"The time for taxpayers to pay for environmental governance is over." Shi Yichen, deputy dean of the International Institute of Green Finance, Central University of Finance and Economics, said in an interview with a reporter from the China Economic Times that since A shares were included in MSCI and FTSE, foreign Investors are increasingly demanding ESG information disclosure from Chinese companies, which in turn forces Chinese companies to accelerate their ESG disclosure level and performance.
Since China's "Eleventh Five-Year Plan", environmental supervision departments have successively released several policy documents that have required environmental information disclosure by listed companies and other companies, and ESG regulations have not yet been formally proposed. Shi Yichen told reporters that he could see the clues in the three major battles proposed in the report of the 19th National Congress of the Party. He believes that the three major battles are in complete agreement with ESG: E (environment) meets the pollution prevention battle, S (social) corresponds to the poverty alleviation battle, and G (corporate governance) is also a very important factor in preventing and controlling financial risks.
There are four major factors that promote the mainstreaming of ESG investment: First, sustainable development and green finance are becoming mainstream globally. Second, ESG-related regulations and regulatory measures promote the acceleration of sustainable investment. The third is the drive of risk management. ESG can become an important demining tool in investment. The fourth is driven by customer requirements and fiduciary responsibilities.
The mainstream of ESG investment lies in three factors: low interest rates, low economic growth rates, and longevity. Since the outbreak of the international financial crisis in 2008, global institutional investors have tended to make stable profits. In an environment of low interest rates, institutional investors have lowered their rate of return requirements. At the same time, the World Bank's latest forecast is that China's economic growth rate will be 6.1% in 2019 and 5.9% in 2020. Shi Yichen believes that low economic growth rate is also one of the reasons. In addition, with the development of health care and the improvement of quality of life, people's life expectancy has also increased. In order to guarantee life after retirement, people hope to obtain long-term stable income.
