In recent years, many investment projects have caused damages on the ecological environment and biodiversity. Although under the supervision of environmental protection departments, many of these projects resulted in forced suspensions due to strong opposition and backlash from civil organizations and mounting media scrutiny. These projects have caused not only significant economic losses to the financial industry, but have also severely impacted the reputations of certain institutions. ESG – a sustainable investment concept centered on the Environment, Society and Governance – has been attracting increasing levels of attention, as the society has reached a consensus in regard to green development.
“The loss of biodiversity and degradation of the ecosystem both pose a serious threat to the survival and development of human race, while negatively impacting economic development. All sectors of society including entrepreneurs should have a high degree of social responsibility in order to explore win-win development in both ecological protection and economy,” said Xu Zhihong, Chairman of the UNESCO China-MAB (Man and Biosphere) Committee, academician of Chinese Academy of Sciences and former President of Peking University.
“The participation of the financial industry is crucial to biodiversity conservation. There is currently a lack of discussion in the industry on how to incorporate biodiversity in ESG investment. One of the biggest constraints on domestic ESG investment is the lack of information, especially that related to biodiversity. We hope that listed companies and scientific research institutions will make more efforts to disclose information on biodiversity, gradually improve the accessibility of biodiversity in investing and promote potential projects that benefit biodiversity to set the benchmark. For instance, in key areas, biodiversity should not only be included in the environmental impact assessment, but also be embedded in the procedure,” said Liu Ning, Deputy director of the Department of Nature and Ecology Conservation, MEE, Chinese negotiator for the Fifteenth Meeting of the Conference of the Parties to the Convention on Biological Diversity (CBD COP15).
As for how China partakes in the international nature conservation process while coordinating economic development with biodiversity conservation, Zhou Zhihua, deputy director of the Department of Wildlife Conservation of National Forestry and Grassland Administration, highlighted three key aspects: “First, we must deeply understand the significance of constructing an ecological civilization and firmly establish the concept that lucid waters and lush mountains are invaluable assets. Second, nature conservation should be incorporated into the national economic development plan and the formulation of various policies and guidelines, including the feasibility study of all projects, so as to promote in-depth dialogue between the financial and commercial industries and protection departments. Third, we should promote the gathering and sharing of information to support decision making and reduce the waste of social wealth and the loss of biodiversity.”
“As the world’s largest developing country, there are many differences between China and developed countries in terms of ecological environment protection and economic development. We need tools and methods of our own to understand and evaluate companies, overcoming the hurdles embedded in ESG investment decisions,” said Zhang Guangyao, Co-head of Huatai Securities Research Institute.
“Biodiversity is the foundation of sustainable development, and finance plays an important role in protecting biodiversity and promoting green development. In recent years, the scale of global ESG investment has soared; at the end of the second quarter of this year, China had become the largest passive sustainable development fund market outside of Europe and the US. By connecting investors and listed companies, the Shanghai Stock Exchange plays an important role in the ESG space. In recent years, the Shanghai Stock Exchange has enhanced its international experience, bringing into play capital market functions that optimize resource allocation and serve the real economy, as well as implemented green development and sustainable development concepts. In addition, the Shanghai Stock Exchange is practicing ESG concepts by actively participating in the formulation of international sustainability disclosure standards. In the future, we will continue our efforts in green finance and sustainable development, and contribute towards sustainable global development and China’s goal to become carbon neutral by 2060,” said Li Yingying, Assistant Director of the International Development Department of the Shanghai Stock Exchange and Vice Chairman of the Sustainability Working Group of the World Federation of Exchanges.
Experts including Lu Zhi, a professor at Peking University and founder of the Shan Shui Conservation Center; Ouyang Zhiyun, Director of Research Center for Eco-Environmental Sciences, Chinese Academy of Science; Ma Jun, Founder and Director of The Institute of Public & Environmental Affairs (IPE); and Wang Xiaoshu, MSCI ESG Research, APAC Team Lead (Ex Japan & Australia), gave keynote speeches on topics such as mainstreaming biodiversity conservation, the environmental performance of listed companies, using big data to formulate ecologic maps, the value of realizing ecological products and practices and ESG ratings. During the round table session, representatives from government departments, scientific research institutes, ecological environment protection organizations, listed companies, and domestic foreign investment regulatory agencies held in-depth discussions on the regulations governing the ecological and environmental protection system, investment applications and local exploration practices in ESG investment.
The “One Yangtze” Sustainable Development Forum was jointly sponsored by Huatai Securities and Shan Shui Conservation Center, China Environmental Protection Foundation, Peking University Center for Nature and Society, and Peking University China Center for Energy and Development.
The Biodiversity Impact Assessment (BiA) tool was officially launched during the forum. The BiA tool is a platform which leverages data to assess the environmental and biodiversity impact of construction and development projects. The tool allows users to look into the construction, investment, planning and other aspects of a project and evaluate its impact on biodiversity. As of today, the platform has compiled data on more than 1,900 bio-species, 1,100 various types of nature protected areas and 180,000 environmental impact assessments on construction projects, which will provide enterprises with a database when calculating biodiversity indicators in ESG ratings and be used to assess the biodiversity and potential financial risks that investment projects may bring.
About Huatai Securities
Huatai Securities Co., Ltd. (601688:CH; 6886:HK; HTSC:LI) is a leading technology-driven securities group headquartered in Nanjing, China. Founded in 1991, Huatai Securities has grasped the opportunities offered by China’s capital market reform and opening-up, leading the way in transforming China’s securities industry via financial technologies. Considered to be a titan in the industry, Huatai Securities has long provided comprehensive, fully integrated, professional and diversified client-centric securities services for individuals and institutional clients.
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