China-Based Institutional Investors Increasingly Favor ESG, Survey Shows

What’s new: Up to 92% of China-based institutional investors plan to increase environmental, social and governance-related (ESG-related) investments this year, despite concerns about a lack of client interest, a recent survey has found.

The survey, conducted by American private investment bank Brown Brothers Harriman & Co. (BBH), covered 146 respondents in China. All of them invest in exchange-traded funds (ETFs), which are a product that invests in stocks, bonds or other assets.

According to the survey, 53% of respondents on the Chinese mainland expect 11% to 20% of their investment portfolio to be ESG ETFs in the next five years, up from 43% in last year’s survey.

Despite the appetite for increased ESG investment, 19% of the mainland respondents were concerned about the lack of a consistent methodology and framework for ESG ETFs, and 31% were concerned about the lack of interest from customers.

“ESG is an investment strategy that is still in a nascent stage in the region and it’s not surprising to see a subset of clients that may not be interested in these products yet,” Chris Pigott, a senior vice president at BBH, told Caixin. “As the regulators introduce new reporting requirements for the industry and attempt to create industry standards, we expect that to be a tailwind for further investor adoption of these strategies.”

The background: The concept of ESG is in the ascendant in China and has gradually attracted investors’ attention in recent years, particularly as relevant investments form a major part of the government’s ambition to achieve carbon neutrality by 2060.

Quick Takes are condensed versions of China-related stories for fast news you can use. To read the full Caixin article in Chinese, click here.

Contact editor Lin Jinbing (jinbinglin@caixin.com)

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