Greenpeace has issued a damning report on China’s asset managers, saying they are at risk of “systemic greenwashing” in relation to climate goals.
The China Asset Management Institutions Climate Performance Report (2022) was released jointly by Greenpeace and the All-China Environmental Protection Federation. It looked at 15 leading Chinese asset managers including ICBC Credit Suisse Asset Management, Bosera, Harvest Fund Management, China Universal Asset Management and China Southern Asset Management
Eleven of these companies are among the top 20 fund management institutions with the largest assets under management in non-money market funds. They manage the Basic Pension Insurance Fund and the National Social Security Fund in mainland China, and all but one are signatories of the UN Principles for Responsible Investment.
High-emission and ‘sustainable’
The research scored the asset managers according to climate risk governance and actual climate action and found none of the groups reached the passing level of a 50% total score.
None had any long-term climate goals nor had made any commitments to assess Scope 3 carbon emissions. And only two firms, China Asset Management and China Southern Asset Management, announced their own carbon neutrality goals at the operational level.
The report found the investment portfolios and sustainable-badged products of many asset managers had large positions in high-carbon industries. Some 23 of the 37 mutual funds identified as “sustainable” had high-emission investments among their top 10 holdings. With six new funds not disclosing their allocations, that means only 20% of sustainability-themed funds are “worthy of their name in terms of stock selection,” the report said.
In total, the 15 groups invested more than 5.2bn yuan (£643m) in high-carbon industries, accounting for 13.6% of total investment in stocks. Dacheng Fund’s investment portfolio had more than 40% in high-carbon stocks while Southern Fund, which Greenpeace said performed well on climate risk governance, had 25% in high-carbon investments.
There was also low willingness to disclose climate impact information, the research found. Only two firms published independent ESG reports, and three have policy papers, but 11 put forward no emissions information at all, and none were appraised or by a third-party auditor.
“This is the first detailed scan of climate impact and action from asset managers in China,” said Yuan Yuan, director of Greenpeace climate and energy projects and a researcher involved in the report.
She said the paper shows the asset managers’ impact on the China’s efforts to green its economy as the country itself faces rising climate risks.
“With this research, we wanted to create a rubric to evaluate asset managers’ performance on climate-related risk governance and climate action. We also propose practical steps forward. It’s not clear at all what asset managers have done, if anything, to prepare to meet the net zero emissions targets they’ve signed onto in name. At this point, it seems to still be lip service. That creates serious risks for all of us,” said Yuan.
She added that asset management institutions should “recognise the status quo and implement the concept of sustainable investment into practical actions, so as to avoid systematic ‘greenwashing’ risks.”
Greenpeace is calling on the groups to commit to net zero by 2050, develop climate action plans, and direct investments towards truly green and low-carbon industries.
The asset managers named in the report did not respond to Greenpeace ahead of the report’s publication.
None responded to ESG Clarity’s request for comment at the time of publishing.