"The mainland's financial industry and public sector have not fully recognized the importance of sustainable finance, and at this stage, we should focus on introducing and introducing foreign research results, and carry out academic research and industry practice on this basis, so as to shorten the gap with international counterparts as soon as possible. ”
In 2003, Guo Peiyuan, Chairman of SynTao Green Finance, was a Ph.D. student at the School of Public Policy and Management of Tsinghua University, with a research focus on financial investment and sustainable development.
He pointed out that the mature markets in Europe and the United States have formed a benign transmission mechanism between "public-consumer-enterprise-investor" in terms of green finance and responsible investment, "I believe this will be the development direction of China's capital market."
This article comes nearly a decade before the CBRC issued its first guidance document on green finance, the Green Credit Guidelines.
At that time, there were only the concepts of socially responsible investment and sustainable finance in foreign countries, and there was no concept of ESG. In 2004, the United Nations Global Compact released a research report "Who Cares Wins", which put forward the concept of ESG for the first time, exploring how financial markets can introduce environmental, social and corporate governance factors into financial analysis. Guo Peiyuan quickly translated the report into Chinese and translated it as "Those Who Have a Heart Win."
Where the dream begins
In 2005, after almost completing his doctoral dissertation, Guo Peiyuan founded SynTao, which was initially positioned to serve financial institutions to practice sustainable finance, but due to the immature market environment, he began to turn to service enterprises to practice social responsibility. Starting with the network, consulting services and talent training, SynTao has embarked on a value journey to promote the Chinese market.
In 2015, global ESG investment boomed, with the annual growth rate gradually exceeding the compound growth rate of global asset management, and the People's Bank of China and the National Development and Reform Commission also began to explore the green bond market, prompting capital to incorporate more environmental and social considerations.
This year, Guo Peiyuan returned to the "place where the dream began" and founded SynTao Green Finance, which provides data and consulting services on green finance and ESG investment for financial institutions. In 2017, SynTao Green Finance began to carry out ESG ratings for A-share listed companies, and established the earliest ESG database of listed companies in China, with the core purpose of enabling financial institutions to efficiently understand the ESG performance of listed companies and incorporate them into investment decision-making, so that "capital for good" is not just a slogan.
In 2009, despite the immaturity of the market, SynTao established an ESG investment research team to communicate and cooperate with overseas rating agencies and pension investors to share cutting-edge insights and practices.
MSCI and Morningstar have matured through mergers and acquisitions over the past 20 years, and have not only developed a set of professional ESG rating methods, but also formed a market-oriented and product-based operation model. Exchanges and cooperation with such institutions will help to open up ideas for the local ESG rating market.
Get the infrastructure in place
After all, the degree of market development, the construction of laws and regulations, and the social and cultural background are different, and it is impossible to copy the logic and method experience of overseas ratings, so SynTao Green Finance is committed to forming a set of ESG evaluation systems that conform to Chinese characteristics (SynTao Green Finance ESG Rating Methodology).
SynTao Green Finance's ESG rating framework includes 14 core topics and nearly 200 ESG indicators, covering all listed companies in China, Hong Kong-listed companies under the Stock Connect, and major bond issuers.
Considering the different impacts of different sustainability issues on the steady development of different industries, SynTao Green Finance has set up 51 industry models, which include ESG indicators and differential weights for the industry.
For example, in the mining industry, indicators for mining areas and ecological restoration measures have been set, and in agriculture, forestry, animal husbandry and fisheries, indicators for sustainable agriculture (fishery) and the use of rare animals have been set. For some common indicators, the weights vary from industry to industry. For example, the weight of pollutant emission indicators is set in the chemical industry more than in the financial industry.
Considering the characteristics of the current development of China's capital market, SynTao Green Finance has set indicators such as the proportion of green credit, support for rural revitalization, and participation in the carbon market, which are different from overseas rating systems.
With the attention to biodiversity issues at home and abroad, the rating team has begun to study the impact of natural capital on different industries, and identify potential ecological risks in a timely manner by increasing or adjusting the weight of indicators.
Guo Peiyuan believes that ESG rating data is an important infrastructure of the ESG market, and the data service object is investors, and the primary task is to help investors avoid risks. The evaluation logic, system and operation of SynTao Green Finance adhere to this as the starting point to ensure the rigor, professionalism and seriousness of the rating.
The composition of SynTao Green Finance's ESG rating score
Ride the waves
In the past two years, the uncertainty of the economic outlook has intensified, the growth rate of global responsible investment has slowed down, the "anti-ESG" voice has been loud under the bipartisan dispute in the United States, the market's doubts about ESG ratings and investment have increased, and some people have even criticized ESG as a "copywriting competition" for enterprises.
In this regard, Guo Peiyuan wrote a series of articles on his official account to respond to doubts, and also frankly analyzed the problems of ESG ratings, such as the unreasonable scoring system, the inability to highlight industry differences, and the inability to comprehensively present the positive and negative effects of enterprises.
"Imperfect ESG ratings are indispensable – but that doesn't excuse ESG rating agencies from not being aggressive," he stressed. "SynTao Green Finance's ESG rating products are still evolving, for example, in order to highlight the positive impact of enterprises on society and the environment, the "friendly product" indicator has been added under the product management topic.
In order to meet the strong demand of financial institutions for climate change data, SynTao Green Finance has recently developed the "PANDA Carbon Neutrality Database" and built a carbon measurement and climate risk analysis platform to estimate the carbon emission data of the asset portfolios of enterprises and investment institutions, and to assess the physical risks and transition risks faced by enterprises and investment institutions in climate change.
SynTao Green Finance PANDA Carbon Neutral Database
Guo Peiyuan believes that among various uncertainties, the impact of non-financial factors on business operations and investment returns is certain, the direction of green and low-carbon (zero-carbon) transformation is certain, and non-financial information disclosure, especially carbon information disclosure, is certain. Therefore, zero-carbon transition, information disclosure, and ESG rating are still the keys to China's ESG development in the future.
The current problems of the ESG rating system can be regarded as a growing pain, its value is irreplaceable, and its problems should not be ignored. Guo Peiyuan suggested that financial institutions should pay attention to the quantitative value of ESG rating data, and at the same time, recognize the limitations of ratings, and find their own ways to adapt to them through practice, trial and error, and iteration.
For the evaluated companies, he believes that enterprises need to regard the rating as a tool to improve their ESG performance, the second is to do a good job of information disclosure and improve the quality of data, and the third is to find an effective way to practice ESG in line with their own business characteristics.
Build a market for discovering "beauty".
"The ultimate goal of economic development should be to maximize social welfare, not to create more wealthy businessmen, but in the real world, there are markets that can find 'profits' everywhere, but markets that are good at finding 'beauty' are hard to find. ”
More than 10 years ago, in the article "Information Disclosure Constructs a Market for Discovering "Beauty", Guo Peiyuan emphasized the necessity of injecting human care into the market and establishing a benign transmission mechanism of "public-consumer-enterprise-investor".
Today, China has gradually built a green finance policy system covering credit, securities, insurance and funds, and green finance has become one of the fastest-growing business segments of major commercial banks.
Under the unified deployment of the China Securities Regulatory Commission, the three major exchanges have recently issued a draft of the "Sustainability Reporting Guidelines (Trial)", and the standardization and standardization of sustainable information disclosure of listed companies are accelerating.
On the corporate practice side, according to the 2023 ESG Rating Analysis Report of A-share Listed Companies by SynTao Green Finance, a total of 1,739 of the 4,843 A-share listed companies have an ESG rating of B or above, an increase of 40% over the previous year, and more and more listed companies have begun to pay attention to improving ESG performance.
How to create economic benefits while promoting the well-being and interests of more people, the exploration of the Chinese market continues.
Southern Weekly researcher Kang Hua
Editor-in-charge: Sun Xiaowen