Deeply practice the concept of ESG and actively fulfill social responsibilities - the securities industry serves the high-quality and sustainable development of the real economy
ESG is a concept of how environmental, social and governance are coordinated and developed, and it is also an evaluation standard for the non-financial performance of a company and the long-term development of a company based on these three factors.
In the securities industry, the "Ten Elements of Cultural Construction in the Securities Industry" clearly states that "adhering to sustainable development" is one of the ten elements, and encourages "building an ESG governance structure and governance mechanism". In recent years, more and more securities companies have incorporated ESG into their corporate management, and guided resources and funds into industries in line with the concept of sustainable development in their actual business, contributing to the high-quality development of the real economy.
Supporting the national "dual carbon" goal and serving the "double carbon" goal of green finance have profoundly affected China's economic development. In recent years, the securities industry has continued to study the ESG concept in depth, and explored the integration of ESG concept into various businesses, so as to serve the realization of the national "dual carbon" goal in an innovative way.
On the financing side, the securities industry continues to promote the development and construction of sustainable financing, deeply explores and lays out the industrial value under the guidance of the "dual carbon" policy, and guides the transformation of the industrial structure and energy structure to green and low-carbon with capital allocation.
According to the special data of the bond underwriting business of the Securities Association of China, from 2020 to 2022, the scale of green corporate bonds (including asset securitization products) underwritten or managed by securities companies on the Shanghai and Shenzhen stock exchanges will be about 90.465 billion yuan, 137.646 billion yuan and 171.658 billion yuan respectively, with a compound annual growth rate of about 37.75%. In the first half of 2023, the aforementioned data will be about 76.874 billion yuan.
A number of securities firms have contributed typical cases in supporting green finance. For example, in recent years, CICC has underwritten a number of green bonds and carbon neutrality bonds, covering a wide range of underwriting categories, including central state-owned enterprises, local state-owned enterprises, large state-owned commercial banks, policy banks and local governments. In 2022, CICC underwrote a total of nearly RMB340 billion in domestic green bond issuance, ranking first in the market. In addition, in the first half of 2023, CICC underwrote a number of overseas green bonds, such as assisting ICBC in the issuance of multi-branch and multi-currency offshore carbon neutrality-themed green bonds, and assisting in the issuance of green bonds by China Construction Bank London Branch, China Construction Bank Sydney Branch, and Bank of China New York Branch.
Orient Securities also actively responded to the national strategy and continued to promote the underwriting business of policy bank thematic bonds, ESG bonds and science and technology innovation notes. In the first half of 2023, the company participated in the underwriting of 6 thematic bonds issued by China Development Bank, including "green development", "national student loans" and "urban infrastructure", and completed the underwriting of 20 ESG bonds and 12 science and technology innovation notes, with an underwriting scale of 3.792 billion yuan.
At the 2023 Shanghai International Low-Carbon Smart Mobility Exhibition, exhibitors displayed green financial service cases Visual China
Promote the concept of responsible investment and serve sustainable development
In the context of the "dual carbon" era, ESG investment methodologies that advocate responsible investment and promote sustainable development have gradually attracted the attention of the capital market and are increasingly accepted by investors. In recent years, the securities industry has carried out a lot of work in promoting ESG investment and has achieved fruitful results.
On the one hand, many brokerages have taken the initiative to apply ESG concepts to corporate risk management and investment decisions.
First Capital pointed out that since the second quarter of 2022, the company has integrated ESG assessment content into the risk assessment of new products, new businesses, and daily business, and listed ESG chapters. In terms of specific display content, qualitative analysis and material ESG negative analysis are the mainstay, and risk identification and assessment are carried out from three dimensions: environmental, social and governance. For example, in a stock pledge project, the company applies the ESG chapter to focus on the ESG-related risks of the underlying securities of the collateral.
At the same time, the company continued to promote the integration of ESG investment strategies into equity proprietary business investment. For example, in the secondary market stock investment, the company will further combine ESG strategy with pool screening, in the primary market project screening, the company will explore high-quality targets that are in line with the sustainable theme investment strategy, and if the relevant issues are contrary to the ESG sustainable development concept when voting at the shareholders' meeting of the holding stocks, the company will urge the target listed company to improve ESG performance by actively communicating, voting against or adjusting positions. At present, the policy formulation and strategy application related to responsible investment and ESG investment have basically covered the company's securities asset management business, fixed income investment and trading business, mutual fund management business, private equity fund management business and proprietary investment and trading business.
On the other hand, through the creation of ESG products, the securities industry continues to explore the application scenarios of ESG in more product fields, so as to attract more social funds to invest in green and low-carbon projects, and serve to establish and improve a green, low-carbon and circular development economic system.
For example, CITIC Securities actively develops strategic products that meet ESG themes, and makes full use of ESG criteria to screen out investment targets with good credit quality, excellent management capabilities and good ESG performance, so as to provide investors with opportunities and choices to participate in ESG investment while supporting sustainable economic and social development.
In 2022, China Asset Management, a subsidiary of CITIC Securities, issued three ESG-themed ETF funds, including the New Energy Vehicle Exchange-Traded Open-ended Index Fund (ETF Fund), ChinaAMC CSI New Energy ETF Fund, and ChinaAMC CSI Mainland Low-Carbon Economy Theme ETF Fund. In addition, the Fixed Income Department of CITIC Securities has cooperated with a number of professional index companies to issue more than 20 indices covering pure bonds and large asset allocation categories, and issued about 800 index-linked income certificate products.
In addition, in the context of the comprehensive deepening of the reform and opening up of the capital market, many securities firms have realized that the use of professional carbon finance to help green and low-carbon development is not limited to the mainland market, but should make full use of the interconnection mechanism to better serve the low-carbon transformation needs of enterprises.
In 2022, Galaxy Securities established a dual-carbon innovation center in Hong Kong, China, to carry out "dual carbon" industry research, low-carbon management consulting (including CCER/VCS and other domestic and foreign voluntary emission reduction development), carbon financial product innovation, carbon finance training and other businesses. At the same time, Galaxy Securities gives full play to the synergy between China and overseas to continuously help the investment connection and capital flow between China and ASEAN in the field of green finance and sustainable development.
In 2022, the CSOP Galaxy-CIMB Asia Pacific Low Carbon Index ETF, jointly launched by Galaxy Securities' Singapore joint venture Galaxy-CIMB Asset Management and CSOP Asset Management, was listed on the Singapore Exchange. According to Bloomberg data, the low-carbon index ETF is the world's first low-carbon ETF covering the Asia-Pacific region, and it is also the largest equity ETF ever listed on SGX. In addition, in 2023, Galaxy International and Galaxy Dre will also jointly launch the "first financial product to deal with EU carbon tariffs - EU carbon emission futures contract cross-border income swap (TRS)". As the first financial product in China to respond to EU carbon tariffs, this product helps domestic institutional customers directly participate in EU carbon market transactions, provides enterprises with means to avoid EU carbon tariff risks, better copes with the risks brought by EU carbon tariffs, effectively promotes the green and low-carbon transformation of enterprises and upstream and downstream industrial chains, and helps China's carbon market to connect with international standards, which not only provides useful reference for China's construction of a global carbon market, but also plays an important role in achieving the goal of carbon peak and carbon neutrality.
Serve the high-frequency resonance of rural revitalization and sustainable issues
ESG focuses on sustainability and social responsibility. The development ideas of ecological civilization, rural revitalization, common prosperity, and high-quality development emphasized in the report of the 20th National Congress of the Communist Party of China resonate with the sustainable issues of ESG concepts.
In May 2021, the China Securities Association issued an initiative to all members, calling on the securities industry to consolidate and expand the achievements of "one company and one county" on the basis of the achievements made in serving the national strategy of poverty alleviation, and take on the new mission of promoting rural revitalization. For more than two years, the securities industry has shouldered the important mission of introducing financial revitalization to rural areas based on its own profession, and has continuously added new samples of practice in the process of continuous exploration of rural revitalization.
For example, in recent years, Changjiang Securities has given full play to the power of financial intermediaries, actively responded to the decision-making and deployment on comprehensively promoting rural revitalization, and implemented the three major measures of "cultural guidance, financial empowerment, and industry drive" with the goal of promoting the overall transformation and upgrading of the county economy, making enterprises bigger and stronger, and creating production and increasing income for the masses.
Changjiang Securities adheres to the industrial development as a key part of rural revitalization, relying on the characteristic resource endowment of rural areas in various places, and integrating the company's brand concept while giving full play to the advantages of financial expertise, so as to create a young assistance product with "Yangtze River recognition". At the end of August 2022, Changjiang Securities innovatively launched the company's independently designed original tea cultural and creative product "Long Drink, Changying", which is produced by tea enterprises in Wufeng, Hubei Province. The project skillfully combines tea culture with the "long-term investment" concept advocated by the industry, adopts a younger packaging design style, and becomes a new "flow" cultural and creative product in the industry. The project not only actively helps the transformation and upgrading of local tea enterprises, but also shifts from the previous "one-time" consumption assistance to "continuous" cooperative assistance, which opens up new ideas for the county-level assistance model.
In addition, Changjiang Securities also actively links with relevant local departments in the help region, and makes suggestions and suggestions for the development of the region with the help of the company's professional strength in advantageous business. In June 2023, the company and the Enshi Prefecture Financial Bureau jointly held a seminar on the capital market to promote the high-quality development of Enshi Prefecture. Wu Ge, chief economist of the company, and researchers from agriculture, forestry, animal husbandry and fishery, cultural tourism and other industries made keynote reports at the meeting, focusing on the location characteristics of Enshi, Hubei Province, digging deep into resource advantages, exploring transformation paths, and contributing research strength to the local construction of a diversified industrial development pattern.
It is worth mentioning that the economic conditions of the counties that are helped by securities companies are relatively underdeveloped, and the problem of "difficult and expensive financing" for small, medium and micro enterprises and private enterprises is particularly prominent. In response to these problems, the securities industry has achieved positive results by giving full play to the pivotal role of the capital market in allocating resources and guiding financial resources to invest more in key areas and weak links.
For example, in the first half of 2023, China Securities Construction Investment assisted Sichuan Gold, an issuer located in Muli Tibetan Autonomous County, Liangshan Prefecture, which was once a key county of the country's poverty alleviation and development work and a deeply impoverished county, to complete its initial public offering project, raising 390.2 million yuan. The company also joined hands with China CITIC Bank to assist Lishui State-owned Capital Operation Co., Ltd. in completing the first tranche of medium-term notes in 2023 (rural revitalization/old revolutionary areas). The medium-term notes are the first dual-labeled debt financing instrument for rural revitalization and old revolutionary areas in Zhejiang Province, and the funds raised are mainly used for the purchase of farmers' agricultural and sideline products by Lishui Shangeng Dream Factory Agricultural Technology Co., Ltd., a subsidiary of the issuer, to guide the flow of social capital to key areas of rural revitalization.
Guojin Securities also gives full play to its industry advantages and professional skills to introduce "financial living water" to consolidate the achievements of poverty alleviation and effectively connect poverty alleviation and rural revitalization. In the first half of 2023, the company underwrote two rural revitalization bonds with an underwriting amount of RMB1.192 billion, and one low-carbon transition-linked corporate bond with an underwriting scale of RMB600 million. As of June 30, 2023, Guojin Securities Investment Bank has completed the issuance of 15 bonds in Xinjiang, raising a total of 9.31 billion yuan, and the lead underwriting amount of Guojin Securities is 7.58 billion yuan, providing financial support for local rural revitalization and promoting the formation of a good financial ecology.
It can be seen that as an intermediary in the capital market, the securities industry practices ESG, internally can integrate ESG concepts into corporate governance or management operations to help the high-quality development of the industry, and externally, it can guide market resources to continue to flow into the field of sustainable development through relevant ESG business, so as to improve the quality and efficiency of the transformation of the real economy. Through several years of in-depth understanding and practice of ESG concepts, the securities industry's ability to serve the real economy has been continuously enhanced, and its social reputation has also been continuously improved.
Cover image source: Visual China
