On 15 April, the China Securities Regulatory Commission (CSRC) issued the Guidelines for the Management of Investor Relations of Listed Companies (hereinafter referred to as the Guidelines), which came into effect on 15 May 2022. These include implementing the requirements of the new development concept and adding environmental, social and governance (ESG) information to listed companies in communications.
Industry insiders believe that the new regulations mean further promoting the standardization of ESG data disclosure, on the one hand, it has played a supervisory role in the practice of social responsibility of listed companies; on the other hand, it also provides data support for ESG investment of asset management institutions. ESG letter Phi requires downward pushing down from the regulatory level, and I believe it will have a better effect.
Underlying data problems have long plagued domestic ESG investment, and specific pain points include missing data, poor data quality, and scattered important information.
Globally, data issues are recognized as a major obstacle to ESG investment. Drawing on the experience of overseas asset management institutions and using fintech as a tool, we may be able to build on the regulatory designation of credit.
Corporate ESG credits are included in the regulatory guidelines
On 15 April, the China Securities Regulatory Commission (CSRC) issued the Guidelines for the Management of Investor Relations of Listed Companies (hereinafter referred to as the Guidelines), which came into effect on 15 May 2022. These include implementing the requirements of the new development concept and adding environmental, social and governance (ESG) information to listed companies in communications.
In this regard, Xiong Wanfang, a postdoctoral fellow at the University of Chinese of Hong Kong (Shenzhen), believes that the ESG concept is still in its infancy in China, and the new regulations will further promote the standardization of ESG data disclosure, on the one hand, to supervise the practice of social responsibility of listed companies; on the other hand, it also provides data support for ESG investment of asset management institutions.
Previously, the Shanghai and Shenzhen Stock Exchanges have successively issued social responsibility guidelines for listed companies, encouraging enterprises to publish ESG reports and strengthen ESG information disclosure, but there is no formal mandatory document to regulate specific disclosure requirements. "At present, the ESG disclosure data is relatively complete, mainly the constituent stocks of CSI 800, which means that ESG actively discloses this piece, and most of the good ones are blue-chip enterprises." Xiong Wanfang told the Chinese reporter of the brokerage, "ESG xinpi can bring a good reputation to enterprises, but it also needs some costs, and small and medium-sized companies lack the motivation to do it." ”
She believes that the new regulations will further promote the ESG credit requirements for listed companies, from the regulatory level downwards, and believe that there will be better results.
At the same time, in her view, the new regulations have taken a big step towards the goal of solving the lack of underlying data of ESG, bringing great benefits to public institutions to carry out ESG investment. "In the future, whether a company has done a good job of ESG, the effect of relying on its own publicity will not be large, and institutions can use a large amount of public data to directly compare and form objective conclusions."
Underlying data plagues domestic ESG investment
Previously, a number of ESG practitioners have said that the lack of underlying data and poor data quality are still one of the core pain points of public ESG investment.
Cai Kar, the fund manager of Wells Fargo Fund, believes that the large-scale development of overseas ESG business is inseparable from the support of multi-dimensional components such as ESG underlying data, rating models, monitoring systems, solutions, etc., and the current domestic ESG field is still in the early stage of development.
Carl Zei highlighted the degree and quality of disclosure of domestic ESG information, pointing out that there is still room for improvement between the two. She said that most of the ESG rating agencies and data providers in the market will encounter problems such as low data quality, scattered important information, and lack of unified disclosure guidelines in the process of collecting the underlying data of ESG, which greatly reduces the efficiency of ESG data collation.
At that time, because the underlying data of ESG had not yet required mandatory disclosure, most of the data could only be obtained through crawling or questionnaires, and the result was that there might be deviations between the ESG score and the real situation, and the coverage of the ESG scoring system that could be used for investment reference was not very ideal for domestic listed companies.
Han Xianwang, chief economist of Hui Tianfu Fund, said that judging from the ESG reports released by listed companies, most companies only disclosed ESG-related management policies, less implementation methods and specific measures, and even fewer data reflecting the implementation effect. From a deep level, the awareness and attention of listed companies to ESG are not enough, and the promotion and disclosure of ESG are not regarded as important things for the company.
Overseas Asset Management Institutions' "Stones of Other Mountains"
It is worth noting that previously, the "2021 China Asset Management Industry ESG Investment Development Research Report" released by the University of Chinese in Hong Kong pointed out that the survey showed that 63% of the mainland respondents believed that the biggest obstacle to ESG responsible investment was "difficult to obtain ESG-related information of listed companies, incomplete or low credibility", which coincided with BNP's ESG survey results on global investors, and the data was recognized as an obstacle to global ESG investment.
Based on this, overseas asset management institutions have also carried out long-term exploration in the acquisition and processing of ESG data, including building relevant platforms and using financial technology to collect and optimize the underlying data of ESG.
In the interview, Cai Carl also mentioned this, she believes that domestic public offering institutions should make more long-term sustainable investments through the perspective of financial technology. "Drawing on the experience of overseas asset management institutions such as BlackRock and Fidelity, domestic institutions can combine their own advantages to internally develop and build ESG technology platforms similar to Alasdin Climate and Fidelity ESG Pro."
Specifically, relying on the system to automatically collect and optimize the underlying data of ESG, effectively filter information from different sources, update the ESG database in real time through artificial intelligence technologies such as natural language processing, emotion tag recognition, unsupervised learning, and knowledge graph, and finally incorporate the processed high-quality ESG data into the company's overall ESG evaluation and investment framework, helping public fund managers to practice the ESG investment concept in a more accurate, fast and collaborative manner.
Editor-in-charge: Gui Yanmin