Alliance News | China's First Sustainable Development Themed ETF Releases
On December 2nd, China Alliance of Social Value Investment (CASVI) and Bosera Funds jointly held the China Sustainable Finance Forum 2019 and the Launching Ceremony of Bosera CSI Sustainable Development 100 ETF in Shanghai, UN Resident Coordinator in China Nicholas Rosellini, CASVI Board of Chairpersons Executive Chairman Weihua Ma, Bosera Asset Management Co., Ltd Chairman Guanghua Zhang, Shanghai Stock Exchange Investor Services Department Executive Director Claire Wei LIU, and distinguished guests in the industry attended and delivered speeches under the theme of “Sustainable Investment for a Better World”.
The forum focused on the theme of “Sustainable Development Finance,” with more than 150 guests gathered from influential financial and academic research institutions to discuss the trends of the global sustainable development finance and its future in China. “Bosera CSI Sustainable Development 100 ETF,” China’s first sustainable development themed ETF product, jointly launched by CASVI and Bosera Funds, celebrated its launching ceremony at the scene.
Great urgency in using sustainable development finance to drive global sustainable development
Nicholas Rosellini, UN Resident Coordinator in China made an opening speech. He noted that finding solutions to financing the Sustainable Development Goals is a priority of the UN. Specifically in China, there is a need to build consensus among stakeholders, in order to strengthen the enabling policy environment, develop the ecosystem with measurements systems and financing instruments, and to provide guidance and regulatory frameworks to scale up the SDG investment. He emphasized that for the 2030 Agenda to be successful, it requires the “participation and collaboration among all countries and sectors - both public and private”.
Weihua MA , CASVI Board of Chairpersons Executive Chairman delivered a keynote speech on “Impact Investment and Sustainable Development.” Emerging countries alone need USD $3.9 trillion to achieve the SDGs. There is a funding gap of USD$2.5 trillion, and requires mainstream investment institutions to launch high quality and large scale financial products. With the support of the United Nations Development Programme and Shanghai Stock Exchange, CASVI and Bosera Funds have jointly develop the Bosera CSI Sustainable Development 100 ETF. This ETF will close the current gap in passive investment products related to sustainable development value in the Chinese market and also bring in an innovative perspective for related global sustainable development themed products. A truly sustainable development is not only about the persuasion of economic profits, but to achieve social value as well.
Guanghua ZHANG, Chairman of Bosera Asset Management Co., Ltd delivered a keynote speech on “Promoting Sustainable Financial Development and Advocating for Sustainable Investment Concepts.” He believes that sustainable social and economic development is inseparable from the support of sustainable development finance. Sustainable investment is the best way for fund companies' to practice long-term, value and responsible investment concepts. As a discoverer of investment value in China's capital market, Bosera Funds has been committed to finding a more comprehensive corporate investment value. It will actively deploy sustainable financial products and find long-term, sustainable and high-quality investments for investors.
Shanghai Stock Exchange Investor Services Department Executive Director Claire Wei LIU delivered her keynote speech on “ETF and Sustainable Financial Innovation and Development.” She said that China's ETF industry had gone through 15 years of development, with a total market value of over 650 billion RMB. The total transaction volume of various ETFs on the Shanghai Stock Exchange, in 2018, exceeded 7 trillion RMB. With investors gradually changing their approach to asset allocation in recent years, various thematic ETFs such as ESG have begun to attract market attention. Bosera CSI Sustainable Development 100 ETF products are typical representatives of the Chinese fund industry focusing on ESG development.
Leaders and Scholars in Finance Discuss Innovation and Challenges of Sustainable Development
The first round-table discussion was themed “Practice and Innovation of Sustainable Development in China”. Humanities and finance scholar and chairperson of CASVI Shuo Qin served as the moderator, and led the discussion with panelists Yang Yao Dean, National School of Development at Peking University, Zimu Wang, Chairman, Huatai Insurance Group Company, Suyuan Lu General Manager, China Securities Index Co., Ltd, Xiangyang Jiang, Chief Executive Officer, Bosera Asset Management Co., Ltd, Feng Lu Founder and Chairman of Wind Information Co., Ltd and Fan Bao Chairman and CEO, China Renaissance Capital. The panel engaged in in-depth discussions, offering insights and perspectives from different industries and background. Some of the topics touched on include how global mainstream financial institutions are responding to the SDGs, the roles that Chinese capital market and mainstream financial institutions can play in promoting sustainable development finance, the significance of sustainable development finance to society, ways to sustainable development investment, required policy support for sustainable development financial products, the performance of public offering of funds with a theme of sustainable development, the role of index products in promoting sustainable development finance and its development prospects, how asset managers can impact and guide investment target companies to implement and improve sustainable development, etc.
The second panel discussion themed “the Trends and Challenges of Global Sustainable Development Finance” was moderated by Angela Bai, the Secretary General of CASVI, with Ligia Torres, Asia-Pacific CEO at BNP Paribas Asset Management, Xia Xiaohua, the General Manager of Morningstar, Inc. (China), Shen Li, the Managing Director of Equity Department of CICC, Vincent Kwan, the CEO of Hang Seng Indexes Company, Karl H. Richter, the Executive Director and Co-founder of EngagedX. In recent years, governments, investors, and financial institutions around the world have invested considerable resources in infrastructure construction, sustainable development and climate actions for achieving Sustainable Development Goals (SDGs) and promoting sustainable development. Meanwhile various forms of investment ideas and financial products also emerged, such as green finance, responsible investing, impact investing, ESG investing, etc. Data shows that by 2018, a total of nearly $31 trillion assets were managed under sustainable investing strategies with an increase about 34% since 2016, accounting for 33% of total global asset management. (Data Source: Global Sustainable Investment Alliance (GSIA) 2018 Trends)
China’s First Sustainable Development Themed ETF Launches
The launching ceremony of the Bosera CSI Sustainable Development 100 ETF was held during the forum. Officially approved for launching, the ETF tracks the CSI Sustainable Development 100 Index with full application. The CSI Sustainable Development 100 Index is based on China Alliance of Social Value Investment’s long term research and its Sustainable Development Value Assessment Model. The index uses the CSI 300 constituent companies as sample pool, first screens out listed companies that do not meet the requirements of 17 indicators covering 6 areas. It then evaluates and rates the remaining listed companies using 57 indicators in 3 areas: AIM | Driving Force, APPROACH | Innovation Force and ACTION | Transformation Force, finally arriving at 100 listed companies with high Economic (E), Social (S), Environment (E) and Governance (G) comprehensive values. It aims to identify high quality investments that are sustainable and long-term for institutional investors.
Bosera Asset Management Co., Ltd Guanghua ZHANG introduced the 4 characteristics of the CSI Sustainable Development 100 Index. First, the Index is the first A-share index that aligns with the UN’s 17 SDG and takes into consideration China’s Five Development Concepts; it comprehensively assesses the Economic, Social and Environmental values of the listed companies, evaluating their sustainable development value. Second, back testing data between 2014 June 30th and 2019 July 1st indicates that relative to the CSI 300 Total Return Index, CSI Sustainable Development 100 Index’s annualized excess return outperforms by 4%, with a relatively stable excess return. Third, the Sustainable Development Value Assessment Model, while benchmarking against relevant international evaluation models, also places itself within China’s context and provides localization to the indicators. Fourth, the Index’s constituent companies are leading in their industries in terms of comprehensive economic, social and environment values, and they tend to have low valuation, high dividend yield and high profitability.
CASVI’s Chairman Ma calls for the finance sector and all of society to pay attention to the ETF, as a way to drive sustainable economic and social development. By quantitatively assessing the sustainable development value of listed companies, we can set forth a common language, reshape business logic and bring transformation to the financial market. Mankind share a common future, and it is through promoting economic development, together with social inclusion and ecological protection, that mankind can continue to develop sustainably.