In this report we highlight several learnings when it comes to adapting an ESG approach to China including prioritising political risk, localising frameworks and building up local networks.
Historically, it has been governance (the ‘G’) that has been the overarching concern amongst foreign investors looking into China but there is evidence to suggest that the pace of change of ESG adoption will accelerate significantly in the next decade and extend much deeper into the environmental (‘E’) and social (‘S’) pillars.
Especially interesting is the policy priority of the Chinese Government which is now evolving from brute-force economic expansion towards more inclusive and environmentally sustainable growth. The latest Five-Year Plan – announced in March 2021 – places social welfare and green development at its core. Given the power of the state to translate these wishes into actions, we see heightened risk and opportunity for all companies.