Striking a balance between economic benefits, social values

The coronavirus outbreak has forced people to think more about sustainable investing, which could pave the way for faster development of the emerging sector, according to experts and industry insiders.

Compared with traditional investing that focuses merely on financial rewards, sustainable investing aims to achieve the dual benefits of social and economic value.

COVID -19 has created significant challenges in achieving sustainable development goals set by the United Nations, but, from another perspective, it has fostered a deeper reflection for sustainable development among people, stresses Ma Weihua, executive chairman of China Alliance of Social Value Investment.

Promoting impact investing, he believes, is an ideal way to drive sustainable development as the new investment method strives to strike a balance between economic benefits and social values that can reduce the cost of solving problems caused by economic activities.

Qin Xiaojuan, chief operating officer of Beijing-based investment company CGP Investment, said that with China being the world’s second-largest economy, the country is playing an increasingly pivotal role in the global economic landscape.

“This requires us to catch up with international standards in ESG (environmental, social and governance) investing,” she said.

The global economic downturn and the pandemic have fully demonstrated that ESG investing has greater comparative advantages in resisting economic and other risks.

“Outstanding ESG performance will enhance enterprises’ popularity in secondary markets, enabling them to get more attention and recognition from investors,” said Qin.

Bao Yan, general manager of research department at Shenzhen-based venture capital investment firm Oriental Fortune Capital, reckons that the development of ESG investing and impact investing in China is still in its infancy, and how to get market-oriented investment organizations and social capital involved is a challenge.

“The recognition of impact investing in the West is quite high — about 40 percent in the United States and 20 percent in Europe. But in East Asia, the rate is merely 4 percent,” she said.

Bao urged the government to play a leading role in addressing the challenge. The Chinese mainland is attaching greater importance to the green economy with the issuing of an 88.5 billion yuan ($13 billion) national green development fund.

“This is a very good beginning (in China’s development of sustainable investing),” she said.

Despite the pandemic and Sino-US frictions, Tang Jiaxin, climate change and sustainable development services director at Ernst & Young, still sees the current environment as an opportunity for the sector, rather than a challenge.

The mainland is experiencing economic difficulties. “But, it’s exactly in this difficult time that a new trend can get a chance to develop. Sustainable investing should seize the opportunity to grow because it’s something without boundaries and has nothing to do with politics,” she said.

According to data from Morningstar, global assets under management in funds that invest in accordance with ESG principles have surpassed $1 trillion for the first time, following net inflows of $71.1 billion between April and June this year.

The organization said governments and investors are stepping up investments in the sector in the wake of the pandemic, as the public health crisis “highlighted the importance of building sustainable and resilient business models based on multi-stakeholder considerations”.

According to a UBS survey in 2018 of various world markets, an average of 36 percent of the assets were allocated to sustainable investing, with the Chinese mainland in second place in the global rankings at 46 percent.