Financial institutions Taking Actions to Guide Capital towards Green and Low-carbon Industries in China
GUANGZHOU, China, Aug. 30, 2024 /PRNewswire/ -- China has demonstrated stepped-up efforts to ramp up green transition in all areas of economic and social development and to promote relevant financial instruments, such as green equity financing and green financial leasing, as strengthened by recently issued guidelines from the Communist Party of China Central Committee and the State Council, as reported by Xinhua News Agency. On one hand, according to The People's Bank of China, the balance of China's green loans in local and foreign currencies reached US$4.1 trillion (30.08 trillion yuan) at the end of 2023 and delivered a year-on-year increase of 36.5%, leading all other forms of loans. Moreover, the cumulative domestic green bonds issuance in China approached US$498 billion (3.62 trillion yuan), with the majority of raised capital supporting the green transition of energy, construction, and mining industries, based on a study from International Institute of Green Finance.
On the other hand, many financial institutions have been active in launching sustainable investment funds and 296 mutual funds focusing on sustainability and ESG managed assets over US$55.5 billion (403.7 billion yuan) as of the end of 2022, according to Asset Management Association of China. As the largest mutual fund manager, E Fund Management Co., Ltd. ("E Fund") proactively navigated this trend by joining PRI as one of the first signatories in China and launching several ESG-related products in recent years, including E Fund Environmental Theme Flexible Allocation Hybrid Fund and E Fund Carbon Neutral 100 ETF.
Meanwhile, the guidelines also encouraged the optimization of investment mechanism and the participation of social capital in green and low-carbon projects. Against the backdrop of fund managers' rising dedication in ESG investment strategies, leading institutions have independently constructed ESG-integrated research database and methodology.
Notably, E Fund has been enhancing its proprietary ESG rating framework to better align with A-shares market characteristics. The rating framework used a combination of quantitative and qualitative evaluation methods to evaluate portfolio companies' ESG performance from three aspects – environmental impact, environmental management and environmental opportunities. In addition, E Fund has published climate risk management framework to effectively monitor and manage the impacts of climate change on investees and investment portfolios.
About E Fund
Established in 2001, E Fund Management Co., Ltd. ("E Fund") is a leading comprehensive mutual fund manager in China with close to RMB 3.3 trillion (US$ 454 billion) under management. It offers investment solutions to onshore and offshore clients, helping clients achieve long-term sustainable investment performances. E Fund's clients include both individuals and institutions, ranging from central banks, sovereign wealth funds, social security funds, pension funds, insurance and reinsurance companies, to corporates and banks. It is a pioneer and leading practitioner in responsible investments in China and is widely recognized as one of the most trusted and outstanding Chinese asset managers.
Note: As at Jun 30, 2024. AuM includes subsidiaries.
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