Asset managers in China are no stranger to sustainable investing – but in a way that fits into a formal social responsibility framework is still “relatively new,” said the managing director of a Chinese financial services company.
ESG – or Environment, Social and Governance – refers to a set of criteria used to measure a company’s performance in areas ranging from carbon emissions to contributions to society and employee diversity.
“Responsible investing and the long-term sustainability of our portfolio are not new to the investment community in China, but we haven’t really complied with it under the ESG,” Li Yimei, CEO of China Asset Management, told CNBC’s “Squawk Box Asia” on Wednesday .
Li gave an example of a home appliance company that had initiatives to recycle metal waste and manage its supply chain in an environmentally friendly way. The company’s sustainability efforts have not been officially announced to the public, and MSCI’s ESG rating has been given a low score.
“We had a very long discussion with them and then actually led them to more and better disclosure – and then their rating in the ESG for MSCI actually went up two notches,” said Li, a member of CNBC’s ESG council.
“ESG is relatively new by its name,” she said, adding that this is a reason why the ESG fund market in China is smaller and less developed compared to other regions.
Future of ESG in China
According to Li, Chinese asset managers have tried to tailor the global ESG indicators to the local context by taking into account China’s business and political environment.
“Our policy makers are really pushing for standardized disclosure for A-share companies, and we believe that will change relatively quickly,” said Li.
Still, companies should publicize their sustainable, environmentally and socially responsible programs, she said.
“(This is) very localized information, so we want to help international companies get access to this information,” she said.