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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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 the number of policies issued on responsible investment increased gradually worldwide, and financial regulators started paying more attention to the impacts of ESG factors on the real economy.
Xufeng Zhu, Professor and Associate Dean of School of Public Policy and Management, Executive Director of Institute for Sustainable Development Goals at Tsinghua University, addressed the significant role of ESG investment in reaching the UN SDGs.
Subsequently, Sean Kidney, CEO of Climate Bonds Initiative (CBI) brought forward three global developments of responsible investment. Firstly, while the global issuance of green bond reaching a new high, China has become the second largest market of green bonds worldwide. Moreover, ESG-related risk forecasts have attracted more attention, of which climate risk will become an important factor in the fixed income and private equity investment analyses. Finally, 62% of the central banks worldwide have started to concern climate risk and issued policies to support the development of green finance.
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 China’s efforts to promote green finance. She also pointed out the important role of fintech innovation in the development of green finance.
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Plenary Roundtable 1: Policy Dynamics: Trends of ESG and Green Finance Policy
The second plenary roundtable themed with "Market Practices: Institutional Investors Moving ESG from Concept to Action" was moderated by Peiyuan Guo, Chairman of China SIF and SynTao GF.
The guests first discussed the mainstreaming of ESG investment. They did not consider ESG investment as 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; and it is developing to go mainstream. Moreover, the green bonds led by ESG principles have already gone mainstream, which will attract more investors' concern towards ESG investment.
Afterwards, the guests discussed whether ESG could promote the two-way opening-up of China's capital market. Ben Pincombe, Head of Active Ownership of Climate Change at PRI, believed that the ESG application in China's asset management would encourage more capital to flow into China. But he also mentioned the inconsistent standards of information disclosure 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 progress to a consistent result. Ricco Zhang, Asia Pacific Director of International Capital Market Association (ICMA), explained the interaction between China and the international market by introducing the development of green bonds 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 provides a public and transparent way for participants to observe the performance of ESG investment. Secondly, it contributes to improve the quality of listed companies through its company screening. In addition, the ESG index also serves as a tool for institutions' ESG practices.
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Plenary Roundtable 2: Market Practices: Institutional Investors Moving ESG from Concept to Action
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, delivered a speech to interpret the increasing significance of ESG in the global market. 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 ESG principles could help avoid some industry risks and provide quantitative data for corporate governance assessment.
In subsequent discussion, the guests shared their own practices of ESG investment. Katherine Han, Head of ESG Research at Harvest Fund Management Co. Ltd., introduced the establishment of ESG research system in her company. Yixi Wei, ESG Analyst of Equity Research at E Fund Management Co. Ltd., elucidated their application of ESG principles in the A-share market. Zhongning Pan, Managing Director from China Asset Management Co.,Ltd. shared the experience of helping listed companies improve ESG performance. 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, expressed that ESG provided another reference standard to value a company. Gary Lau considered the environment factor was better reflected in a company's financial data compared with the social and governance factors. Finally, regarding future development of relevant regulations, the guests hoped it could improve the quality of ESG information disclosure.
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Gary Lau, Managing Director, Corporate Finance Group, Moody’s Investors Service Hong Kong
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Yuebin Yang, Equity Investment, SPDB AXA Fund Management
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Roundtable Guests for the parallel forum of “ESG Integration in Asset Management Sector”
The parallel forum of "Banking Sector and Sustainability" 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 Principles for Responsible Bank (PRB) evaluate the challenges for banks to achieve the UN SDGs and the goals in the Paris Agreement. Qingrong Wang, Director of Policy Research Bureau at CBIRC, introduced China's regulations for banks' overseas businesses, and the achievements of Chinese banks in international co-operations.
In subsequent discussion, Dawei Wang, Head of Department of Securities Affairs at Hua Xia Bank, introduced the impacts of signing the PRB on the bank's development. Xia Liu, Manager of CSR Department at China Industrial Bank, considered that, compared to the Equator Principles, the PRB provided a more comprehensive framework for the sustainable development of banks. Muyuan Qiu, Analyst of Urban Finance Research Institute at ICBC, shared the experience of participating to formulate the PRB. Xiaying Fang, Assistant to General Manager of Green Finance Department at Bank of Huzhou, focused her speech on the development of green finance in Huzhou. 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.
Afterwards, they discussed questions raised by the moderator, including the terminology differences of green finance, and the possible conflicts of sustainable development and economic benefits. The guests agreed that sustainable development should be considered as a factor of risk management; and it is consistent with the economic interests in the long term. Finally, the guests shared their focuses and prospects of green finance in the next year.
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Qingrong Wang, Director, Policy Research Bureau, CBIRC
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Roundtable Guests for the parallel forum of “Banking Sector and Sustainability”
The parallel forum of "Localized ESG Drives Capital Market Opening-up" 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, pointed out that ESG investment led to more excess returns in emerging market. With the development of ESG investment strategies, ESG products have experienced a rapid growth. In general, traditional investment analysis integrated with ESG factors would bring better-performed products. Afterwards, He shared the ESG practices of Southern Asset Management.
Executive Director and Head of Asia ex Japan Power Utilities and Environmental Equity Research at J.P. Morgan, Elaine Wu, considered 2019 as a turning point for responsible investment. On one hand, the frequent occurrence of extreme weather events underlined the impacts of climate change. On the other hand, the internal governance of companies started to be evaluated and questioned in the market. Additionally, more policies have been issued to regulate information disclosure, especially in Asia. Ms. Wu considered that ESG investment would continue to play an important role in China; and contribute to the steady development of the capital market. She also mentioned that JP Morgan would further incorporate ESG factors into investment practices.
In subsequent discussion, Flora Wang, Director of Sustainable Investing at Fidelity International Limited, considered that the original retrospective ESG assessment tended to become a forward-looking one. She also emphasized the importance of shareholder engagement after investment. Weihua Wang, Chief Investment Officer from China Life Asset Management, pointed out that the ESG practice in China was a top-down process. Portfolio Manager of Equity Investment at China Southern Asset Management, Hui Zhang, introduced the ESG funds issued by Southern Asset Management. Kaifeng Zhang, Head of Capital Market of Asset Management at Hua Xia Bank, explained that driven by capital, companies with better ESG performance also obtained more excess returns.
During the discussion, the guests mentioned the problem of inconsistent information disclosure standards. Flora Wang considered new ESG regulations should be generated from the localization of existing ESG framework. Based on the practices of SynTao GF, Grace Guan added that investment institutions could help promote more applicable information disclosure by screening ESG factors in fundamental analysis. Afterwards, the guests discussed the ranking of the three factors, environmental, social and governance, in the ESG practices. All of them agreed the importance of governance. Kaifeng Zhang also mentioned the climate risk should be paid more attention in China's ESG practices.
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Zengtao Wu, Chief Marketing Officer, China Southern Asset Management
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Elaine Wu, Executive Director, Head of Asia ex Japan Power Utilities and Environmental Equity Research, J.P. Morgan
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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. Mark Mills, Partner of Generation Investment Management LLP, elucidated the importance of information transfer in the sustainable development of business. He thought that the asset management should incorporate the ESG factors into analysis.
In subsequent 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. Apart from information disclosure, he also emphasized the important role of person in charge in managing investor relationship. Bo Tian, Head of ESG Team at China Re., considered that for ESG investment, institutions should integrate regulatory indices into the investment analysis. Zhaowen Lin from IFC - Corporate Governance underlined the influence power of the board of directors, social responsibility committee and strategy department in a company's ESG practices. Christine Chow, Head of Emerging Markets Stewardship at Hermes Investment Management stressed the importance of effective communication between the investors and investees. Finally, Jon Edwards, Chief Representative of Beijing Office at London Stock Exchange Group added that ESG could serve as a tool to enhance the market communication.
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Mark Mills, Partner, Generation Investment Management LLP
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Wei Liu, Executive Director, Investor Service Department, Shanghai Stock Exchange
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Roundtable Guests for the parallel forum of “Investors Engaging Corporates in ESG”
The main conference ended in a lively discussion.