The wealth management subsidiaries of Chinese banks have driven a surge in their issuance of environmental, social and governance (ESG) wealth management products (WSP) since the start of 2021, following the launch of ambitious carbon mitigation targets by Beijing last year.
As of 8 December the wealth management subsidiaries of Chinese banks had issued 66 WMP’s bearing the term “ESG” in their titles since the start of 2021. This included 21 ESG WMP’s in the first week of December alone.
The 2021 ESG WMP issuance volume marks a more than four-fold surge compared to 2020, which saw the release of just 14 ESG WMP’s. In 2019 – the year that ESG-themed WMP’s made their debut in China, only two of the products were issued by wealth management subsidiaries.
54 of the ESG WMP’s released in 2021 are fixed income products, while 27 are mixed WMP’s and one an equity WMP.
“With the concept of ESG receiving more and more attention, and the government tightening compliance regulation of various industries, in future an increasing number of enterprises will include the concept of ESG in their operations,” said Chen Xuehua (陈雪花), a researcher with PY Standard.
“The cost disadvantages of this sector will gradually disappear, and market funds will further tilt towards ESG firms. In future the returns of ESG-themed products could exceed those of normal products over the long-term, and their risk-resistance capability will also increase.”