Mercer recently partnered with the UK-China Green Finance Centre to review best practice in responsible investment for both asset owners and investment managers. There was also an aim to identify opportunities for collaboration between investors in the UK and China to accelerate ESG integration and scale responsible investment solutions. As ESG expectations continue to evolve rapidly, particularly in light of COVID-19 and determining a sustainable recovery, we expect this new report "Resilience - Lessons to Scale Responsible Investment" to be of interest to asset owners, investment managers, policy makers and industry initiatives, focused on sustainable investment and ESG integration across the globe.
Mercer interviewed leading asset owners and investment managers from both the UK and China on current approaches, gaps in the market, drivers of change and opportunities for collaboration. This report sets out four recommendations for the newly formed ESG Leaders Forum, a new initiative of the UK-China Green Finance Centre.
- Pioneer-led scalable solutions: Solutions remain underdeveloped in various asset classes, particularly fixed income, equities (particularly index-based), and real assets. Pioneering asset owners need to partner with managers to create investable solutions that will enable the market to scale and support their peers to adopt new products as their approaches mature.
- Accelerate stewardship through a new China Stewardship Code: Stewardship and governance are underappreciated value drivers in the Chinese market. A Chinese Stewardship Code for asset managers, asset owners and service providers would catalyse innovation, build resilience, and preserve long term value – all prerequisites to a sustainable recovery. This will also help drive changes at the most senior levels.
- Reiterating the financial materiality of ESG risk factors: Regulators, advisors, and investors must continue to impress and buttress the materiality of sustainability risks through new financial analysis and regular market engagement.
- Double down on transparency and disclosure: Building on the success of the UK-China Environmental Information Disclosure Pilot, investors should continue to engage in the evolution of TCFD and play their part in aligning their activities with a sustainable future. In particular, investors should be moving towards disclosures in their financial reporting, rather than standalone sustainability reports.