On 14 December, the 10th China Sustainable Investment Forum (China SIF) Annual Conference, organised by SynTao Green Finance and co-hosted by the United Nations Environment Programme Finance Initiative (UNEP FI) and the United Nations Sustainable Stock Exchange Initiative (UN SSEi), was successfully held online. This year's Conference was supported by strategic partners Moody's, Harvest Fund and AXA SPDB Investment Managers.
As the grand finale of the China SIF Week 2022, the 10th Annual China SIF Conference was themed "ESG Investing Comes of Age", looking back on the development of ESG from its emergence and rise to its gradual maturation into the mainstream over the past decade, and looking forward to the prospects, trends and key features of ESG investment in the next decade. The Conference was chaired by Dr. GUO Peiyuan, Chairman of China SIF and SynTao Green Finance.
WANG Zhongmin, Former Vice Chairman of the National Council for Social Security Fund and Honorary Chairman of China SIF, and Eric USHER, Head of UNEP FI delivered the opening remarks. WANG Zhongmin introduced the International Progress in Green Finance, noting that for ESG investment to continue to develop further, an implementation must be strengthened through different levels of governance structures. He also raised expectations for the development of China SIF in the next ten years. According to the 2022 UNEP report, Eric pointed out that global temperatures will still rise by 2.8°C and that stronger policy commitments and more funding are needed to close this gap. He encouraged financial institutions not only to join relevant leadership initiatives and alliances, but also to work to promote the fulfilment of commitments and fully integrate sustainability considerations into financial practices to achieve the best win-win situation for people, planet and financial institutions.
The first round of keynote speeches focused on international development. Professor Mohan MUNASINGHE, Former Vice Chair of the UN Intergovernmental Panel on Climate Change (IPCC) who shared the 2007 Nobel Prize for Peace, appreciated China's active leadership in combating climate change. He said that China is a role model, especially for the Global South. China has made great progress along the Balanced Inclusive Green Growth (BIGG) path in past decades, socially by raising almost one billion people out of poverty; economically via remarkable growth; and environmentally by vigorous efforts to reduce environmental harm.
ZHU Guangyao, Former Deputy Minister of Finance, shared about developing and applying international sustainable disclosure standards. He said that a common, scientific and inclusive standard is essential. China has played an active and vital role in promoting the concept of multilateralism and in advancing the development of international sustainability standards. It is in China's interest as well as the aspirations of developing countries.
David ATKIN, Chief Executive Officer of Principles for Responsible Investment (PRI), noted that responsible investment has entered a new phase of development and that in the next decade of ESG, stakeholders in all areas of responsible investment must make the transition from encouraging short-term investments to encouraging long-term investments; at the same time, they must promote an orderly and just transition to a global economic system that is secure for the world of tomorrow. Only then will investors be able to effectively fulfil their fiduciary responsibilities and deliver good investment returns for decades to come.
Dr. MA Jun, Director of the China Green Finance Committee and the Beijing Institute of Green Finance and Sustainable Development, introduced the G20 Transition Finance Framework and the Lessons for China. He said that although China has achieved significant development in ESG and green finance, it is challenging to help decarbonise high-carbon industries. In this context, an authoritative standard for transition finance is urgently needed; however, before the authoritative standard is issued, local governments, financial institutions and enterprises can also explore and practice with their own needs.
The second round of keynote speeches was focused on the regulatory and market perspective. Kris NATHANAIL, Senior Policy Advisor for Special Projects at the International Organization of Securities Commissions (IOSCO) Secretariat, provided an update on global ESG regulatory policy, citing a strong will to regulate by governments, technological advances and a global sustainable financial market as the three forces behind a successful transition to net zero emissions.
WANG Yida, Chairman of the Supervisory Board of National Green Development Fund Co., Ltd, shared his insights about Green Investment Implementing ESG Investment Philosophy. He argued that the ESG investment concept promotes green investment practices and drives the realisation of value investing. From the perspective of development needs, it is necessary to improve green investment standards further, strengthen the role of long-term incentive and restraint mechanisms, enhance the quality of ESG information disclosure, orderly guide ESG factors into the long-term development strategies and investment decisions of enterprises, and strengthen the implementation and effectiveness.
CAO Deyun, Executive Vice President and Secretary-General of the Insurance Asset Management Association of China (IAMAC), said that the essence of Chinese-style modernisation is highly consistent with the goal of sustainable development promoted by ESG investment. For this reason, ESG investment is a key business area for insurance funds that should be vigorously promoted and developed in the future. This will help boost China's green economic growth, help promote an organic balance between insurance investment returns and social benefits, market responsibility and social responsibility, and help the insurance industry achieve its leap forward in sustainable development.
Dr. AN Guojun, Vice Secretary General of China Green Finance Committee and Vice Chairman of China SIF presented the research results on Green Fund and Climate Investment and Financing for the Achievement of Dual Carbon Goals. She suggested that the framework for supporting green technology innovation such as climate funds, green funds and carbon neutral funds should be improved, information disclosure and risk management systems for climate investment and financing mechanisms should be constructed, capacity building for green investment should be strengthened, ESG investment evaluation systems should be improved, cost-benefit sharing mechanisms should be established, incentives should be provided for green projects developing green and low-carbon technologies, and the process of green and low-carbon cities and rural revitalisation should be steadily promoted.
Two research findings were released at this year's Conference. Prof. ZHU Xufeng, Professor and Executive Dean of Tsinghua University School of Public Policy and Management, and Executive Director of Tsinghua University Institute for Sustainable Development Goals, released the Research on the ESG Rating System of Provincial and Municipal Governments (2022). The Research constructs an ESG rating system for Chinese cities and quantitatively assesses the overall and dimensional ESG performance of the top 85 cities in China in terms of GDP per capita from 2015 to 2019. The findings show that the overall ESG performance of the 85 cities has been improving from 2015 to 2019. However, the average ESG performance of these cities is still in the middle rank, with economically developed cities in the eastern coastal region performing better while inland cities in the central and western regions are performing relatively poorly. ZHU Xufeng emphasised that the significance of the study of ESG ratings of local governments in China is to help deepen the reform of the administrative system comprehensively and promote the transition of local government functions towards scientific development; promote local governments to implement the concept of green and innovative development; and enhance social governance and social participation at the local level.
Raymond ZHANG, CEO of SynTao Green Finance, released the "China Sustainable Investment Review 2022", the fourth consecutive report in this series. According to Raymond, this series of reports focuses on four major dimensions of China's ESG investment market, including policy progress, market scale, market development and stakeholders' attitudes. In 2022, China's ESG responsible investment market will continue to show major development trends such as continued policy promotion, rapid increase in scale, deepening institutional practices, and increased acceptance by asset owners (AOs) and the public. The development will continue to maintain at a rapid pace. Commenting on the report is YU Hua, Director of China SIF and former Chairman of Morgan Stanley Huaxin Fund. He pointed out that this series of reports has maintained its consistent content integrity, continuity and consistency, and has provided complete coverage and comprehensive and detailed introduction to the various entities of the Chinese ESG investment market based on detailed data and standardised calibre.
The ensuing panel discussion focused on the development of the ESG market over the past decade and the potential opportunities and challenges ahead was moderated by Grace Guan, Secretary General of China SIF. ZHANG Xuanchuan, Director of the Research Department of the Asset Management Association of China (AMAC), pointed out that global ESG investment concepts and principles have matured, but there are still differences in understanding and pathways between different institutions, regions and countries. We should fully understand the realistic background and core demands of each economy and seek an ESG investment philosophy and information disclosure system that is applicable to China. HAN Ning, Head of the Market Innovation Department of the National Association of Financial Market Institutional Investors (NAFMII), called for more bottom-up actions from a future development perspective, such as the establishment of a green financial standards system, improving consistency in information disclosure to ensure verifiable and accountable information, and developing various market-based monitoring and discipline mechanisms including ESG ratings by third-party intermediaries. HUANG Peng, VP of the Department of Public Equity, China Investment Corporation (CIC), suggested that ESG investment approaches and regulatory schemes are still in the development and refinement stage, and investors need to be alert to the risk of greenwashing. In addition, balancing the relationship between ESG objectives and performance goals, and enhancing adaptability to short-term market conditions while adhering to a long-term ESG investment philosophy, remains a direction that ESG investors need to work on continuously. Based on a sustainable investment strategy, CIC has built a sustainable investment platform for public market equities that integrates investment, research and management. LUO Ruohong, Deputy General Manager of China Re Asset Management Co., Ltd, introduced the outline of green insurance development of China Re Group. At the same time, he stressed that the more importance a company attaches to risk-adjusted returns and refined management of solvency adequacy, the more conditions and motivation it has to consider ESG investments. In addition to investing directly in compliant targets in the market, the company will also look for products such as mutual funds or private equity management plans that meet the requirements.
In the afternoon, four parallel forums were held to discuss specific dimensions of "ESG Investing Approaches - Principles vs. Innovation", "ESG Considerations in Fixed Income Investment Products", "ESG Information Disclosure Standards and Disclosure Levels", and "Transition Finance: Opportunities and Risk Management".
Dr GUO Peiyuan, Chairman of China SIF and Chairman of SynTao Green Finance, moderated the "ESG Investing Approaches - Principles vs. Innovation" session. After years of development, ESG investment approaches have become increasingly diverse, with similarities and differences between approaches; ESG investment approaches need to both follow basic principles but also to evolve and develop. YANG Yuebin, Fund Manager of Equity Investment in AXA SPDB Asset Managers, shared his practical insights on the organic combination of value investment and ESG, and raised three issues worthy of attention: firstly, climate change has negative externalities and can easily lead to spillover effects; secondly, we need to be cautious about the stock selection role of a single ESG score; and thirdly, we need to focus on the impact of ESG factors on corporate free cash flow. Eva HALVARSSON, CEO of the Swedish Andra AP-fonden (AP2), said AP2's work on sustainability focuses on four areas: climate, corporate governance, human rights and diversity, equity and inclusion. She shared in details about AP2's sustainable investment practices in two areas: climate and human rights. During the panel discussion, BAI Xueshi, Head of Foreign Investment of Sunshine Asset Management Company, Alexander Chan, Head of ESG Client Strategies, Asia Pacific, Invesco, Charles NGUYEN, Managing Director and Head of ESG Asia at Neuberger Berman, DU Jian, Director of Education, Director of Training and International Affairs at IAMAC, and Dr. WANG Bolu, Senior Executive Director of Risk Management of Silk Road Fund, discussed on how to find an approach that is compatible with their business objectives while upholding the basic principles of the ESG investment approach.
Traditional ESG rating methodologies are more widely used in equity investments, with ratings mainly for listed companies. As the fixed income market increasingly incorporates ESG considerations, the application of ESG rating methods in fixed income investments is becoming more and more important. The parallel forum on "ESG Considerations in Fixed Income Investment Products" was moderated by Raymond ZHANG, CEO of SynTao Green Finance and Director of China SIF. In the keynote session, Dr. LIU Feng, Chief Economist of China Galaxy Securities, and Dr. WU Ruojun, Co-founder and Deputy Managing Director of Nine Martingale Investment Management, delivered keynote speeches on "ESG Considerations in Fixed Income Securities Investment" and "Sustainable Development Concepts and Fixed Income Investments" respectively. Dr. LIU Feng highlighted the different perspectives of ESG considerations in fixed-income investment and equity investment, while Dr WU Ruojun presented the win-win results of financing and investment through SDG bonds by studying the SynTao Green Finance Nine Martingale SDG Bond Series Index. Afterwards, Rex ZHAO, General Manager of Fixed Income Investment Dept., Head of ESG Investment, Allianz Insurance Asset Management Company, HUANG Dafei, Executive General Manager of Fixed Income Department, CICC, Ricco ZHANG, Senior Director, Asia Pacific, International Capital Market Association (ICMA), GUO Yijin, Sustainable Investment Analyst, Manulife Investment Management, and Malika TAKHTAYEVA, Sustainable Fixed Income Lead - EMEA, BNP Paribas Asset Management, discussed about the appropriate ESG rating methodology for the bond market. They also addressed the current situation and market challenges of rating Chinese bond issuers.
The subsequent parallel forum focused on "ESG Information Disclosure Standards and Disclosure Levels", an important infrastructure for ESG investment, and was moderated by SynTao Consulting's Partner, Fiona LANG. In the keynote session, Dr. LENG Bing, Director of the International Sustainability Standards Board (ISSB), presented the latest progress of the international sustainability standards, especially the progress made by the ISSB in key areas such as industry regulations, Scope 3 emissions and climate resilience after the close of the public consultation. YIN Hong, Deputy Director of the Urban Finance Research Institute, Industrial and Commercial Bank of China (ICBC), gave an introduction to the trends in standards for environmental information disclosure by financial institutions and the relevant practical experience of ICBC. She also put forward suggestions for the next step of development, especially the need to continue to study and improve climate and environmental scenario analysis and stress testing methods and to encourage the development of professional third-party institutions. Dr. William HONG, Director of Moody's Analytics IPL team, shared insights on the current status and trends of global ESG and climate risk disclosure and its impact on financial institutions, and also shared the methodology of scenario analysis and its usefulness for investment and credit decisions from the challenging point of scenario analysis in disclosure requirements. In the panel discussion, CHENG Haibo, Coordinator of Green Finance of Bloomberg, Dr. LIU Yanfeng, Director of Corporate Governance Department of China Association for Public Companies (CAPCO), Dr. QI Yue, Deputy Director of the International Cooperation Research Department of the Research Centre of the State-owned Assets Supervision and Administration Commission of the State Council, LI Fei, Associate China Director, CDP and PAN Ling, Vice President of Strategy of China at StarWiz, shared their views on the needs, challenges and gaps of ESG information disclosure at home and abroad, as well as the standards and regulations.
The final session of the Conference on "Opportunities and Risk Management in Transition Finance" was co-organised by the UK Partnering for Accelerated Climate Transitions (UK PACT) and Climate Bonds Initiative (CBI). LIU Yujun, the Director of Sustainable Finance Advisory at SynTao Green Finance moderated the session. In the keynote speech, the Acting Minister Counsellor of Financial and Professional Services at the British Embassy in China, Rhys GORDON-JONES, introduced the progress and cooperation between the UK and China on transition finance, saying that a joint effort is needed to develop more innovative and high-standard financial instruments and to promote higher quality and wider disclosure of climate and sustainability-related information to support low-carbon transition and low-carbon investment in the future. Sean KIDNEY, co-founder and CEO of the Climate Bonds Initiative (CBI), said that transition finance offers an opportunity to finance high-carbon emitting sectors in the face of the urgent need to tackle climate change. The investment opportunity is to leverage relevant policies, frameworks, standards and tools to support high-carbon emitting companies to undertake credible low-carbon transitions along a clear path. Katherine HAN, Head of ESG Research at Harvest Funds, said that the importance of transition finance is becoming increasingly evident against the backdrop of traditional high-carbon industries that are in urgent need of transition-related technical and financial support. However, the current green finance system cannot meet this need effectively. The traditional capital market approach of "voting with one's feet" or "disinvesting" is not conducive to supporting the smooth transition of the real economy, and professional investment institutions should play a more active role in exercising shareholder influence and professionalism to empower and supervise the green and low-carbon transition of enterprises through regular due diligence management tools. Dr. DONG Shanning, Deputy General Manager, Green Finance Department & Corporate Finance Department at the Bank of Jiangsu, shared about the recent exploration and practice of Bank of Jiangsu in managing environmental and social risks and how to seize the financial opportunities of transition through the innovation of financial products. In the following panel discussion, Dr. SUN Tianyin, Deputy Director of Green Finance Research Centre, National Finance Research Institute, Tsinghua University, Dr. CHENG Jian, Director of Risk Alert and Stress Testing Division, Risk Management Department, China Construction Bank, Dr. LU Shutong, Manager of RMI's Zero Carbon Mechanism Program, Will GOODHART, CEO of CFA Institute, and XIE Wenhong, Head of China Programme, Climate Bonds Initiative (CBI), shared their views on the development of transition finance and the development of credible transition plans. The discussion on the development of transition finance, the development of reasonable transition plans, and the challenges and responses of transition finance was very engaging.
The 10th China SIF Annual Conference and the 2022 China SIF Week 2022 is supported by media partners including Securities Times, Sina Finance and house.china.com.cn. Acknowledgements to: Responsible Investment Association of Australasia (RIAA), Caixin International, CDP, Ford Foundation (Beijing Office), International Finance Corporation, International Capital Markets Association (ICMA), Korea Sustainability Investing Forum (Kosif), Sustainable Banking and Finance Network (SBFN), Lianhe Equator, Norwegian Forum for Responsible Sustainable Investment (Norsif), Europe- based national Sustainable Investment Fora (EuroSIF), Cliumate Bonds Initiative (CBI), Global Sustainable Investment Alliance (GSIA), Sweden's Sustainable Investment Forum (SweSIF), SynTao Consulting, Shenzhen Finance Institute, Shenzhen Stock Exchange, CUEB China ESG Institute, CCM CSR Promotion Centre, iFinD, Wind Content Conference Community, Asia Investor Group on Climate Change (AIGCC), UK Partnering forAccelerate的ClimateTransitions（UK PACT), UK Sustainable Investment and Finance Association (UKSIF), and Yuze Charity for the contribution to 2022 China SIF Week.
Prior to the Annual Conference, 2022 China SIF Week has already hosted a series of 11 Side Events covering various aspects of responsible investment such as Sustainable Agriculture, Bond Markets for Sustainable Development, Net Zero Investment Trends in Asia and Asset Owners' Expectations on ESG Investment in China, Academic Workshop on ESG Practice and Investment Return, Training on Sustainable Blue Economy and Climate Change Management, TCFD Training for Listed Companies, Climate and Sustainability Disclosure in Stock Exchanges, Wealth Management for A Good Cause, China's Overseas Responsible Investments and ESG Information Disclosure for Enterprises, etc. In addition, we have contacted eight organisations from the Global SIFs Network to jointly look at the next decade of global responsible investment in a webinar format.
More than 2,000 professionals from around the world registered for the 10th China SIF Annual Conference and 2022 China SIF Week. 8,265 views were recorded on the day of the live broadcast through the China SIF website (chinasif.org), Wind 3C Conference, iFinD Terminal and WeChat Channels, with a total of 114,254 minutes of viewing time. The number of registrations and live streams watched reached a new record high. You can visit China SIF website to get the link to the replay of the 2022 China SIF Week events.
