Insights from UK-China ESG Summit

Last Wednesday, I attended the second iteration of the British Chamber of Commerce Shanghai’s Sustainability and ESG Summit in China’s financial capital. A conference for local and international companies and experts alike, held at the PwC Innovation Centre, tech and innovation, as well as dialogue and collaboration, were common themes.

Having acted as MC for the afternoon sessions, I got a real sense of growing momentum in ESG knowhow and practice, but also the diversified expertise in this space compared to the first of these summits in 2021. As we and other organisations and practitioners start to look towards COP27 in November, there is much to be excited about China ESG!

Below are some takeaways relevant to all with an eye on “ESG with Chinese characteristics” (to piggyback off a phrase used by one of the speakers):

• UN promotes multilateralism: Siddharth Chatterjee, the current UN Resident Coordinator in China, promoted multilateralism despite notions of decoupling in some aspects of how China fronts the western world. He spoke of global solutions as the only means for China and other countries to satisfy the 2030 Agenda and Sustainable Development Goals, with the ultimate objective of overcoming critical global challenges in the ESG space. Working for “common prosperity” is one of the Chinese government’s own goals, and Mr Chatterjee seemed keen to similarly emphasis that government, the private sector, civil society and individuals must collaborate to achieve the ESG outcomes sought by business and the wider world.
• UK climate leadership: Following its hosting of the UN Climate Change Conference COP26 at the end of last year, UK has sought to continue its stewardship of global climate initiatives. In this respect, the British Consul-General Shanghai, Chris Wood, emphasised ongoing partnerships that the UK continues to support with China on green finance, clean energy, and managing climate risk. A highlight of recent UK reforms also cited by Mr Wood is a new minister-led taskforce established in the UK to assist pension schemes to navigate the risks and seize the opportunities of ESG investing’s “social” element. With China’s aging population of 1.4 billion, examples, such as the UK’s approach, may be a useful reference for other governments looking to further refine public social security schemes through an ESG lens.
• Shanghai’s carbon policy: The Shanghai government’s Director of Environmental Resources Division, Guo Jianli,  provided an overview of the efforts and achievements of his municipality in establishing a dual carbon policy in line with President Xi Jinping’s guiding vision. His speech also highlighted Shanghai’s focus on five areas to ensure energy conservation and carbon reduction, namely, in the areas of energy, industry, buildings, transportation and the circular economy. Investors and businesses operating in China were reminded to keep a look out for 13 supporting policy documents to be released before year-end, which will include details on further financial, scientific and technological support.
• Carbon exchange can only grow: The lockdown in Shanghai meant that the platform established last year by the Shanghai United Assets and Equity Exchange (SUAEE) to be the latest carbon exchange in the world took off with less fanfare than may have been expected. Unperturbed, Lv Weimin, Vice President at SUAEE, asserted the importance of actively practising and promoting ESG principles while contributing to the establishment of Shanghai as international financial centre and science and innovation centre. He further foresaw the SUAEE seeking to develop greater standardisation in line with international norms but with a view to constructing an ESG system with Chinese characteristics.
• Industry views centre on disclosure: Experts from the various industries took the stage for the afternoon sessions. UBS (represented by Eugene Qian, China Country Head at UBS AG and Chairman of UBS Securities Co. Ltd.) and Lotus (represented by Alexious Lee, CFO at Lotus Tech and Member and Vice Chairman of Lotus ESG Committee) spoke of the need of multinationals – whether domestically- or internationally-headquartered – for further alignment across markets’ ESG disclosure regimes. If not, issuers will continue to face inefficiencies in making disclosures in China that differ to those in their other key jurisdictions; and their investors will not be able to adequately evaluate the ESG risks attached to Chinese securities by reference to benchmarks in other markets. Disclosure challenges were also cited as critical by Wenhong Xie, Head of China Programme for the Climate Bonds Initiative, and Jason Tu, CEO and Co-founder of MioTech, who spoke eloquently on the increasing pressure on issuers to provide robust ESG-related data to the market and yet also recognising the technology solutions emerging to aid issuers in grappling with this challenge (particularly vis-a-vis the extensive Scope 3 disclosures).