Abu Dhabi, October 20, 2023 -- China Sustainable Investment Forum (China SIF) and SynTao Green Finance, with support of Southern Asset Management, jointly released 2023 ESG Survey Report for Asset Owners at the 8th World Investment Forum. By analysing asset owners' awareness and practices of engagement and stewardship, how they implement engagement and stewardship in China, and their requirement on stewardship for asset managers, this report provides a reference for the market to understand the attitudes and needs of asset owners for engagement and stewardship in China. More than 50 Chinese and offshore asset owners have responded to the questionnaire, covering sovereign funds, pension funds, insurers, banks and their wealth management subsidiaries, family offices, and many other types of financial institutions.
SynTao Green Finance (STGF) is one of the first Chinese organisations to provide green finance and responsible investment services, starting ESG data collection and research as early as 2009. STGF ESG rating, data and research on ESG key issues are widely employed to support investment decisions, risk management, policy making, and sustainable finance product innovation. Dr. Guo Peiyuan, Chairman of SynTao Green Finance and Chairman of China SIF, noted that the survey report demonstrates asset owners’ awareness and practices of engagement and stewardship in China. When selecting an asset manager, asset owners value their knowledge and capability in engagement in addition to the requirements of ESG analysis and investment ability.
As one of the pio neers in China's asset management industry, Southern Asset Management is committed to creating long-term and stable returns for its clients while actively promoting the development of ESG investment in China. Southern Asset Management, as the only Chinese institution, won the 2022 PRI Awards of "ESG incorporation initiative" and "Emerging markets initiative". Southern Asset Management believes that asset managers should continuously improve their ability of engagement and stewardship, and actively practice active ownership by engaging in governance and voting, in order to guide companies to improve their ESG performance and business practices. By increasing companies’ sustainable value creation capabilities, investors can reduce the ESG risks of their portfolios, and make long-term, sustainable returns for their clients.
The report found that in terms of awareness and practices of engagement and stewardship, more than 80% of respondents have started to engage with investee companies, and have dedicated stewardship staff, internal investment or other teams to conduct engagement activities. Respondents' policies related to stewardship take a variety of forms, and 70% of respondents ranked regulatory requirements as the top driver to incorporate ESG factors into engagement.
Figure1: The primary driver to incorporate ESG factors into engagement
In terms of implementing engagement and stewardship in China, nearly 60% of respondents see engagement very important when investing in China, and Nearly 70% of respondents take annual reports and ESG rating as reference when engaging with investees. Offshore respondents are more active in adopting various types of stewardship approaches and engaging on ESG issues with investees in China. At the same time, offshore respondents face greater challenges in accessing Chinese companies and achieving desired outcomes from engagement efforts. With respect to ESG issues, more than 80% of the offshore respondents has engaged on Climate Change, Labour Rights, Supply Chain Management, and Governance Structure issues, while Chinese respondents pay more attention to Governance Structure, Pollution Control, Energy-saving and Consumption Reduction, and Climate Change issues.
Figure2: The approaches adopted for conducting stewardship in China
Professional talents with engagement expertise is one of the most valued engagement capabilities of an asset manager in China, and more than 50% of respondents always consider the asset manager's knowledge and capability in engagement. 80% of respondents think the asset classes and proportions covered by engagement activities should be regularly reported by the asset managers. More than half of respondents are satisfied with the performance of Chinese asset managers in stewardship, but offshore respondents have higher expectations for them.
Figure3: The most valued engagement capabilities of an asset manager in China
Pension funds' focus and commitment to engagement and stewardship is more prominent among all types of the responding asset owners. Pension funds have relatively more comprehensive coverage of policies related to stewardship, and the content of engagement that pension funds expect asset managers to report on a regular basis is more extensive. All the pension funds respondents require asset managers to engage with companies in the portfolio.
Figure4: The content of engagement that asset owners expect asset managers to report on a regular basis
The report finds that, driven by regulatory requirements, most asset owners have started to conduct engagement and stewardship. Offshore respondents are more active in adopting various types of stewardship approaches and engaging on ESG issues with investees in China. Pensions, as an important participant in ESG investments, have the highest level of concern for engagement and stewardship among all asset owners. Asset managers should further improve their engagement and stewardship capabilities and refine the report of engagement on a regular basis to meet the higher expectations of asset owners.
Download the report：
SynTao Green Finance official website:
Chinese：https://syntaogf.com/products/srao2023
English：https://en.syntaogf.com/products/srao2023
China Sustainable Investment Forum (China SIF) official website:
Chinese：https://chinasif.org/products/srao2023
English：https://en.chinasif.org/products/srao2023
