC) and a seminar on implementing the Green Finance Guidelines for the Banking and Insurance Industry. As an Expert Advisor of the Committee, he pointed out that insurance asset managers should gradually and orderly reduce the carbon intensity of their portfolios and ultimately achieve carbon neutrality on asset level.
STGF Insights
Dr. GUO Peiyuan on "How ESG Boosts Green Development in the Banking Sector" (Chinese Only)
GUO Peiyuan, 2023.03.06
Recently, Dr. GUO Peiyuan attended the "5th Global Wealth Management Forum - Wealth Management Trends in Economic Restructuring" co-organised by Caijing Magazine, Caijing Think Tank and Caitonghui. Dr. GUO shared his speech on "How ESG Boosts Green Development in the Banking Sector" in the panel discussion. He said that China has the potential to lead and be ahead of the curve in integrating ESG in the banking sector.
The ESG Debate in the US is Devolving into a Bipartisan Debate (Chinese Only)
GUO Peiyuan, 2023.03.08
The US Senate overturned a rule introduced by the US Department of Labor in November 2022 to allow pensions to consider ESG factors in investment decisions, citing the belief that taking ESG factors into account would harm pension returns. They argued that ESG advocated the de-fossilisation and was detrimental to the economies of these states. However, the argument has been increasingly used as a tool for political goal.
Policy Update
Notice of the China Banking and Insurance Regulatory Commission Shanghai Office on Further Improving Financial Services to Optimise Shanghai's Business Environment and Support High-Quality Economic Development
China Banking and Insurance Regulatory Commission Shanghai Office, 2023.03.10
The Notice encourages banks to establish green sub-branches that specialises in green finance, actively participate in constructing Shanghai's carbon inclusion system and exploring establishing personal carbon accounts, actively promote innovation in investment and financing products based on carbon trading, explore pilot work on carbon trading and provide support to critical projects such as new materials and energy.
Market Update
Wall Street Titans Confront ESG Backlash as New Financial Risk
FINANCIAL TIMES, 2023.03.01
Wall Street's largest asset managers, private equity firms and brokers have warned that a backlash against sustainable investing is now a material risk, in filings that show how acrimony over ESG principles has become a perceived threat to profits.
Over 100 Companies have been Penalised In the National Carbon Market
Caixin, 2023.03.03
Public information from local ecological and environmental departments show that as of February 28 2023, 115 companies have been penalised for failing to fulfill the compliance obligations and on time, and 28 companies for misreporting, concealing or refusing to report their greenhouse gas emissions.
YI Gang: Supporting the Development of Green Financial Instruments and Strengthening International Cooperation in Green Finance
Yicai, 2023.03.03
YI Gang, governor of the People's Bank of China, said that the Carbon Emission Reduction Support Instrument had issued more than RMB 300 billion in refinancing loans and supported commercial banks to issue more than RMB 500 billion in loans, driving a reduction of 100 million tonnes of CO₂ equivalent by 2022. The next step would be to improve the green finance standards, encourage climate information disclosure by financial institutions, support the development of green finance instruments, strengthen international cooperation in green finance to facilitate a green transition of the economy.
Promoting the Green Transition of Development: Making Green a Bright Colour For a Beautiful China
People.cn, 2023.03.08
This year's government work report proposes to promote the green transition of development to become one of the priorities, including the construction of urban and rural environmental infrastructure, clean and efficient use of energy, new energy systems, and the improvement of policies and financial instruments to support green development. Supporting pilot climate investment and financing, and low-carbon transition of carbon intensive sectors will become hot topics.
Bond Market Research under Transition Finance (Chinese Only)
China Bond, 2023.03.27
The report builds an environmental information disclosure indicator system in accordance with the five major principles of compliance, compatibility, simplicity, completeness and relevancy, including indicators for 35 sectors in eight categories.
Download the report in Chinese at (please copy to open in your browser)：
https://www.chinabond.com.cn/cb/cn/yjfx/zzyb/yjbg/20230317/162246671.shtml
ESG Investment Instruments Update
March 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 March 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 0.6%, -3.5% and 4.2% 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: 3.6%, 4.4% and 3.5% respectively.
Environmental Controversies
No major environmental controversies during this month
Social Controversies
· On March 10, Industrial Bank (601166.SH) Wuhan Branch was fined 3.2 million yuan for non-standard loan process.
· On March 12, one employee died in a safety accident of China Construction (601668.SH) Eighth Engineering Bureau.
· On March 21, many people were held accountable for the "June 8" leak and fire accident at Sinopec (600028.SH) Maoming Branch.
Governance Controversies
· On March 1, Gong Shuxiong, former secretary and president of the Party Committee of China Construction Bank (601939.SH) Hunan Branch, was expelled from the Party for serious violation of discipline and law.
· On March 2, Grand Automotive (600297.SH) was criticised by the Shanghai Stock Exchange for not disclosing major issues.
· On March 3, Jizhong Energy (000937.SZ) was criticised by Shenzhen Stock Exchange for failing to fulfill its obligation of information disclosure.
· On March 15, Wang Jianhong, former Secretary of the Party Committee and President of Bank of China (601988.SH) Beijing Branch, was investigated for serious violations of laws and disciplines.
· On March 21, Zhuhai Guanyu (688772.SH) is sued by Ningde New Energy for patent infringement.
· On March 21, Flush Info's (300033.SZ) employee shareholding platform has been charged more than one billion yuan in taxes.
· On March 21, Liu Yanzhong, an inspector of the International Finance Department of the Agricultural Bank of China(601288.SH), was investigated for suspected serious disciplinary violations.
· On March 23, Xinhu Zhongbao (600208.SH) was criticised for failing to comply with the resolution procedure when providing financial assistance to related parties.
· On March 23, Zhao Zhiran, Senior Commissioner of China Construction Bank (601939.SH) Shenzhen Branch, was investigated for suspected serious disciplinary violations.
· On March 24, Yi Jing'an, former Deputy Secretary of the Party Committee and Vice President of China Construction Bank (601939.SH) Shenzhen Branch, was investigated for serious violations of discipline and law.
· On March 24, Gao Zongsheng, former member of the Party Committee and Vice President of Bank of China (601988.SH) Inner Mongolia Branch, was investigated for suspected serious disciplinary violations.
· On March 26, after the death of the founder of Shanshan Shares (600884.SH), the son and stepmother got into a dispute over control.
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.