Sustainable Investment Awards 2023

Thought leadership paper on sustainable investing, Asia: SynTao Green Finance and PRI

China has set a national goal to reach carbon neutrality by 2060, delivering a just transition alongside it.

However, in a thought leadership paper on the topic, Chinese data and analytics firm SynTao Green Finance (STGF) points out that the disclosure frameworks that are commonly used by Chinese companies to address voluntary and mandatory reporting expectations do not tend to recognise the linkages between social and climate issues and the measurement of social justice impacts.

Without information on both aspects, investors are also unable to address the full range of risks in their portfolios, it finds.

STGF, in collaboration with the UN-supported Principles for Responsible Investment (PRI) therefore created a draft disclosure framework, specifically tailored to the Chinese market, to help investors integrate just transition issues and analysis into their decision-making.

As part of the quantitative and qualitative disclosure metrics recommended, companies were encouraged to disclose:

  • Its acknowledgment and commitment to a just transition;
  • The social impacts, risks and opportunities it faces associated with climate change and transition and its just transition plans;
  • Actions to address these issues; and
  • Advocacy for policies and regulations to support a just transition. 

While it claims to be the first framework of its kind in China, it has aligned with relevant elements of existing international reporting recommendations from the OECD, Taskforce on Climate-related Financial Disclosures (TCFD), and the Climate Action 100+

The Just Transition in China report also sets out the economic and social costs of the transition and outlined why a just transition approach should be followed.

Peiyuan Guo, the Chairman of STGF, said: "The research paper analyses how China's economic, social, and environmental interests are balanced in the process of the low-carbon transition, providing valuable insights and suggestions to the policymakers and the stakeholders, and recommending the first disclosure framework regarding the just transition in the world."

STGF hopes the paper will make policymakers and market participants "pay more attention to the theme of just transition and take action".

Daniel Wiseman, head of APAC policy at the PRI, added: "Although the topic of transition finance and the just transition is still a nascent area for Chinese investors, we believe this research paper provides a good starting point".

He added the just transition will be "critical for China's responsible investment development as well as achieving China's carbon neutrality goal".