Chinese institutional investors welcome the chance to support China's efforts in addressing climate issues and capitalizing on related solutions.
In the rapidly evolving landscape of global climate action, China is making significant strides towards its ambitious goals. The country, which aims to peak carbon emissions by 2030 and achieve carbon neutrality by 2060, is seeing a surge in participation from some of the world's leading climate solutions behemoths.
One such player is Invesco Great Wall Fund Management. Their mandates are shaping their climate offering, with a focus on investments that contribute to China's climate goals and capitalise on opportunities in climate solutions.
Similarly, Ninety One's All China Equity Fund invests 4.3% in Contemporary Amperex Technology Co. Limited (CATL), a leading Chinese battery manufacturer.
The mandates of asset managers in China are catalysing investment decisions and stewardship practices that accelerate the country's climate transition. Since the launch of China's 'dual carbon' strategy, key institutions supporting the financial integration of climate factors into investment policy include major Chinese state-owned banks, the People’s Bank of China, and regulatory bodies such as the China Securities Regulatory Commission (CSRC). These institutions have been embedding climate risks and green finance frameworks into financial decision-making since around 2016.
Robeco's Chinese Equities Fund, classified as an Article 8 fund under the EU's SFDR regulation, promotes environmental factors in its portfolio management.
For investors integrating climate materiality into their portfolios, the future trajectory of the coal power sector will be crucial. However, China has already made significant strides in renewable energy. In July last year, the country reached its target for a combined wind and solar power capacity of 1200 GW, six years ahead of schedule.
BlackRock offers exposure to Chinese transition opportunities through its China Environmental Tech Fund, with its largest holdings including CATL, XPeng, and BYD, electric vehicle manufacturers.
The implications of mainstream climate materiality are wide-reaching, including climate-driven mandates for asset managers based in China. AIGCC's research surveyed 30 institutional investors across China with a collective US$19.7 trillion in assets under management (AUM), showing that 50% of Chinese investors are now integrating climate factors into their investment policies.
Rebecca Mikula-Wright, AIGCC's chief executive, stated that investors are pivotal in achieving China's energy targets. She further emphasised that asset owners, as stewards of capital, are positioned to be the best drivers of climate action.
However, the transition is not without challenges. Researchers at the Global Energy Monitor (GEM) and Centre for Research on Energy and Clean Air (CREA) estimate that in the first half of the year, China commissioned nearly 25GW of coal power, which brings the number of new and revived coal power projects to their highest level in a decade.
Despite these challenges, the climate solutions opportunity set is visible in the funds on offer, often through the listed equities channel. Su Yingying, head of ESG research at Invesco Great Wall Fund Management's investment department, recognises the role of the institution in supporting clients with investment objectives to contribute to China's climate goals and capture opportunities in climate solutions.
In conclusion, China's commitment to climate action is being reflected in the investment decisions of its leading asset managers. As more institutions embrace green finance and climate solutions, the country is poised to accelerate its transition towards a low-carbon future.
