Beyond looking to account for ESG-related risks that may affect individual companies or assets, many investors are now also seeking to influence the achievement of improved real-world sustainability outcomes. For investors active in China, these trends are highly relevant. Policy action linked to China’s development goals will be a key driver for markets in the years ahead. This briefing identifies some current practices, key challenges, and a series of recommendations for policymakers to help investors to develop their practices in these areas.
Executive summary
Investors around the world are recognising that both economic growth and financial returns depend on a healthy environment and a stable society. At the same time, governments, including China’s, want to help investors use their capital and influence to address challenges like climate change and poverty. Accordingly, many investors are identifying opportunities to integrate the consideration and pursuit of sustainability outcomes into their investment decision-making. Often, they are using the United Nations (UN) Sustainable Development Goals (SDGs) as a framework for doing so.
China has been a strong supporter of the SDGs both domestically and internationally. Domestically, its own development priorities, including those articulated through strategic goals such as “high-quality development”, “common prosperity” and “carbon neutrality”, are well aligned with the SDGs. Internationally, China’s foreign investment activity, particularly through the Belt and Road Initiative, is focused on open, green, clean and inclusive sustainable development that follows high standard, people-centred and sustainable approaches. Essentially, China’s strategic goals are aligned with the SDGs.
For investors active in China, these trends are highly relevant. Policy action linked to China’s development goals will be a key driver for markets in the years ahead. Using the SDGs as a lens, alongside other tools, can help investors identify emerging risks and opportunities and strengthen environmental, social and governance (ESG) analysis. For investors seeking to influence the achievement of real-world sustainability outcomes and support national policy goals, such as carbon neutrality and high-quality development, the SDGs also provide a valuable set of goals and targets against which impacts and progress can be measured and assessed.
While responsible investment is growing quickly in China, the intentional pursuit of sustainability outcomes, including the use of the SDGs as a basis for doing so, is only just starting to emerge. Based on a combination of desktop research, analysis of PRI reporting and assessment data, interviews and a roundtable with Chinese signatories, this report identifies current practice, emerging opportunities and key challenges for investors in China to integrate the consideration and pursuit of sustainability outcomes and the SDGs into their decision making. It then identifies a series of recommendations for policy makers to help investors develop their practices in these areas.
Policy recommendations
- Recommendation 1: Policy makers should provide clarification and guidance on investors’ duties and the use of stewardship to pursue sustainability outcomes
- Recommendation 2: Policy makers should enhance sustainability information disclosure requirements, frameworks and infrastructure
- Recommendation 3: Policy makers should encourage capacity building and knowledge sharing for investors to better consider sustainability impacts and outcomes.
Download the full report (available in English and Chinese) below.
