Meet the Chinese SRI Expert -- Guo Peiyuan

Connect with: Guo Peiyuan
View profile for: Syntao
Meet other: China-based users of SRI-CONNECT
Join: Discussion group on: SRI research, strategy & networking (Asia)

Q1: Introduce us to Syntao, its objectives, clients and services

SynTao is a Beijing-based CSR and SRI consultancy. It aims to promote sustainable development in China through providing high quality services in CSR and SRI.

Currently, SynTao serves a variety of clients, including multinational companies, Chinese state owned enterprises, Chinese private enterprises and civil society organizations. SynTao helps these organizations to develop their own CSR strategy, build capacity and communicate with stakeholders.

SynTao ESG, an independent research arm under SynTao, focuses specifically on SRI and ESG business. SynTao ESG’s clients are funds, asset management firms and SRI research houses. SynTao ESG provides them with data and in-depth research about the Chinese market and Chinese companies.

Q2: What inspired you to found Syntao?

My personal interest in CSR/SRI can be traced back to early 2000s when I worked on my doctoral dissertation on sustainable finance. I believe that what happened in western countries will happen in China sooner or later; that CSR & SRI would grow quickly and that this could generate business opportunity. As a result, I and my friend, Wayne Silby, a SRI veteran from US, co-founded SynTao in Beijing in 2005. We hoped we could quicken the development of CSR & SRI in China by running this business.

Q3: What will drive awareness of sustainability factors into Chinese companies?

There are two important driving forces that enable Chinese companies to care more about sustainability:

• Policy driving force. China is a market where the government and regulators play important roles. Therefore, companies operating in China have to follow policy trends closely. For instance, the increase of CSR reports in China is mainly driven by a government mandate for state-owned enterprises.
• Market driving force. We need to ‘show the money’ to companies. Chinese companies will definitely calculate cost and benefit of doing sustainability. If they understand that sustainability can really reduce their costs and create new opportunities, they will implement sustainability programmes immediately.

Q4: How do you expect Chinese companies disclosure on sustainability & corporate governance to change in the coming years? What will drive this?

According to SynTao’s statistics, the number of CSR reports in China keeps increasing. In 2012, over 1,700 reports were published and it is expected that this year the number will reach a new record. More than half of the reports are published by listed companies in China. Such an increase is mainly driven by regulation as stock exchanges required certain kinds of listed companies to publish an annual CSR report.

Quality remains a big concern in China. Many CSR reports just present good stories and do not contain information on the most material concerns. This will not change unless bad reports result in negative feedback to companies and a worsening reputation.

Q5: What factors should international investors consider when engaging with Chinese companies?

There are several factors that international investors should consider:

• Different background context. SRI investors often talk about human rights and climate change issues. These, of course, are important issues worldwide. However, most Chinese companies don’t understand why investors care about these issues and why companies need to know about them. Investors need to consider this different background context and communicate with companies using business-focussed language.
• Finding the right contact point. Usually, investors have access to Investor Relations people in companies. These IR people normally do not know much about CSR. People in the companies who manage CSR come from EHS, CSR or sustainability departments. They know the most about corporate sustainability performance. It would be more useful for investors to talk to these people rather than their IR colleagues.
• Combine considerations on policy and market. Global investors put more focus on market issues, and less on policy issues. However, for some Chinese companies, particularly state-owned enterprises, policy issues predominate. Global investors have to keep this in mind, for instance, when discussing climate change and carbon policy with Chinese state-owned coal mine enterprises.

Q6: If you could introduce any two people in the world to each other, who would they be?

The head of the Chinese State Pension Fund and the Head of Norwegian State Pension Fund.

Know more about SynTao's ESG Research and SRI Consulting services.