Moody's eyes China's ESG sector

Move to acquire stake in SynTao part of global firm's efforts to tap Chinese market

Global financial service providers are placing more weight on environmental, social and governance (ESG) elements in their development strategies in China, and the acceleration in the opening-up of the economy could bring in higher standards from outside the country.

Moody's Corp announced in late October that it would acquire "a minority stake" in SynTao Green Finance, a leading provider of ESG data and analytics based in and serving China.

The Beijing-based SynTao Green Finance also provides ESG ratings and green bond verification to financial institutions and corporations. The international rating agency plans to enrich its market offerings in China and complement its growing platform of ESG data and solutions globally through a Chinese market leader.

The deal was completed recently, Shi Hao, managing director and country manager for Moody's Investors Service in China, told China Daily in an exclusive interview. Moody's did not take control of the Chinese company through an acquisition, nor did it change its operational and governance structure.

"The investment is in line with Moody's strategy, as the ESG-related business is one of the key areas that Moody's is developing globally. And we see a great potential in China's ESG-related market," Shi said.

The ratings agency sees business opportunities in the Chinese market, although ESG data analysis is at the early stage of development. "Combining with Moody's global strengths and accumulated experience, the deal will help to build a foundation in the market," said Shi.

In business, "risk versus return" is not the only standard for selecting projects and assets. ESG principles have been incorporated into the evaluation system.

Globally, companies are integrating ESG factors into their business strategies. Research from the International Monetary Fund showed that efforts to promote ESG considerations in finance started some 30 years ago and have accelerated recently.