China should consider creating a ‘transition map’ with clear, credible targets to help them reach net zero, according to new reports published by the UK-China Green Finance Taskforce in advance of the UN Climate Change Conference COP26 in Glasgow next week.

The Value Creation of Active Engagement, which aims to support asset owners and managers in the UK and China in engaging more deeply with each other’s markets, recommends that Chinese policymakers should set out a target-based path to a net zero future in various sectors including energy, with a strong focus on Environmental, Social, and Governance investor considerations.

The report analyses engagement practices used by investors and corporates from the UK and China, providing thoughts and insights on their value to the wider financial markets. The research, led by Professor Robert G Eccles and based on 20 interviews with UK and Chinese business figures, shows how long-term active engagement can benefit both asset owners and asset managers.

Meanwhile, a second report, Scaling Sustainable Solutions - Public and Private Markets, a result of collaborative work from GoalsFirst, Mercer, Ninety One, Syer Advisers and Three Hills Capital Partners, looks at the current state of China’s sustainable solutions market. The report builds on the findings of the 2020 report Resilience: Lessons to Scale Responsible Investing, by Mercer, and shares insights from practitioners obtained through 29 interviews with asset owners and managers from a range of markets.

The report provides recommendations on how to scale sustainable solutions effectively in the UK, China and other emerging markets, to create tangible positive outcomes. In particular, it examines how investors can best set sustainable goals and contribute to the net-zero goals of their respective markets by building stronger, more sustainable portfolios.

The UK-China Green Finance Centre is co-chaired by Alderman William Russell, 692nd Lord Mayor of the City of London, and Dr Ma Jun, Chairman of the Green Finance Committee (GFC) of the China Society for Finance and Banking. It aims to accelerate awareness of green finance opportunities in China and identify critical regulatory and market barriers to mainstreaming green investment flows.

Lord Mayor of the City of London & Co-Chair of the UK-China Green Finance Centre, Alderman William Russell, said:

"Green finance is now the business opportunity of the century, creating thousands of jobs, and the businesses that put environmental resilience at their core will be highly valued and desirable.

“Of course, it is also a key tool as we transition to net zero, financing new technologies and helping us move away from polluting fossil fuels, given the right investment environment.

“These reports aim to create just that, leveraging the vast experience of hugely talented individuals in the UK and China. As we approach COP26, I am confident that together we can work to ensure the net zero future is bright.”

Chairman of the Green Finance Committee of the China Society for Finance and Banking & Co-Chair of the UK-China Green Finance Centre, Dr MA Jun, said:

“Although there has been a significant uptake in ESG investing recently, greater efforts are needed by Chinese investors to adopt best practices and develop more products that are aligned with the net zero goals. 

“What we need to do is to develop more authoritative ESG rating systems and operating guidelines for information disclosure for the asset management industry. At the same time, institutional investors should enhance their ESG research capability, scale up their ability to generate new products, and more actively engage with investees. 

“The greening of the asset management industry is a key pillar of the functioning of the green and sustainable finance system.

“As green finance market leaders, China and the UK have collaborated successfully in many areas in the past few years, including on initiatives such as G20, NGFS, and GIP; and we should now work together to develop sustainable solutions that are suitable for the respective private and public markets, with the goal of implementing a more ambitious decarbonization agenda to be outlined during COP26.”

Visiting Professor of Management Practice at Saïd Business School, University of Oxford, Robert G Eccles, said:

“The UK has long been a leader in corporate governance and stewardship. Good governance and active engagement and stewardship are at the foundation of transitioning the global economy to net-zero.

“The sheer scale of the Chinese economy means its contribution to this can be enormous and the investment community has an essential role to play. Our study found intense interest in the Chinese investment community to learn from the experience of the UK while adapting it to their national context.

“I hope this report will just be the start of an ongoing collaboration between these two countries to mobilize the power of the capital markets for a just transition.”

Head of Sustainable Investment – UK and Europe, Mercer, Kate Brett, said:

“It is more important than ever that the investment industry works together, across the value chain and different markets, to create effective sustainable investment solutions that tangibly impact the world for the better.

“The Scaling Sustainable Solutions report highlights the work that still needs to be done and, crucially provides recommendations for achieving a more sustainable investment ecosystem.” 

Notes to editors

About the UK-China Green Finance Taskforce
The UK-China Green Finance Centre (UKCGFC) is the evolution of a longstanding partnership between the UK’s Green Finance Initiative and Green Finance Committee of the China Society for Finance and Banking. The Centre’s overarching mission is to enhance UK and China green finance cooperation to accelerate the global transition to an environmentally sustainable future. www.ukchinagreen.org

About the City of London Corporation

The City of London Corporation is the governing body of the Square Mile dedicated to a vibrant and thriving City, supporting a diverse and sustainable London within a globally-successful UK. www.cityoflondon.gov.uk

About Mercer

Mercer believes in building brighter futures by redefining the world of work, reshaping retirement and investment outcomes, and unlocking real health and well-being. Mercer’s approximately 25,000 employees are based in 43 countries and the firm operates in 130 countries. Mercer is a business of Marsh McLennan (NYSE: MMC), the world’s leading professional services firm in the areas of risk, strategy and people, with 81,000 colleagues and annual revenue of over $19 billion. Through its market-leading businesses including Marsh, Guy Carpenter and Oliver Wyman, Marsh McLennan helps clients navigate an increasingly dynamic and complex environment. For more information, visit mercer.com. Follow Mercer on LinkedIn and Twitter