The major reason for Chinese companies adopting ESG data is regulatory requirements (25%), followed by onshore clients’ demand (21%) offshore clients’ demand (21%), and internal risk management (22%). This information was revealed as a result of a survey conducted by Bloomberg across 150 respondents who attended the Bloomberg Sustainable Finance Forum in Shanghai.
Businesses in China are embedding ESG considerations into their decision-making in a variety of ways. Around 20% are using third-party ratings, scores or related research, 19% are focusing on impact investing, and 18% are focusing on building quantitative strategies that utilise ESG data alongside other financial considerations. 16% are considering climate risks and 9% considered biodiversity.
When it came to ESG data challenges, nearly two-thirds of respondents (62%) said it was related to issues with company-reported data coverage and quality. Combining ESG with alternative data was the second biggest challenge faced by respondents (26%).
Almost one-third (31%) of respondents indicated challenges with managing multiple ESG vendor feeds. 35% of respondents also found linking ESG data to existing entity/instrument data was a significant challenge.
Patricia Torres, Global Head of Sustainable Finance Solutions at Bloomberg, said that the findings were indicative of the significant appetite for high-quality ESG data and the changing role of sustainability in Chinese financial markets.
She said, “There is a growing synergy between the demands of investors and regulatory drivers when it comes to the use of ESG data for Chinese market participants. Now, more than ever, the firms that are building capacity to incorporate and thoughtfully manage ESG data as part of their investment decision-making processes will have a positive point of difference. There is every indication that the role of ESG in China’s financial markets will continue to grow in importance over time.”
