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08 Mar CSRC Includes ESG Information in Listed Firms’ Investor Relation Management
CSRC drafted revisions of the guidelines on the investor relation management of listed companies on February 5 for public opinions, which, for the first time, included ESG related information in the communication content between listed companies and their investors, as reported by Caixin on February 24. The inclusion is in accordance with the requirements of the Code of Corporate Governance for Listed Companies, revised in 2018.
ESG indicators reflect a company’s method of creating long-term value, internal system construction to achieve decision-making, and the ability to avoid risks. At present, foreign investors pay more attention to ESG than domestic investors. According to the Global Sustainable Investment Alliance (GSIA) data, nearly half of the asset management market has included ESG investment, and about 25% of the asset management market in the US has adopted ESG investment. According to the report from the Asset Management Association in China (AMAC), 85% of securities investment institutions believed that ESG investing could effectively reduce the risk of individual stocks and portfolios, and 58% of them regarded risk reduction as the primary driving force in 2020.
Although the acceptance and utilization rate of ESG in the Chinese market are increasing rapidly, much work needs to be done by companies improving ESG performances and investors incorporating ESG indicators into the investment process. The scope and quality of ESG information disclosures of Chinese listed companies are still lagging behind the international level. CSRC firstly established a basic framework of ESG disclosures in 2018, while the Shanghai and Shenzhen Stock Exchange added ESG indicators to the corporate information disclosures in September 2020, regarded as voluntary items. Among the constituent companies in the world’s major stock market indexes, the companies in CSI300 index have the lowest average score in the disclosure of the ESG on Bloomberg.