Thursday, June 8, 2023

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FTSE Russell, Ping An jointly launch China ESG indexes

SHANGHAI (Reuters) Index publisher FTSE Russell and Chinese financial conglomerate Ping An announced a partnership on Thursday, aimed at promoting sustainable investments, and have launched the first of a series of China indexes that integrate government, environmental and social (ESG) aspects. 

The strategic partnership is coming as investors around the world become more conscious of their ESG footprint and Beijing intensifies its green drive to assist in meeting the government’s carbon neutrality commitment to 2060. 

The FTSE Ping An China ESG Index Series that combines Ping An’s unique China-specific ESG strategy with FTSE Russell’s China indexes, demonstrates that Chinese institutional investors and Western ones can work together in sustainable investments in spite of tensions around sensitive areas like the rights of human beings or Communist Party 

The first index launch is targeted at onshore investors however, the multi-year partnership will eventually be able to provide international investors with the same according to FTSE Russell, a unit of the London Stock Exchange Group. 

Ping An Insurance Group is China’s biggest insurer by market value.

“It’s all about harnessing market-specific information” which Ping An brings, said Helena Fung, Head of Sustainable Investment, APAC at FTSE Russell.

Fung said that Ping An’s ESG appraisal framework upon these new benchmarks were based on, has a few unique Chinese components like “common prosperity” — a state initiative to end equity-based wealth growth however, it didn’t create a problem with FTSE that uses its own ESG ratings standards. “People have a tendency to view ESG as a unmarried method. In reality there are many methods, various ways to apply the information within indexes” Fung said.

To highlight this divergence, Sustainalytics Sustainalytics, the ESG rating division within the U.S. financial services group Morningstar was reduced the rating of Tencent Holdings, Baidu and Weibo Corp earlier this year due to their roles in China’s growing control over its online activities. 

In China However, internet restrictions on censorship are not considered as part of ESG evaluations by the domestic institutions.

The fracture could grow wider in the future as Beijing encourages the development of corporate governance that has Chinese features, and the President Xi Jinping strengthening Party control over state-owned enterprises (SOEs). 

The Chinese government has recently months been pushing the ESG transparency framework that applies to listed SOEs.

A greater co-operation with more harmony with West can be seen in the area of environmental issues. This month, China increased the standard for the issuances of its green bond market, making the first step toward implementing international standards.

“The environment is a major aspect of consideration and concern in China and is not necessarily in opposition to an international view,” FTSE Russell’s Fung stated.

Publisher of the Rival Index MSCI announced that in their 2023 ESG report on trends that, after the global reopening from COVID and COVID, the attention “quickly moved back to dealing with climate change , and the focus to the issue grew significantly, particularly within China.

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