Sustainable Investment in China Newsletter | Q1 2010

   
 

In This Issue

Editor's Note

Welcome to BSR's Sustainable Investment in China Newsletter

With more than five years of experience collaborating with Chinese businesses to develop sustainable business strategies and solutions, BSR is a leader in corporate responsibility in China. Now, BSR is bringing its global expertise in financial services to China with a focus on sustainable investing—helping investors support sustainable businesses, and helping businesses attract and engage with these investors.

This quarterly newsletter will help investors in China understand how sustainable investing can mitigate business risk and create opportunities for greater financial as well as social and environmental returns. UN PRI, as our partner, will also contribute one article to every issue. Please forward this newsletter to colleagues and send feedback and comments to jzhu@bsr.org.

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In Depth

Sustainable Investment in China Report Released

At the beginning of 2010, BSR launched the Chinese version of its “Sustainable Investment in China” report. Funded by the International Finance Corporation, this report surveys the sustainable investment (SI) landscape in China, identifies the challenges associated with the nascent field, and makes recommendations for speeding up the growth of the SI market. We spoke with BSR’s Zhuo Xin to learn more about the report’s findings and the implications for investors.

Learn more →
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Insight From the UN PRI

Principle 1 and the Rise of Responsible Investment

In the past, it was rare that financial institutions considered “extra-financial” matters—such as corporate governance and climate change—relevant to investment decisions. Modern responsible investors argue that companies that take into account and manage the full range of risks and opportunities, including ESG issues, are best able to deliver long-term value for investors. Responsible investment is clearly on the rise, perhaps most obviously indicated by the number of mainstream investors now signed up to the PRI. In just three years, over 600 investors from five continents, representing around US$18 trillion in assets, have adopted and started implementing the principles.

The first of the six PRI principles requires investors to “incorporate ESG issues into investment analysis and decision-making processes.” Signatories often cite this as the most difficult principle to put into practice because the process can be different depending on to which sector, asset class, and region each investment decision pertains. For example, how valuable is a company’s management of its supply chain? Or how might a company’s high carbon emissions affect its share price over the long term? Each investor will have to develop its own process to assess the materiality of ESG issues.

Implementation examples of Principle 1 include the development of ESG-related tools, metrics, and analysis, training for trustees and investment professionals in ESG issues, and, in the case of asset owners, assessment of investment managers' capacity to incorporate ESG issues into investment decisions. Signatories often use specialized ESG research to inform their decisions, and with this in mind, the PRI Initiative recently created the "Enhanced Research Portal," a free online directory for signatories that provides an overview of ESG research in the market and supports the implementation of Principle 1.

The PRI Initiative is the first time institutional investors, fund managers, and professional service partners have developed a truly international and mutually supportive framework within which to consider and take action on the most important and material ESG issues. It is inevitable that investors will recognize and act on ESG issues over the long term, as these issues are clear drivers of long-term value. As an investor-led initiative, we welcome any Chinese investors that want to sign up to the PRI.

For more information, please contact Narina Mnatsakanian at narina.mnatsakanian@unpri.org.

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News to Know

  • China to Cut 40 to 45 Percent GDP Unit Carbon by 2020

    Achieving this target will require efforts beyond energy saving and emissions reductions. According to a statement by the State Council, the Chinese government will need to dedicate major efforts to developing renewable and nuclear energies that ensure that the consumption of non-fossil-fuel power accounts for 15 percent of the country's total primary energy consumption by 2020.

  • China Considering Carbon Tax

    If a proposal from a Chinese energy research institute wins political support, China could launch a tax on greenhouse gas emissions in approximately four to five years.

  • China Tightens Corruption Supervision

    The personal lives and family information of senior officials in China will be put under tighter supervision as the top anti-graft body of the ruling Communist Party of China (CPC) vows a harsher fight against corruption.

  • The China Greentech Report 2009 Launched at the World Economic Forum Annual Meeting

    The report examines 125 existing and emerging green tech solutions across seven sectors. It evaluates each solution's potential environmental impact as well as commercial opportunity. The report is the culmination of a research process led by a 30-person team that inspired significant contributions from hundreds of companies.

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