China's intellectual capital ranks among the top three in the world.
The 11th China SIF Forum recently released the "China SIF Annual Report 2023", pointing out that China's ESG policy and market will continue to develop in a stable and orderly manner in 2023, showing the characteristics of focusing on carbon peak and carbon neutrality, information disclosure and product growth, and the overall acceleration of the insurance industry. In addition, Solability, an independent think tank for sustainable development, recently released the "Global Sustainable Competitiveness Index 2023" (Global Sustainable Competitiveness Index), which mainly evaluates the environmental, social and corporate governance (ESG) construction of various countries.
China's intellectual capital ranks among the top three in the world.
Solability mainly evaluates countries from six aspects: natural capital, resource efficiency, social capital, intellectual capital, economic sustainability, and governance efficiency, to determine the overall progress and potential risks of the assessed countries in key areas such as climate, energy, economy, and sustainability. Natural capital refers to the state of the natural environment, including the availability of energy resources and the degree of depletion;Resource efficiency refers to the efficiency with which available resources are used when resources are constrainedSocial capital refers to national satisfaction with life and the promotion of development;Intellectual capital refers to the ability to create wealth and employment through knowledge-driven industries, i.e., high value-added industries, in a globalized market;Economic sustainability and governance efficiency refer to the ability to guide sustainable development through measures such as resource allocation, infrastructure, and market guidance.
The results of the 2023 index show that ESG construction in countries around the world is mixed, with an average score of 434, of which Sweden with 59A score of 8 retains the top spot, with China holding 51A score of 1 is in 30th place, compared to a score of 50The United States of 9 is two places ahead. It is worth mentioning that this is the first time since the release of the index in 2012 that China has surpassed the United States.
China ranks third in the world in terms of intellectual capital, and scores higher than the global average in the areas of social capital, governance efficiency, and economic sustainability.
According to the comprehensive assessment of Solability, China is on the path to improving its sustainable competitiveness in the future, especially in terms of innovative intellectual capital such as clean energy technologies, ranking among the top in the world. In contrast, the United States has shown a downward trend in social capital, governance efficiency, and natural capital, which will undoubtedly weaken the global influence of the United States on core issues such as climate change and green transition.
In terms of trends, the global energy mix is accelerating the transition from fossil fuels to renewable energy, and the deployment of renewable energy technologies has basically reached critical scale and cost parity, and fossil fuels will no longer be competitive over time. However, even the best-performing countries still have a long way to go before they can achieve sustainable competitiveness, i.e. net zero in the circular economy, according to the Solability assessment.
The number of ESG investment products has grown significantly
Globally, China's ESG construction started relatively late, but the overall development speed is relatively rapid, which is largely due to the take-off of new energy innovative technologies such as "wind and solar" energy and electric vehicles. In 2002, when the China Securities Regulatory Commission (CSRC) issued the Code of Corporate Governance for Listed Companies, China's ESG entered its infancy, and environmental information disclosure at that time was dominated by the policy recommendations of "environmental information disclosure".After 2009, China's ESG entered a stage of exploration and development, and the requirements for environmental information disclosure became clearer and stricterSince 2017, China's ESG has entered a stage of deepening and upgrading, with environmental information disclosure requirements further refined, and comprehensive disclosure by listed companies has become a trend.
According to the China Responsible Investment Annual Report 2023, the overall scale of China's responsible investment market will still maintain a relatively rapid growth trend in 2023, but the structural imbalance still exists. As of the end of the third quarter of 2023, the total size of China's responsible investment market is about 3306 trillion yuan. Among them, green credit 2858 trillion yuan, the total amount of sustainable investment (including sustainable investment, sustainable bonds and sustainable wealth management products) is about 366 trillion yuan, sustainable equity investment of about 082 trillion yuan.
From the perspective of institutional responsible investment practice, in 2023, China's institutional investors will carry out responsible investment practice in strategy, management, product, climate, disclosure and advocacy, and the practice of public offering ** institutions is slightly ahead of other types of institutions on the whole. However, as the practice of responsible investment has become more difficult, more efforts are needed.
From the perspective of responsible investment products, in 2023, the number of ESG investment products in China will still grow significantly, but the scale is subject to the factors of the market, and the overall scale has declined. Statistics show that the "ESG content" of ESG-themed products is better than that of ordinary products, but the advantages are not significant and the individual differences are large.
Looking ahead to 2024, the China SIF Annual Report 2023 identifies the following trends to be watched: progress in information disclosure;The cross-ministerial coordination mechanism of ESG, especially how to strike a balance between international standards and Chinese characteristics, how to grasp the degree and rhythm of carbon emission reduction and information disclosure, etc.;Progress in the Green Finance Reform Pilot Zone and the Climate Investment and Financing Pilot Zone.
Strengthen the ESG product system that relies on finance
Dong Zhanfeng, deputy director of the Policy Institute of the Academy of Environmental Planning of the Ministry of Ecology and Environment, recently pointed out that China's ESG development has entered the fast lane, and it is necessary to strengthen environmental information disclosure as the starting point and gradually standardize ESG ratings, standards and investment systems. ESG investment is an important part of supplementing the green investment and financing gap, and building an ESG product system that relies on banks will be an important development direction in China.
Li Jing, Climate Change and Sustainability Partner and Director of ESG Office of Ernst & Young Greater China Financial Services, told China Energy News that green finance has formed a diversified product system in China, including a series of green gold products and financial instruments such as green credit, green bonds, green **, green insurance, green trust, and carbon finance. "At the national level, different policies, standards and guidelines have been accelerated, and different provinces have local incentives and policies with their own characteristics, and green finance has become an important starting point for achieving the 'dual carbon' goal. ”
For ESG construction, industry experts suggest that the top-level design of the ESG evaluation system should be further improved from the policy and regulatory level, and the introduction of quantitative and comparable ESG information disclosure framework guidance documents should be promoted, emphasizing the innovation and construction of indicators related to the environment and carbon neutrality. At the same time, ESG investment guidance documents have been issued to guide the market to deepen ESG investment awareness and align with international ESG disclosure standards.
For financial institutions, ESG should be included in the screening of financial institutions' projects to support green innovation and transformationDevelop more green and sustainable investment product options for institutional investors;Strengthen the guidance of market participants, improve the ability of institutional investors to identify environmental risks and prevent risks, and guide more investors with personal ESG information.
Enterprises should raise awareness of green governance, integrate the concept of sustainable development into actual business plans, and realize the importance of green governance for long-term valueStrengthen ESG practices, improve their ESG performance, strengthen internal governance, and improve investment efficiencyFurther improve the disclosure of corporate environmental information.
With the successive introduction of relevant supporting policies and the gradual improvement of infrastructure, the scale of ESG-related investment by various types of investment institutions will also increase significantly, and China is becoming an important member of the international ESG investment field. "China's ESG investment started early, but due to the late rise of green bonds, information disclosure and other reasons, the development of ESG bond investment** is relatively slow. However, with the gradual increase in regulatory encouragement and investable targets, this type of bond may show a rapid growth trend. A financial analyst who did not want to be named told the China Energy News.
Text |Reporter Wang Lin.