Sustainable Development Finance in China | June 2019


1. China SIF issued Analysis of China A-share ESG Ratings   

On June 30, China Social Investment Forum released the 2020 Analysis of China A-share ESG Ratings. The report shows that: 1) The number of ESG reports issued by A-share listed companies is growing steadily. By June 15, 2020, 1,021 ESG reports were issued, accounting for about 27%. 2) ESG risks faced by listed companies in the same period are significantly increased; 3) There is a significant positive correlation between the ESG rating of A-share listed companies and their stock prices. From January 2016 to May 2020, the cumulative return of the top 50 companies in the CSI 300 Index was 23.28% higher than that of the bottom 50. From July 2018 to 2020, the cumulative return of the top 100 companies in the CSI 800 was 6.65% higher than that of the bottom 100. In terms of indexes such as maximum drawdown, the portfolio with high ESG rating was also significantly better than that with low ESG rating.

2. NetEase Issues its First ESG Report

On June 30, NetEase, one of China’s leading internet and online game service provider, announced that it has published its first Environmental, Social and Governance (ESG) report in a bid to make public the Company’s latest ESG achievements in recent years. The report was an important signal for the Company’s commitment to social responsibilities.

Highlights of the Company’s achievements include: 1) NetEase has fulfilled its social responsibilities with technological and innovative measures such as the pioneering policies   to curb minors overuse of online games back in 2007 and the release of a “minor protection manifesto” with other industry leaders aimed at combating online game addiction. 2) NetEase has been dedicated to creating a culture of equality and inclusiveness and cultivating talents. 3) NetEase has carried out a number of measures to ensure its business practices impact our environment to a minimum level and are energy-saving. For instance,the solar power system installed in NetEase office in Hangzhou has provided a cumulative electricity of 382 plus megawatt for the Company.   Also, NetEase has installed smart lighting control systems in its office buildings, which are expected to reduce energy consumption by as much as 90%.

3. The Central Bank Addresses Recovery and Sustainable Development of the Real Economy

The Monetary Policy Committee of the People's Bank of China held its 89th regular meeting for the second quarter of 2020 in Beijing on June 24. It was noted that it is necessary to keep track of changes in the global economic and financial situation, deepen the financial supply-side structural reform, and improve the modern financial system that is highly adaptable, competitive and inclusive.


4. Guangzhou Development Zone Will Accelerate the Promotion of Green Financial Innovation Services

Recently, Guangdong Environment & Resources Financial Service Center was launched in China-Singapore Guangzhou Knowledge City. The Center, jointly built by the Guangzhou Development Zone, Guangdong Environment Exchange and financial institutions, will rely on the industrial foundation of Huangpu district and Guangzhou Development Zone and relevant green finance policies, explore the green finance services that combine environmental rights and financial innovation, and provide comprehensive services for the development of green industry.

5. Starquest Capital issues ESG Investment Yearbook

Based on its experience of ESG investment practice and extensive study, Starquest Capital recently released its first ESG Investment Yearbook, comprehensively analyzing and revealing the current situation of the development of global and China responsible investment industry and market trends from the perspective of private equity investors.

6. CBIRC Replicates and Promotes Financial Policies, Explores and Optimizes Green Finance

Recently, the China Banking and Insurance Regulatory Commission (CBIRC) issued Guiding Opinions on Replicating and Promoting Relevant Regulatory Policies in National Pilot Free Trade Zones, proposing to encourage financial innovation and the exploration of the optimization of green finance, support the green building investment and financing mechanism and the innovation of green financial products and services, and promote the coordinated development of green building and green finance.

7. CAM launched its First ESG UCITS Fund

On June 1, China Asset Management (CAM) and its strategic partner NN Investment Partners (NNIP) announced that CAM's first ESG UCITS fund, investing in China's equity market, had been successfully launched in Luxembourg and the Netherlands. The fund is the world's first ESG UCITS product managed by a mainland fund management company, and the third product of AMC after it pioneered the direct management of overseas funds as a domestic public offering of fund in 2017.

8. RKS released its First ESG Rating

Recently, Rankins CSR Ratings (RKS), a third-party rating agency, released its first ESG rating for the China Securities 800 component stocks. With ESG risk management as the core, RKS ESG rating evaluates ESG risk management capability through management planning, management execution and management performance. RKS rating results show that among 800 A-share companies, more than 80% of A-share companies are rated B or below, and only 30 companies are rated BBB with the highest ESG rating. Among them, Shanghai Fosun Pharmaceutical was rated BBB, ranking first among A-share listed companies. In addition, Ping An Insurance Company of China and Joincare Pharmaceutical Group are also rated BBB.

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