Viewpoint: China’s Embrace of ESG Is Threat to Real Sustainable Investing
Environmental, social, and governance (ESG) investing standards—also called “sustainable investing” and “socially responsible investing”—have taken on greater importance in the investment community in recent years.
Such investing has also reached the shores of China.
With this, ESG investing reaches an inflection point. Will the standards have real bite, effecting change at companies, or will they become an irrelevant article for portfolio managers to simply “check the box” and move on?
What factors do ESG investing usually consider? There isn’t a uniform standard of ESG, but generally speaking it looks at a company’s environmental impact and policies such as waste management, emissions impact, and environmental protection; social policies such as labor standards, employee relations, equal employment, and impact on local communities; and governance factors such as ownership/structural transparency, investor voting rights, independence of the board/oversight, business ethics, and executive compensation fairness.