Richard Sheng, Board Secretary of Ping An Insurance (Group) Company of China, Ltd. (“Ping An” or the “Group”, HKEx:2318; SSE:601318) attended and spoke on FTSE Russell webinar, titled “ESG investing in China: a new paradigm”.
Access to education, poverty alleviation and climate change are key areas of focus when it comes to environmental, social and governance (ESG) in China.” said Richard Sheng. Ping An’s artificial-intelligence-based ESG evaluation system is tailor-made to reflect the unique features of the ESG landscape in China. “These issues have a great deal of significance in China and this is why we don’t simply purchase data from external resources. We leveraged our investment direction, overall investment strategy, and our own investment logic to build up our ESG system.”
Developed own ESG framework and evaluation system
As awareness of ESG issues has grown among international and domestic investors in China, international ESG rating standards are not always suitable for China’s business environment and ESG priorities. Hence, Ping An developed its own framework.
Ping An’s artificial-intelligence-based CN-ESG Smart Evaluation System, launched in 2021, is helping to drive responsible investment in China. It covers more than 5,000 A-share listed companies in China and more than 2,500 Hong Kong listed companies. It evaluates more than 5,000 corporate credit bond issuers and the green elements of 58,000 bonds in the bond market, nearly 140 fund management companies and more than 14,900 funds. It incorporates domestic and international ESG disclosure standards. Out of all the core issues included in the CN-ESG framework, 87% overlap with at least one international framework and 13% of the indicators are specific to China.
Ping An’s expertise and outstanding success led to its involvement in shaping China’s first disclosure standard, the “Guidance of Enterprise Disclosure”, which took effect in June 2022. Ping An’s China-specific approach has also been integrated with FTSE Russell’s leading China benchmarks, in a partnership announced in December 2022 for the FTSE Ping An China ESG Index Series.
Proactively seized low carbon transformation opportunities in China
China’s targets to peak carbon emission by 2030 and achieve carbon neutrality by 2060 present an “enormous opportunity” for green finance in China, Mr. Sheng said. “These include some investment opportunities that support environmental enhancements, those that address climate change, and those that economize and efficiently use resources.”
Ping An is seizing these low carbon transformation opportunities in investment and financing, Mr. Sheng added. Ping An’s green investment and financing reached more than RMB282.3 billion in 2022. Carbon neutrality in China needs an estimated RMB100 trillion or more of direct investment, he said, with opportunities ranging from new energy vehicles to nuclear and hydroelectric power plants. For instance, Ping An Bank invested RMB5.23 billion in total to finance the Baihetan Hydropower Station since 2018, Ping An Property & Casualty Insurance served as the leading underwriter of the main construction of the Baihetan Hydropower Station, with the sum insured amounted to RMB6.12 billion, and Ping An Securities was the key issuer for RMB20 billion in green exchangeable bonds for Baihetan’s parent company China Three Gorges Corporation. “These are the aspects that reflected Ping An’s integrated financial strengths by providing our customers with integrated services, ranging from investment financing, bonds, loans or insurance.” Mr. Sheng said.
In addition, Ping An is also innovating in green finance products and services, including Ping An Bank’s personal carbon account, Low Carbon Home, for UnionPay credit and debit card customers, and carbon sink insurance for terrestrial and marine ecosystems.
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