China’s rising middle class is becoming more interested in sustainable investing.
Per capita gross domestic product in the world’s most populous country is reaching $10,000 (€8,823). As they grow wealthier, more people are demanding cleaner air, water and more respect for the environment and other aspects of sustainability.
“Environmental protection has become a critical way of improving quality of life, as income levels in top-tier Chinese cities approach those of their developed market peers,” wrote Investment & Pensions Europe.
Chinese public companies, for instance, are expected to disclose their environmental impacts by 2020. A market for carbon is also slated to launch that year, a move that has helped curb greenhouse gas emissions in Europe and the United States.
Western investors often complain about a lack of measurements to judge environmental, social and governance, or ESG, standards in companies and funds. The problem is worse in China, where many state-owned companies have little experience or interest in transparency.
“Getting accurate data for Chinese companies will require in-depth research beyond superficial scorecards,” the news website noted.
But Chinese leaders have tools that their Western counterparts lack: near-complete power over their commercial enterprises and financial sector, at least in terms of the goals they can set for executives and the punishments they can mete out for offenders who might have little recourse for appeals.