China Life invests in power player

Bullish on prospects of ESG, insurance giant injects $315m in green energy firm

China Life Insurance (Group) Co announced on Wednesday that it will invest 2 billion yuan ($315 million) in Huadian Fuxin Energy Development－a clean energy company specializing in the development and integration of new energy－marking a major green effort by the company to echo the country's carbon neutrality call.

So far, HFED has attracted an investment of 15 billion yuan from 13 strategic investors covering insurance, banking and other related industries. After the investment, China Life will become HFED's largest strategic investor and third largest shareholder.

As a subsidiary of State-owned power company China Huadian Corp, HFED reported a total installed capacity of wind and photovoltaic power of 25.13 million kilowatts by the end of 2020.

Institutions represented by China Life have embodied their green investment ideals with the latest investment, which shows their resolution to support the real economy and help promote the country's high-quality economic growth, said HFED.

China Life Asset Management, a subsidiary of China Life, is responsible for the implementation of the strategic investment. With assets under management of 4.3 trillion yuan, CLAM has helped carry out a series of the parent company's green investment in recent years, including an 8-billion-yuan clean energy fund initiated in June 2020.

Carbon neutrality will be a major theme amid uncertainties in the global economy in the future, which is about to generate a huge amount of investment opportunities. In this sense, green investment will be the most popular theme in the decades to come, Wang Junhui, chief investment officer at China Life, said during an industry forum in May.

Chinese insurance companies in general have attached greater importance to investment in environmental, social, governance, or ESG, projects. According to the China Banking and Insurance Regulatory Commission, Chinese insurers had invested more than 1.06 trillion yuan in ESG projects by the end of August, with transportation, energy, water conservation and utility projects attracting the most.

China's goal of achieving carbon neutrality by 2060 has brought opportunities for ESG-themed investment. Renewable energy and natural gas providers will gain the most benefits from the country's transformation, said Philip Li, investment director of private investment firm Wellington Management.

More ESG investment themes will emerge in China next year, and this will extend the focus on emissions reduction, biodiversity, circular economy, waste management and clean energy, said Jia Jingwei, research associate for Sustainable Fitch, an ESG investing data research arm under Fitch Ratings.

Amid the rising interest of domestic investors in ESG, there will be more discussion and introduction of rules on ESG information disclosure and setting up related standards, Jia said.

China Life's A-share price climbed 0.34 percent to close on Wednesday at 29.90 yuan while the benchmark Shanghai Composite Index gained 1.18 percent to settle at 3637.57.