China to see significant growth in responsible and ESG-themed investment

China to see significant growth in responsible and ESG-themed investment
Invesco Fixed Income expects responsible investing to accelerate in China in 2021.
Recent developments have encouraged Chinese issuers and investors to adopt social investing principles, including growing Chinese government support, large-scale green financing needs, and evidence that ESG-related investments have performed well relative to non-ESG investments.
Europe and the US have been early adopters of ESG principles, but we expect Asia, and especially China, to gain ground in the coming year.

Responsible investment has taken center stage in the global investing and finance arena after years of evolution. The number of global investor signatories to the United Nations Principles for Responsible Investment (UN PRI)1 topped 3000 in 2020, up from 63 in 2006. Total assets under management represented by the signatories exceeded USD100 trillion in 2020. We expect responsible investment to grow exponentially in the next few years, reshaping the landscape of the global financial industry. Europe and the US currently play leading roles, but we believe 2021 will be an important year for environmental, social, and governance (ESG) adoption in Asia, especially in China.

In this article, we take a detailed look at the top-down drivers of growth in ESG adoption in China and their potential impact in the coming year.

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Investment risks

  • The value of investments and any income will fluctuate (this may partly be the result of exchange rate fluctuations) and investors may not get back the full amount invested.

Important information

  • Data as of 10 March 2021 unless stated otherwise.

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