Ping An Insurance (Group) Company of China, Ltd. (hereafter “Ping An” or the “Group”, HKEx:2318; SSE:601318) presented its responsible investment system to facilitate Environmental, Social and Governance (ESG) investing and promote long-term value creation in China’s capital market.
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Incorporating its extensive experience in ESG investment, Ping An Group has created the CN-ESG Smart Rating System for the market, providing a suite of smart ESG investment tools with comprehensive, intelligent and practical features that are China-specific.
Companies in China got off to a late start in ESG information disclosure, compared to companies in other major capital markets. Though China company disclosure has increased over the years, the scope and quality of disclosure in China is still behind. In addition, standards of disclosure from different regulatory bodies and assessment by rating agencies are not aligned, resulting in different ratings for the same company. As a result, companies lack actionable insights to improve their ESG ratings or guide their investment decisions.
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Despite the continued toll of COVID-19 on the global capital markets, ESG investing has demonstrated strong resilience, and has been increasingly favored by investors during the pandemic. Ping An categorized the CSI 300 companies into two groups: ESG-friendly industries, which include computer applications, electronic manufacturing, medical equipment, environmental engineering and services, healthcare business and semiconductor industries, and ESG-unfriendly industries, which include coal mining, petrochemicals, extractive services, oil mining and other resource-extraction industries. Based on the analysis, the profitability and Sharpe ratios – which measures risk-adjusted returns — of ESG-friendly industries outperformed the ESG-unfriendly industries significantly.
Ping An has taken a leadership role in promoting responsible investment in China, as a responsible asset owner and technology provider. At the end of 2019, the investment scale of Ping An’s insurance funds reached RMB3.22 trillion. Ping An was the first asset owner in China to sign the UN-supported Principles for Responsible Investment (PRI).
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