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ARTICLE

ESG IN CHINA: CHALLENGES AND OPPORTUNITIES

By Matthew Welch,
DPAM: Responsible Investment Specialist

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Investor interest in China has surged in recent years. The Chinese government welcomes foreign capital, and the country’s rising middle class, as well as its leadership in emerging technologies such as solar and batteries for BEVs, offer interesting opportunities for investors.

China’s growth potential is undeniable, but recent reforms highlight how challenging it is to invest sustainably in the country. This article details the recent demographic shifts in China and government regulations that strongly impact Chinese companies. As sustainable investors, we also explore the main environmental and social risks to consider when analysing a Chinese company.

We purposely do not draft a clear conclusion to this article, as views on the credibility and success of sustainable investing in Chinese companies may diverge according to the reader and will undoubtedly evolve over time. Navigating the complex national context to invest in China with an ESG angle requires a profound knowledge of the country.

DISCLAIMER

Degroof Petercam Asset Management SA/NV l rue Guimard 18, 1040 Brussels, Belgium l RPM/RPR Brussels l TVA BE 0886 223 276 l

Marketing communication. Investing incurs risks. Past performances do not guarantee future results.

Degroof Petercam Asset Management SA/NV, 2022, all rights reserved. This document may not be distributed to retail investors and its use is exclusively restricted to professional investors. This document may not be reproduced, duplicated, disseminated, stored in an automated data file, disclosed, in whole or in part or distributed to other persons, in any form or by any means whatsoever, without the prior written consent of Degroof Petercam Asset Management (DPAM). Having access to this document does not transfer the proprietary rights whatsoever nor does it transfer title and ownership rights. The information in this document, the rights therein and legal protections with respect thereto remain exclusively with DPAM.

DPAM is the author of the present document. Although this document and its content were prepared with due care and are based on sources and/or third party data providers which DPAM deems reliable, they are provided without any warranty of any kind, either express or implied. Neither DPAM nor it sources and third party data providers guarantee the correctness, the completeness, reliability, timeliness, availability, merchantability, or fitness for a particular purpose.

The provided information herein must be considered as having a general nature and does not, under any circumstances, intend to be tailored to your personal situation. Its content does not represent investment advice, nor does it constitute an offer, solicitation, recommendation or invitation to buy, sell, subscribe to or execute any other transaction with financial instruments including but not limited to shares, bonds and units in collective investment undertakings. This document is not aimed to investors from a jurisdiction where such an offer, solicitation, recommendation or invitation would be illegal.

Neither does this document constitute independent or objective investment research or financial analysis or other form of general recommendation on transaction in financial instruments as referred to under Article 2, 2°, 5 of the law of 25 October 2016 relating to the access to the provision of investment services and the status and supervision of portfolio management companies and investment advisors. The information herein should thus not be considered as independent or objective investment research.

Investing incurs risks. Past performances do not guarantee future results. All opinions and financial estimates in this document are a reflection of the situation at issuance and are subject to amendments without notice. Changed market circumstance may render the opinions and statements in this document incorrect.

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