On December 1, the 8th China Social Investment Forum (China SIF) Annual Conference was held in Beijing with virtual access for remote attendees.
Dr. Guo Peiyuan, Chairman of SynTao Green Finance and Chairman of China SIF, moderated the morning session. Zhang Jinsong, Deputy Secretary-General of the People’s Government of Beijing Municipality, Fan Wenzhong, Chairman of Beijing Financial Holding Group, Deng Qingxu, Senior VP of Sina, and Eric Usher, Head of UNEP FI, delivered opening remarks.
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Dr. Guo Peiyuan, Chairman of China SIF, Chairman of SynTao Green Finance
Zhang Jinsong pointed out that President Xi Jinping’s commitment for China to become carbon neutral by 2060 and to peak its emissions before 2030 implies that an increasing amount of long-term capital with green preference will come in to support China’s green development. The capital city Beijing, with systematic policies, abundant market resources, open investment environment and advanced technology, possesses a leading position in the development of green finance.
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Zhang Jinsong, Deputy Secretary-General of the People’s Government of Beijing Municipality
Fan Wenzhong shared the development trend of ESG at home and abroad, and introduced the practical experience of Beijing Financial Holding Group. He called out that financial institutions should foster moral values, actively practice their social responsibilities, effectively integrate policies and maximize social benefits.
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Fan Wenzhong, Chairman of the Board, Beijing Financial Holding Group Co. LTD
According to Deng Qingxu, the covid-19 epidemic has brought a wide range of reflection to the investing community, making ESG factors more significant in standardizing and regulating investment from a sustainability perspective.
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Deng Qingxu, Senior Vice President of Sina
Eric Usher said in his speech that a tough year of 2020 underscores the importance of sustainable investment and the need for financial institutions to properly manage environmental risks and align their investments with a sustainable development framework. Eric acknowledged the recent achievement of emission reduction and green finance in China, and introduced the progress of the Principles for Sustainable Banking (PRB) and the Sustainable Blue Economy Finance Initiative.
Eric Usher, Head of UNEP FI [ONLINE]
The following two sessions were “What Drives ESG into Mainstreaming and Market Response” and “Climate Change and ESG Investing – Risks and Opportunities”. In the keynote speech of the first session, Cao Deyun, Executive Vice President and Secretary-General of the Insurance Asset Management Association of China (IAMAC), said that the insurance assets should bear social responsibility under the regulatory framework in China, and insurance companies need to be responsible investors by protecting the environment. The pursuit of long-term and stable returns for insurance assets is a natural match with the concept of sustainable development, but there is still a long way to go for ESG integration in insurance sector.
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Cao Deyun, Executive Vice President and Secretary-General of the Insurance Asset Management Association of China (IAMAC)
Huang Liping, Deputy Secretary General, China Asset Management Association (AMAC), shared the three driving forces of ESG investment: values, risk management, and investment returns. She suggested that a complete ESG investment chain should include ESG evaluation system, ESG investment subjects, and ESG investment objects. According to the latest green investment self-assessment conducted by the AMAC, more mutual fund managers are taking substantial measures to strengthen green investment management, as well as research and development.
Matthew Arnold, Managing Director and Head of Corporate Responsibility Engagement of J.P. Morgan, sees ESG mainstreaming as an inevitable trend, as ESG investing is growing rapidly and is now a top priority for clients due to the epidemic. He believes that China's carbon neutrality goal would bring a positive shift and opportunities for industries such as solar energy.
Matthew Arnold, Managing Director and Head of Corporate Responsibility Engagement, J.P. Morgan [ONLINE]
Thomas Kwan, Chief Investment Officer of Harvest Global Investments and Head of ESG of Harvest Fund Management, introduced the current market situation of ESG investment in China and abroad, as well as the fund's ESG investment experience. According to him, ESG investment in China faces challenges such as lack of ESG data, lack of support from asset owners, and incompatibility of domestic and international standards.
Thomas Kwan, Chief Investment Officer, Harvest Global Investments; Head of ESG, Harvest Fund Management [ONLINE]
The first roundtable session was moderated by Luo Nan, Head of PRI China. The panelists shared the development of ESG investment in China and globally, as well as the outlook for the future. Miyuki Zeniya, Fellow & Head of Sustainable Finance of Investment Planning Dept. in Dai-ichi Life Insurance Company Limited, and Helena Fung, Head of Sustainable Investment in FTSE Russell Asia Pacific, shared the significant progress of ESG investments in Japan and Europe in the past year respectively. Lin Wei, Economic Advisor to the District Major of Tongzhou District in Beijing, introduced the efforts made by the government and enterprises to build an international center for green finance in Beijing's sub-center, and pointed out that the 2060 carbon neutrality goal will be an important driver for mainstreaming ESG investment in China. Yu Hua, Former Chairman of Morgan Stanley Huaxin Fund Management Company, and a member of China SIF Board of Directors, said ESG investment in China is still in its infancy, and he hoped that asset owners would play a more active role in the future to push asset managers to address climate change and practice ESG investment. He called for a separate performance evaluation system for ESG funds from third parties and among asset managers community. Ye Min, Managing Director - Head of International at Moody's Corporation, highlighted the importance of improved disclosure and quantitative data analysis for the development of ESG investments.
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Plenary Roundtable 1: What Drives ESG into Mainstreaming and Market Response
In the keynote session on "Climate Change and ESG Investment", Wang Zhongmin, Former Vice Chairman of National Council for Social Security Fund, and the Honorary Chairman of China SIF, explained the impact of ESG investment on the development of key industrial sectors such as energy and transportation from the perspective of return on investment, and emphasized the importance of ESG investment in the context of climate change.
Wang Zhongmin, Former Vice Chairman of National Council for Social Security Fund; Honorary Chairman of China SIF
Dr. Wang Shourong, Former Deputy Director of China Meteorological Administration, introduced the trends and risks of climate change in China, including the rise of extreme weather events, agriculture and food security, water safety, air quality, etc. He also introduced approaches to climate change mitigation and adaption.
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Dr. Wang Shourong, Former Deputy Director of China Meteorological Administration
Dr. Ma Jun, Chairman of China Green Finance Committee, analyzed the impact and opportunities of carbon neutrality goals on the financial sector and investment institutions. According to Dr. Ma Jun, to achieve the goal of carbon neutrality, China would increase green and low-carbon investment by 138 trillion yuan by 2060, mainly in the four major sectors of energy, transportation, construction, and industry. Coal-related companies would also face a comprehensive transformation to new energy. For financial institutions, the active innovation of financial products, the opening up of carbon trading market, environmental and climate information disclosure, and the use of environmental risk analysis will strongly support the realization of carbon neutrality.
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Dr. Ma Jun, Chairman of China Green Finance Committee
From a market perspective, Wu Zengtao, Chief Marketing Officer of China Southern Asset Management, shared several effective practices of ESG, including the signing of the Climate Action 100+ initiative and the promotion of ESG risk and opportunity assessments for listed companies based on the TCFD framework.
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Wu Zengtao, Chief Marketing Officer, China Southern Asset Management
The second roundtable in the morning, "Climate Change and ESG Investing - Risks and Opportunities", moderated by Dr. Guo Peiyuan, focused on how financial institutions are addressing climate change and practicing TCFD. Rebecca Mikula-Wright, Executive Director of Asia Investor Group on Climate Change (AIGCC), said that a growing number of Asian financial institutions are concerned about climate change and are taking action to mitigate the risks associated with it in their portfolios while seizing the opportunities created by the low-carbon transition. Founder & CEO of 427, a Climate Risk Fintech company, Emilie Mazzacurati, and Amar Gill, Head of BlackRock Investment Stewardship APAC, introduced their organizations’ approaches to climate risk assessment and management. Yin Hong, Deputy Head of the Modern Finance Research Institute at ICBC, introduced ICBC's approach to climate change and the latest progress of environmental information disclosure in China and the UK. CDP’s China Country Director, Sabrina Zhang, suggested that a unified framework for environmental information disclosure should be developed with TCFD as the lead. Lastly, Dr. An Guojun, Vice Secretary General of Green Finance Committee, and the Vice Chairman of China SIF, said that measures such as national green industry fund and green municipal bonds will further promote financial institutions to address climate risks and carry out environmental information disclosure.
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Plenary Roundtable 2: Climate Change and ESG Investing – Risks and Opportunities
A series of research reports were also released during the morning session. Zhang Rui, Managing Director of SynTao Green Finance, released the "China Sustainable Investment Review 2020", which summarized the important policies in China's sustainable investment field in the past year, the rapid growth of the responsible investment market scale and unique practices, including ESG wealth management products of commercial banks, as well as the change of public attitudes towards responsible investment. Dr. Guo Peiyuan, presented the report titled "ESG for Sustainability at Municipal Level", which was collaboratively written by Beijing Financial Holding Group, SynTao Green Finance and Moody's. The report introduced the model of ESG strategy for municipal financial holdings and pointed out that there is a high degree of synergy between municipal financial holdings and ESG in terms of business goals and policy objectives. Prof. Zhu Xufeng, Executive Director of Institute for Sustainable Development Goals at Tsinghua University, released "ESG Assessment of China’s Local Governments", which introduced the phase-1 research findings of ESG rating for local governments.
Left: China Responsible Investment Annual Report (2020) Zhang Rui, Managing Director of SynTao Green Finance
Middle: ESG for Sustainability at Municipal Level Dr. Guo Peiyuan, Chairman of China SIF, Chairman of SynTao Green Finance
Right: ESG Assessment of China's Local Governments Prof. Zhu Xufeng, Executive Director, Institute for Sustainable Development Goals, Tsinghua University
The afternoon sessions of the conference include four parallel forums, featuring "Quantitative v.s. Qualitative in ESG Investing", "ESG Integration in Fixed Income Market", "Fintech Solutions to ESG", and " ESG Product Design and Innovation” respectively.
The parallel forum "Quantitative v.s. Qualitative in ESG Investing" was moderated by Grace Guan, Deputy General Manager of SynTao Green Finance. Yang Yuebin, Associate Director and Fund Manager of Equity Investment in AXA SPDB Asset Managers, said, "AXA SPDB Asset Managers has carried out meaningful practices by innovatively combining value investment methodology and ESG philosophy in China market. Value investment pursues discounted free cash flow throughout the lifecycle of an enterprise, while ESG pursues sustainable development for all human beings, which we believe are similar principles. Katherine Han, Head of ESG Research at Harvest Fund Management, introduced the practice of Harvest Fund, saying that the effective combination of qualitative and quantitative factors of ESG is essential not only in China but also in the world. Especially in the new stage of high-quality development of China's capital market, the full use of ESG qualitative and quantitative information can more comprehensively and deeply explore investment value, help investors obtain better sustainable Alpha, and achieve a win-win situation for investment returns and ESG performance. According to Eva Halvarsson, CEO of AP2, ESG analysis helps Swedish pension funds make better investment decisions, and both quantitative and qualitative information are important.
Left: Yang Yuebin, Associate Director, Fund Manager, Equity Investment, AXA SPDB Asset Managers
Middle: Katherine Han, Head of ESG Research, Harvest Fund Management
Right: Eva Halvarsson, CEO, Andra AP-fonden (AP2) [ONLINE]
Desiree Wang, China Country Head of J.P. Morgan Asset Management, Flora Wang, Director of Sustainable Investing in Fidelity International Limited, Miranda Zhao, Head of ESG Research of Global Capital Investment in ChinaAMC, Zhao Yonggang, Director of Research and Development Dept. in China Securities Index Co., and Louis Cheng, Professor of Finance in Hong Kong Polytechnic University, shared quantitative and qualitative ESG practices and academic research findings on ESG integration respectively. Desiree Wang said that it is necessary to add qualitative fundamental analysis to quantitative data analysis to balance the two in order to make the most important ESG-related decisions. Miranda Zhao, Head of ESG Research of International Investment Department in ChinaAMC, pointed out that ESG investment is essentially a subjective value judgment based on objective data, and both quantitative and qualitative analysis play a crucial role. Flora Wang noted that “the quantitative gives the what while the qualitative explains the why and how, all of which are needed to make ESG assessment investment-relevant.” Prof. Louis Cheng argued that while there is an ‘Aggregate Confusion’ in ESG performance measures, but there is also a ‘Disaggregate Advantage’ in alpha generation.
Parallel Forum A1: Quantitative v.s. Qualitative in ESG Investing
The parallel forum " ESG Integration in Fixed Income Market" was moderated by Zhang Rui, Managing Director of SynTao Green Finance. Brian Cahill, Managing Director – Global, Environmental, Social and Governance of Moody’s Investor Services, and Dr. Wu Ruojun, Co-Founder and Deputy GM of Nine Martingale Investment Management, delivered keynote speeches on the integration of ESG and fixed-income markets and on STGF-9M China SDG Bond Index. Brian Cahill said that Moody’s Investors Service is delighted to sponsor the 8th China SIF Conference – an annual highlight on China’s ESG calendar. The importance of this conference grows each year as we approach the tipping point for the integration of ESG analysis into mainstream fixed income markets, and the subsequent need to have a systematic approach to that integration. Dr. Wu Ruogun said that in a joint study on the SDG Bond Index conducted by Nine Martingale and SynTao Green Finance, it was found that SDG bonds can achieve a win-win situation for both issuers and investors, by providing more financing channels for SDG projects, and demonstrating a better risk-return ratio.
Left: Brian Cahill, Managing Director – Global, Environmental, Social and Governance, Moody’s Investor Services [ONLINE]
Right: Dr. Wu Ruojun, Co-Founder, Deputy GM, Nine Martingale Investment Management
Afterwards, Jasmine Qu, Senior Manager of Global Investors Services in E Fund, hosted a roundtable discussion on the subject. Elaine Gu, Client Portfolio Manager of E Fund Fixed Income Investment, Ricco Zhang, Senior Director of Asia Pacific of the International Capital Market Association (ICMA), Andrew Brown, Director and Portfolio Manager of Fixed Income for EMEA at BMO, Esther Law, Senior Portfolio Manager of Emerging Markets Debt at AMUNDI, and Peter Mannerbjörk, Quantitative Investment Manager of Fixed Income in AP2, shared the progress and challenges of ESG strategy integration in fixed income investing. Ricco Zhang introduced the factors and differences between Chinese and foreign countries in standard setting for green bonds, social bonds and sustainable bonds. Elaine Gu shared the driving forces and challenges in integrating ESG strategies and said that client demand is increasingly becoming the main driver for ESG integration, while the quality and transparency of ESG data are the main challenges.
Parallel Forum B1: ESG Integration in Fixed Income Market
The parallel forum "Fintech Solutions to ESG" focused on the application of financial technology in ESG investing, especially the experience sharing and idea exchanging on opportunities and challenges. The forum was moderated by Tracy Cai, Co-founder of SynTao Green Finance and Member of China SIF Board of Directors. Zhang Bohui, Director of the Center for FinTech and Social Finance in Shenzhen Finance Institute, pointed out that the biggest challenge in ESG investment is data, and shared the five application dimensions of satellite remote sensing data for ESG. Dong Shanning, Assistant General Manager of Corporate Finance and Head of Green Finance Operation in Bank of Jiangsu, introduced the combination of financial technology and ESG from the perspectives of business innovation and risk control.
Left: Zhang Bohui, Director of the Center for FinTech and Social Finance, Shenzhen Finance Institute
Right: Dong Shanning, Assistant General Manager of Corporate Finance and Head of Green Finance Operation, Bank of Jiangsu
Plato K. T. Yip, CEO of the Treelion Foundation and Vice Chairman of Elion International Investment, said that the company's ESG data management through blockchain technology enhances data credibility and improves data search efficiency, which is especially valuable for small and medium-sized enterprises to manage ESG data. Kelly Yu, Senior Advisor, Green Digital Finance Alliance, pointed out that for municipal financial centers, green and sustainable development can be achieved faster and on a larger scale through financial technology at the city level. Ma Jun, Founding Director of the Institute of Public & Environmental Affairs (IPE), said that the NGO has developed financial technology to create a “Blue EcoChain” and “Blue Map” for dynamic environmental rating of enterprises and dynamic evaluation of millions of enterprises. Zhang Xiangjun, Assistant General Manager of Beijing Financial Big Data LLC. shared the application of financial technology in mapping enterprise credit and ESG "portrait", saying that such application would help improve the transparency of enterprise information and the accuracy of financial services, and support the development of inclusive finance and green finance.
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Parallel Forum A2: Fintech Solutions to ESG
The parallel forum "ESG Product Design and Innovation" was moderated by Zhang Rui. Chen Yaqin, Division Chief of Green Finance Department in Head Office of Industrial Bank, shared the experience of issuing the first domestic blue bond, climate bonds that meet international standards, and ESG wealth management products customized by Industrial Bank's wealth management subsidiaries and private banking department. Frédéric Samama, Chief Responsible Investment Officer at CPR AM of Amundi Group, said that there are many actions and innovations that financial institutions can take, and presented many examples of innovative cooperation. Dennis Fritsch, Project Coordinator of Sustainable Blue Economy Finance in UNEP FI, stated that the oceans -- the world's seventh largest economy -- and blue economy plays a vital role for financial institutions and the whole world. More than 50 financial institutions around the world have joined the Sustainable Blue Economy Finance Principles, including Industrial Bank and Bank of Qingdao.
Left: Chen Yaqin, Division Chief of Green Finance Department, Head Office of Industrial Bank
Middle: Frédéric Samama, Chief Responsible Investment Officer, at CPR AM, Amundi Group [ONLINE]
Right: Dennis Fritsch, Project Coordinator, Sustainable Blue Economy Finance, UNEP FI [ONLINE]
During the roundtable discussion, Dr. Sun Mingchun, Chief Economist of Haitong International Securities Group Ltd, introduced the development of ESG products around the world. Yan Xu, Chief Investment Officer of Hwabao WP Fund Management Co., Ltd, shared the fund’s ESG investment strategy and innovation of ESG themed products. Yang Hai, Managing Director of * Securities Asset Management explained how mutual funds design ESG products and the potential clients for sustainable finance products. Zhang Dachuan, Executive Director of ESG Investment Department in Huaxia Wealth Management Co., Ltd, introduced the progress of ESG wealth management products.
Parallel Forum B2: ESG Product Design and Innovation
The 8th China SIF Annual Conference is hosted by SynTao Green Finance and Sina Finance; co-hosted by Beijing Financial Holdings Group, UNEP FI, UN SSEi, AIGCC, and China Business Journal. Strategic Partners include Moody's, J.P.Morgan, Harvest Fund, Southern Asset Management; Partners include E Fund, AXA SPDB Asset Managers, FTSE Russell, and Country Garden.
China SIF Week 2020 is a week-long series of events lasting from Nov. 30 to Dec. 4, where the 8th China SIF Annual Conference is the main conference. There are also multiple side events including: a media training workshop; a workshop on UNEP FI's Principles for Responsible Banking (PRB); Climate Action in Investment Strategies and Stewardship; ESG Investing in Auto Industry; Corporate Governance and High Quality Corporation; Environmental Disclosure and TCFD Progress; Impact Investing in FOF; Academic Research on Sustainable Finance; and Environmental Risk Management and Climate Reporting.
Note：Quote from Matthew Arnold, J.P. Morgan is translated from Chinese.
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