2021.09.10
■ There has been a rapidly growing focus on ESG matters in the past few years at all levels, from investors to governments, regulators and companies, all of whom are being encouraged to take these matters into consideration.
■ There has been promising growth in diversified ESG investing in the past few years. Investors are employing multiple strategies in their investment. We ran a simple test to compare the performance of ESG funds with the SHSZ300 Index and found that ESG funds outperformed. However, we are unsure how the stocks were selected in the portfolio. We think the stock picking method is important in determining whether ESG engagement is material to a company’s share price performance.
■ Inconsistencies among ESG ratings may confuse investors when they are making the investment decisions. More and more investors now aim to counter this confusion with their own proprietary ratings and assessments, based on analysis of raw ESG data. However, when investors use an ESG rating, it is important that they thoroughly understand the rating methodology and data-collection process.
■ Currently, the CSR report release ratio in the A-share market is still low. With the rising attention to the importance of ESG disclosure, we expect the policies on ESG disclosure to continue to be tightened with increasing requirements on the substance of the disclosure, quantitative information, and maybe a more unified disclosure format.
