GCIC Masters Forum on ESG and Sustainable Development Successfully Concluded
On March 16, 2024, the "ESG and Sustainable Development" Masters Forum, hosted by the Global Climate Innovation Center (GCIC), successfully drew to a close. This forum had the privilege of inviting four experts in this field: Ms. Chen Yingjie, a senior project researcher at Greenovation Hub; Dr. Chen Yushi, an expert member of ISO/TC322 TAG01 Sustainable Fintech and a PhD from the Science Policy Research Unit (SPRU) at the University of Sussex, UK; Dr. Li Kai, the co-secretary-general of the Shenzhen Cross-border Equity Investment Professional Committee, the secretary-general of the "Shenzhen-Hong Kong-Macao Financial Technologist" talent program, and the president of the Financial Technology Division of the Shenzhen Financial Technology Association; and Professor Zheng Hongtao, a professor at the National Accounting Institute of China and a renowned expert in green investment.
The roundtable forum focused on key topics such as emerging trends and opportunities, climate change challenges, policy formulation, and social participation. It delved into discussions on how to support sustainable development through ESG integration and promotion, how to enhance climate resilience through ESG sustainable investment, and how all sectors of society can actively participate to drive social change.
Review of Forum content
Topic 1: Emerging Trends and Opportunities
Ms. Chen Yingjie observed the significance and challenges of ESG from the perspective of non-profit institutions. In her view, ESG represents not only a shift in corporate thinking to balance short-term returns with long-term value but also a crucial approach to addressing survival difficulties such as environmental challenges and resource depletion. However, the current market value of ESG has not been fully recognized, risks in environmental and social fields have not been systematically assessed, and the benefits of action have not been quantified. To create more business value and opportunities, it is necessary to identify ESG-related risks and incorporate them into all aspects of production and operation. Additionally, policy incentives and economic tools should be leveraged to encourage more stakeholders to participate in sustainable development initiatives.
Dr. Chen Yushi explored the pivotal role of ESG integration in investment strategy, emphasizing its crucial function in investment analysis and decision-making. He presented four innovative dimensions of ESG's emerging trends: concept, technology, capabilities, and products. The United Nations plays a pivotal role in promoting the ESG concept, emphasizing the prerequisite of good governance. The continuous growth of global ESG assets underscores its investment importance. ESG analysis places new demands on enterprises and financial institutions, demonstrating contributions through ESG themes. Climate fintech is key to improving the financial system, aiding in the planet's decarbonization efforts, and focusing on the transformation of high-carbon industries and the value of natural assets.
Dr. Li Kai emphasized that ESG investment needs to revert to first principles, with capital parties and assets needing to cooperate to form a positive cycle and incentive. The GCIC platform brings together experts and the public to forge a consensus crucial to system evolution. Simultaneously, cases adopting ESG strategies should be summarized to assess their effectiveness. Transformation requires external support, including policy and scientific research. Financial institutions should use research findings to refine investment models, while entity enterprises must effectively utilize ESG funds to improve operations. Strengthening basic fintech data, consistency between words and actions, and compatible incentives are crucial. The application of new technologies poses risks, necessitating vigilance to avoid negative impacts and ensure the steady advancement of sustainable development practices.
Professor Zheng Hongtao believes that ESG presents a major opportunity for China's economic transformation, albeit accompanied by challenges. Embracing the ESG philosophy and understanding social phenomena is vital. Companies that seize ESG opportunities have achieved notable results in areas like new materials, while those that do not face risks. Taking the green methanol project as an example, he stressed that ESG investment involves the integration of the industrial chain and holds vast potential. Attention should be paid to national policies at the macro level, industrial investment coordination at the middle level, and technical methods and practices at the micro level. ESG is particularly significant in the field of ecological and environmental protection, and he looks forward to in-depth discussions on social and corporate governance in the future. Guiding the public to understand ESG applications, such as green napkins, represents a commendable trend but still has shortcomings.
Topic 2：Climate Change Challenges & How the Stakeholders Are Involved
Ms. Chen emphasized that the ramifications of climate change risks on the financial industry are conveyed through the real economy, predominantly encompassing physical and transition risks, with a particular emphasis on physical risks concerning resilience and adaptability. Presently, the influence of climate change on the real economy is underestimated, and numerous affected sectors and their associated risks have not been thoroughly taken into account. Furthermore, climate change modulates precipitation patterns, which subsequently impacts the performance of renewable energy sources, such as hydropower, and the expenditure related to power equipment. When conducting climate risk assessments, it is imperative to enhance the evaluation and consideration of latent losses. The primary hurdles in managing these risks include a scarcity of risk perception and awareness, insufficient methodologies for measuring and quantifying risk, and uncertainty surrounding measures aimed at enhancing adaptation and resilience. Additionally, future endeavors should strive to integrate meteorological data with production and business activities, fostering the development of predictive models. Within the ESG framework, it is necessary to establish a more holistic assessment framework that encompasses both environmental and social impacts. The involvement of society and stakeholders in adaptation and resilience initiatives must account for regional disparities and emphasize the participation of social organizations, communities, and individuals, thereby rendering the decision-making process more inclusive. Moreover, individuals should cultivate a sense of response and risk awareness, acquire fundamental climate knowledge and risk mitigation consciousness, mitigate vulnerability, and enhance their adaptability.
Dr. Chen observed that the challenges posed by climate change encompass both transition risks and physical risks. Physical risks primarily encompass climate disasters and extreme weather events, which exert an impact on real assets, infrastructure, and business performance, while simultaneously elevating health risks and influencing major engineering projects and the resilience of natural systems. Transition risks, on the other hand, arise from shifts in industry patterns and business models driven by policy and technological changes, ultimately affecting enterprises' revenue and capital costs. In conducting climate risk analyses, it is crucial to comprehensively consider the implications for enterprises, financial institutions, and macro-financial stability. However, the existing models and data provide inadequate support, potentially leading to an underestimation of these risks. When addressing these challenges, ESG substantive analysis holds particular significance, with a focus on issues most pertinent to climate change adaptation, bolstering infrastructure resilience, and integrating grey and green infrastructure. ESG ratings must prioritize genuine issues and risk disclosures to generate financial returns. Stakeholder participation is indispensable, and non-profit organizations play a pivotal role in fostering community building and advancing the management of financial institutions. Enhancing financial institutions' awareness of green and transformation initiatives is crucial for achieving climate goals.
Dr. Li emphasized the significance of innovative private equity companies in addressing climate change, albeit acknowledging that pertinent data remains scarce. It is imperative for us to identify the vulnerable components within the entire system and concentrate on establishing and refining medium-to-long-term mechanisms, thereby achieving more substantial marginal improvements. Furthermore, the government's role in enacting legislation and setting standards is pivotal; however, it must prioritize policy sustainability and enhance the short, medium, and long-term balance, as well as resource allocation, related to sustainable development challenges. During the legislative decision-making process, the opinions of stakeholders must be recognized, and forceful advocates are necessary to maintain consistent advocacy. Dr. Li also discussed the social impact aspect, which is the 'S' in ESG. The family struggles associated with autism underscore the intricacy and immediacy of societal issues that necessitate comprehensive solutions spanning financial institutions. In comparison to the environmental ('E') component, social ('S') and governance ('G') encompass a broader range of issues, necessitating more discerning resource allocation. Strategic ESG is intricately tied to the competitiveness of nations and enterprises, demanding the construction of a resilient ecosystem. ESG education should permeate throughout one's entire lifespan, beginning in childhood. Moreover, the energy expenditure involved in current data computation is substantial, and sustainability must be addressed across various domains to prevent the introduction of novel problems. In the realm of AI and data applications, we must also heed the voices and concerns of stakeholders.
Professor Zheng delved into the concept of risk control within the ESG framework and strategies for addressing challenges vertically. The concept of risk control encompasses macro, meso, and micro levels, with particular emphasis on the environmental sector, which, despite being a blue ocean, faces intense competition. In the pursuit of transformation and high-quality development, it is crucial to scientifically assess the process and potential outcomes. The challenge lies in achieving unity in global ESG concepts and policies, and China must respond through market, economic, and financial measures. Risk control is a process that involves selection and benefit exchange, necessitating structural guidance beyond mere policy reliance. The capacity to endure and adapt to chosen methodologies is pivotal, especially in domains such as rural revitalization. In the face of uncertainty, it is imperative to align financial investments, industrial investments, and technological research and development to seize opportunities and address challenges. Professor Zheng offered three suggestions: the enforcement of mandatory legal norms, the provision of policy guidance, and the leveraging of economic and financial incentives to address issues. He concluded by expressing gratitude to GCIC and other events for providing resources and support, emphasizing that forward-looking research and foundational technology development are indispensable for practical work. He harbored hopes for more thematic exchanges and expert support in the future, aiming to propel the ESG field towards deeper development.
Q&A
Question: As a youth, I aspire to dedicate myself to this field and cultivate my career within its confines. I eagerly seek encouragement and guidance from esteemed teachers, doctors, and professors.
Ms. Chen Yingjie holds the belief that the employment prospects in the sustainable sector are vast and encourages young individuals to actively engage and consider a diverse range of institutional types. Dr. Chen Yushi underscores the significance of organizing one's knowledge system during career development and proposes approaching the sustainable wave from multiple dimensions. Dr. Li Kai notes that the career system evolves with the times and advocates for lifelong learning and prompt action to contribute meaningfully to one's professional journey. Professor Zheng Hongtao shares his experience in nurturing versatile talents within vocational education, emphasizing the importance of ESG and accounting as fundamental knowledge, and highlights that continuous learning is essential for individuals in any position.
This forum focuses on climate economy, sustainable economy, ESG investment and integration, discussing hot issues, opportunities and challenges within the field. The four experts explained the emerging trends and opportunities, the challenges of climate change, and stakeholder participation. We would like to thank all the guests for their active participation and wonderful sharing, and we firmly believe thatthrough our joint efforts and active actions, we will surely make more contributions to the sustainable cause and promote the sustainable development of the society. We look forward to gathering more wisdom and strength in the future to jointly promote the prosperity and progress in the sustainable field.