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ESG practice report of China’s equity investment market in 2021 From 36 krypton

The following is the ESG practice report of China’s equity investment market in 2021 From 36 krypton recommended by And this article belongs to the classification: Chinese economy, Investment & Economy, research report.

In the past two years, ESG (environment, social responsibility and corporate governance) concept has been more and more recognized by domestic and foreign capital markets. On the one hand, after the outbreak of the epidemic, medical care, human rights, environmental protection and other issues have been concentrated and magnified, and all sectors of society have launched a profound reflection on how to maintain the increasingly global economic order; On the other hand, there has been a long-term consensus on “how to realize the long-term value of an enterprise” at the capital level. Excellent ESG performance of an enterprise can reduce the cost of capital, improve the value of assets, and play an important role in reputation, operation efficiency, legal protection, etc.

According to the survey and observation, the development of ESG in Chinese market presents three characteristics: (1) between the advantages of secondary market information disclosure and industry norms, the popularization and practice of ESG concept in domestic secondary market is much higher than that in primary market´╝ł 2) All exchanges and regulators have clear guidelines, policies and regulations on ESG information disclosure of listed companies, so PE Institutions in the investment stage pay more attention to ESG than VC institutions´╝ł 3) LP’s emphasis on ESG is constantly increasing. Many LP’s who hold the investment philosophy of ESG have changed from “negative selection” to “positive selection”. In the early stage of investment, they put forward standard quantitative requirements for GP to guide GP to choose projects that are more in line with ESG philosophy.

In fact, with the deepening of the reform of the capital industry and the enhancement of the linkage effect of the primary and secondary markets, it has become an inevitable trend to include ESG into investment. According to the data, up to now, 57 investors in primary and secondary markets have signed the United Nations principle of responsible investment (PRI). Among them, the master fund includes Gefei assets, Noah holdings, Shengshi investment, Xingjie capital, Shuanghu capital, and the private equity fund managers include Junlian capital, zhengxingu capital, maixing investment, Lvdong capital, etc.

ESG investment is expected to realize the “long-term value” of the enterprise, which is the same as the long-term principle and value investment philosophy of VC / PE. Therefore, as far as 36 krypton’s primary market investment institutions are concerned for a long time, comprehensively incorporating ESG factors into all links of “raising, investment, management and withdrawal” can not only attract international funds, but also effectively avoid risks from the source of investment, screen out high-quality projects with more diversified withdrawal channels, and finally realize the high-quality development of the industry.

From the perspective of GP type, compared with pure RMB institutions, institutions with experience in US dollar fund-raising have stronger ESG concept awareness, and more complete ESG system, strategy and objectives. Many pioneers have taken the first step of ESG practice. For example, Sequoia China, IDG capital, hillhood capital, Yunfeng fund and other head institutions have released ESG investment related reports in the past year; Shengshi investment, Kaihui fund and other institutions have appointed the chief social responsibility and sustainable development officer.

At the 75th UN General Assembly in 2020, China made a solemn commitment to the world to strive to achieve the peak of carbon by 2030 and achieve carbon neutrality by 2060. In 2021, carbon peaking and carbon neutralization will be explicitly included in the government work report of the NPC and CPPCC. From the perspective of ESG investment, the proposal of carbon neutral target has brought great challenges to high energy consuming industries with large carbon dioxide emissions, and also brought more excellent investment opportunities for industrial upgrading, transformation and innovative technology development to investment institutions.

Based on this, 36 krypton launched its first survey on the development of ESG of investment institutions in 2021, and launched the ESG investment list selection of investment institutions. Based on 80% of the investment institutions’ professional performance and 20% of their ESG concept popularization and specific practice, we found the “top 20 best ESG concept investment institutions in China”.

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