Research conclusion
E, s and G refer to the three major factors of environment, social and governance respectively. They are new ideas and methods for investment and evaluation of enterprises. As the first part of the ESG special research series, this article will focus on the historical background of ESG, the current situation of global development and the main regulatory policies of China's ESG investment, so as to provide reference for the direction and methodology of long-term investment.
Definition of ESG Investment: ESG investment, also known as responsible investment, refers to an investment strategy and practice in which environmental, social and Governance (ESG) factors are incorporated into investment decision-making and active ownership. At present, the mainstream of ESG investment strategy is divided into seven categories: ESG integration method, enterprise participation and shareholder action, screening according to the Convention, negative screening / elimination method, best in class method / positive screening, sustainable theme investment method, influence investment and community investment.
Background of ESG Investment: the concept of ESG investment originated from ethical investment with the rise of religion, and the concept of social responsibility investment was born in the 1960s. In the 21st century, the concept of ESG investment has been formed, which has become an important indicator to measure sustainable development. As one of the mainstream investment strategies and methods in the world, it is becoming more and more important. The development of ESG investment is inseparable from the following background: the global population is expected to reach 9.7 billion in the middle of the 21st century, the aging of the population is intensifying, and how to achieve environmental protection while promoting economic prosperity has become a common topic. The investment trend of thought has changed, and more and more mainstream investment institutions have shifted from simply paying attention to financial profit to paying equal attention to ESG and profit. Achieving the sustainable development goals and climate change requires joint action and substantial financial investment from all over the world.
Global status of ESG Investment: ESG investment has the effect of improving the return on investment under long-term risk adjustment. It is not only used for mine clearance and risk control, but also closely related to long-term investment. Reducing the negative impact of environmental, social and corporate governance issues on the capital market is indispensable for the pursuit of long-term return on investment; Most investment institutions in the world, especially pension investment strategies in major countries, are gradually inclined to ESG investment. ESG investment scale is rising year by year: at the beginning of 2020, the global ESG investment scale reached US $35.3 trillion, with a growth rate far exceeding the overall global asset management scale; Regionally, the investment scale of the United States surpassed that of Europe and became the first, accounting for 48% of the five major markets in the world; In terms of investment strategy, the scale under the ESG integration method reached US $25.2 trillion, surpassing the negative screening strategy has become the most commonly used strategy by investors; ESG investment continues to be dominated by institutional investors, with the participation of individual investors growing steadily. The number of international institutions that agree with the ESG concept continues to grow, with 4751 unpri signatories and more than $121 trillion in assets under management; TCFD is supported by more than 1000 financial institutions worldwide, with an asset management scale of 194 trillion US dollars.
ESG and information disclosure: the demand for ESG information disclosure continues to grow, and the relevant global ESG disclosure standards continue to be refined. With the establishment of issb, the unification trend of international disclosure standards is strengthening; On the other hand, the main regulatory trend for ESG information disclosure abroad is from "semi mandatory + voluntary" rules to "mandatory / non-compliance interpretation", and the requirements for ESG information disclosure in overseas legislation are stronger.
Main characteristics of ESG Investment: active engagement has become one of the main characteristics of ESG investment different from other investments, including communication between investors or participating service providers and current or potential investment objects and issuers to improve ESG practice, sustainability results or public disclosure. Actions include individual participation, collaborative participation and participation through service providers; Among them, with the participation of cooperation, the influence of investors' collective action is far greater than that of investors acting alone.
ESG investment and China's domestic regulatory policies: in concept, environmental e factors pay attention to the impact of enterprise business activities on the environment, which is consistent with China's green development concept and double carbon goal. Although the construction of China's ESG related regulatory policies started later than overseas European and American countries, in the context of the era of double carbon goals and the concept of green development, ESG investment has attracted the attention of the government and regulatory institutions. In terms of policy development, the Hong Kong stock market has taken the lead, and the policies related to the A-share market have gradually started, especially around green investment, Policies related to the green financial system have been introduced in recent years. Achieving the dual carbon goal is inseparable from the financial support and green upgrading of a large number of low-carbon and energy-saving technologies. ESG investment can enable the green economy and help achieve the goal of carbon neutralization.
Risk tips
I. The implementation of ESG policies outside China was less than expected
II. The promotion of carbon peaking and carbon neutralization policies was not as expected
