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【China Daily】Creating the impact - it's time to up the stakes

March 01, 2019

Creating the impact - it's time to up the stakes

Editor’s note: This is the fourth of our series on impact investing - a trend that has come to embrace investors across the Asia Pacific, helping them to realize the overall returns, not only financially, but also socially and environmentally. We also welcome contributions or suggestions from our readers that would serve to inculcate greater interest in and enlightenment on the topic.

HONG KONG - Some six years ago, when Chiu Tzu-kuan, a professor specializing in finance ethics, first stepped onto the podium at a Master of Business Administration program class on the Chinese mainland, she was thunderstruck by the fact that almost nobody present had ever heard of environmental, social and governance (ESG) investing.

Before making her contributions to the motherland in the field, the professor had been teaching ESG investment-related courses overseas for almost a decade.

The gradual evolvement of ESG investment, sustainable investing and related topics, which took its first stride onto the world stage nearly half a century ago, has been acclimatized on the Chinese mainland and across Asia in recent years, yet the social awareness of the topic is still poised to take root on the Asian continent, buoyed by years of efforts by the governments concerned, educators, financial institutions, as well as investors.

As far as the related terms are concerned, they are separate and overlap each other. But, the common goal is to make things work the way they should, and blur the line between financial returns and the civil society we rely on.

ESG investing, Chiu tells China Daily, is frequently used in China, raising a few eyebrows from official organizations like the Asset Management Association of China, which introduced ESG principles aimed at assessing the performance of publicly listed companies late last year.

Worldwide, a more all-inclusive term is sustainable, responsible and impact investing (SRI). The United Nations has laid down the principles of the term, containing seven investment strategies, such as sustainability-themed investing, which started in the 1990s, ESG integration that has prevailed in the past 20 years, and impact investing, which began to be used in 2007.

The Aegon-Industrial Social Responsibility Fund, launched by Shanghai-based institution Aegon-Industrial Fund Management Company in 2008, was the icebreaker for SRI products in China, paving the way for the sector to gain traction. As of last year, there had been approximately more than 100 similar products on the  Chinese mainland alone, according to Chiu.

Impact investing - a term coined by the Rockefeller Foundation in 2007 - represents the intentions of generating both financial returns and social and/or environmental impact. Different from other strategies, Chiu says, it highlights the activism of intention, and every impact needs to be valued via key performance indicators.

Fully aware of its importance, Chiu initiated an impact investing course in 2017 for MBA students at Shanghai Advanced Institute of Finance of Shanghai Jiao Tong University.

“The course is over-enrolled so far,” she says, believing that the elation and the accelerating “green market” have been brought about by the government’s efforts and contributions to the development of green finance.

Chasing green bonds

Some 10 years ago, global investors, corporations, financial institutions and regulators began joining in the chorus for a new financial product — green bond — which was pioneered by the World Bank.

As time went by, Chinese issuers jumped on the bandwagon, thanks to the boost from the central government, resulting in a bunch of green bonds being issued in 2015.




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