Adviser underlines standard for ESG investment disclosures

Information disclosure regarding ESG (environmental, social and governance) investment should be mandated under unified nationwide standard, especially for listed companies, to further drive China's high-quality growth, a political adviser said during the two sessions.

Tu Guangshao, former president of China Investment Corp and a member of the National Committee of the Chinese People's Political Consultative Conference, said that with China accelerating its steps of high-quality growth, specific and unified information disclosure of ESG investment will be crucial not only for players in the market, but also for financial resources allocation across the market.

To this end, Tu urged efforts to make ESG information disclosure a mandate first for all companies listed in the A-share market and eventually all listed companies and bond issuers in China.

Official statistics show that there are currently 200-odd public offering funds themed on ESG in China. Last year, roughly a quarter of A-share companies disclosed their information about ESG investment, sustainable growth and CSR(corporate social responsibility)－mostly out of the disclosers' own will.

"The current information disclosure on ESG investment is made only voluntarily with no uniformed standard," Tu said. "Such insufficient and ineffective means of ESG information disclosure will hamper investors to bring such information into full consideration, and has had an impact on efficient financial resource allocation."

One prominent bottleneck issue facing companies in assessing the value of ESG investment is that financial returns on ESG remain not exactly quantifiable using conventional cooperate financial instruments, he added.

Given previous experiences gained at CIC－currently the second-largest sovereign wealth fund in the world with assets and offices worldwide－Tu said mandating ESG information disclosure will be an inescapable move toward China's high-quality growth and higher-level opening-up, which are two consistent major goals China has set for its development in recent years.

ESG investment has been an important piece of information on investment compliance for all major global investors in his early years dealing with global investors, Tu added.

Tu, executive director of the Shanghai Advanced Institute of Finance at Shanghai Jiao Tong University, served as a Shanghai vice-mayor from 2007 to 2016, and joined the metropolis in taking major opening-up strides, particularly on the financial front and attracting overseas investors.

What is highlighted by the CPPCC National Committee member is also a major focus in the Government Work Report delivered on Saturday, which voiced a confirmed tone that China will continue to seek high-standard opening up and promote stable growth of foreign trade and investment.

Premier Li Keqiang said the government will work to make full use of international and domestic markets and resources, expand international economic cooperation and boost trade.

Efforts to push for in-depth reform and high-quality development will be catalyzed by promoting high-standard opening-up, Li said.

"Stepping up information disclosure for ESG investment is a key step for institutional opening-up as it will push overall investment to be much more in sync with global requirements," Tu said. "Such a move will be essential as China has been moving steadfastly into high-level opening-up."