Ping An, FTSE Russell Collaborate to Launch China ESG Indexes
FTSE Russell, a global index publisher, and Ping An, a Chinese financial conglomerate, announced a partnership to encourage sustainable investment by introducing a series of China indexes integrating environmental, social, and government (ESG) considerations.
The strategic partnership comes as global investors become more concerned with ESG issues and Beijing increases its green push to help the government fulfil its carbon neutrality promise by 2060.
The FTSE Ping An China ESG Index Series, which adds Ping An's China-specific ESG approach to the FTSE Russell China indexes, shows how Chinese and Western institutions can work together on sustainable investment even though they have different views on sensitive issues like human rights and Communist Party control.
FTSE Russell, a part of the London Stock Exchange Group, said that the multi-year partnership is meant to eventually serve international investors as well. The first launch of the index will be for investors onshore.
By market value, Ping An Insurance Group is the largest insurance company in China.
"It's really about leveraging the market-specific insights" that Ping An brings, said Helena Fung, Head of Sustainable Investment, APAC at FTSE Russell.
Fung went on to say that Ping An's own ESG evaluation framework, on which the new indexes are based, contains idiosyncratic Chinese elements such as "common prosperity", a government push to eliminate growing wealth inequities, but that this did not cause friction with the FTSE, which has its own ESG rating standards.
"People tend to think of ESG as one approach. In fact, you're looking at different methodologies, different ways of applying the data within indexes," Fung said.
Sustainalytics, the ESG rating unit of the U.S. financial services organisation Morningstar, downgraded Tencent Holdings, Baidu, and Weibo Corp earlier this year due to their role in China's increasing control over its internet.
Domestic institutions in China, on the other hand, do not take internet censorship into account when making ESG decisions.
The rift could get bigger as Beijing pushes for Chinese-style corporate governance and President Xi Jinping tightens Party control over state-owned enterprises (SOEs).
In the past few months, the Chinese government has been pushing for listed SOEs to use its ESG disclosure framework.
Environmental challenges are causing more harmony with the West. In August, China raised the standards for issuing green bonds, which was a big step toward following global standards.
"The environment has been a great consideration and concern in China, which is not at all at odds with an international perspective," FTSE Russell's Fung said.