Mr. Cao Deyun, Executive Vice President and Secretary-General of the China Insurance Asset Management Association, delivered a keynote speech at the 9th China SIF Annual Conference on 7 December 2021, theming on "Harmonization and Uniqueness of ESG Investing". He has introduced the current status of ESG development in insurance asset management, stating that ESG is an inevitable requirement for high-quality economic development. Mr. Cao pointed out that ESG investment matches insurance institutions' long-term prudent investment style. At present, insurance institutions have different degrees of practice in incorporating ESG at the levels of strategy, policies & procedures, investment process and product innovation. However, there is still room for improvement in the ESG risk management system, governance and organizational structure, information disclosure and data technology.
SynTao Green Finance and Sina Finance hosted the 9th China SIF Annual Conference; the co-hosts include UNEP FI (United Nations Environment Programme Finance Initiative and UN SSEi (United Nations Sustainable Stock Exchange Initiative). Policymakers, standard setters, asset owners, asset managers, financial intermediaries, and corporate and academic representatives from home and abroad exchanged their views. They shared their in*sights on the latest ESG development topics.
The following is the full keynote speech by Mr. Cao Deyun:
Cao Deyun’s Keynote Speech at the 2021 China SIF Annual Conference
Accelerating ESG Investments in Insurance Asset Management
It is my pleasure to participate in the 9th China SIF Annual Conference. The Insurance Asset Management Association of China (IAMAC) has participated in the China SIF Annual Conference for five consecutive years since 2016, witnessing the increasing influence of China SIF and its essential role in advancing the development of responsible investment in China. On behalf of the IAMAC, I would like to extend my warm congratulations to the China SIF Annual Conference! I would also like to take this opportunity to introduce to you the latest progress and trend outlook of ESG investment in China's insurance industry.
Although the ESG concept is gaining more and more attention from institutional investors, including insurance institutions, the systematic promotion of the " dual carbon" goals has created favourable conditions for insurance institutions to implement the ESG investment concept. However, China's insurance institutions still face challenges like incomplete policy mechanisms, low market activity, and lagging institutional capacity building when making ESG investments. On the one hand, a unified ESG evaluation index system adapted to China's market has yet to be established. The corresponding ESG investment guidelines and ESG investment regulatory mechanism have yet to be improved. On the other hand, a unified and clear ESG information disclosure framework and guidelines have not been established either. ESG data in the market is significantly differentiated and not sufficiently transparent, and incentive policies for insurers to participate in ESG investment are not yet in place. At the market building level, China's overall ESG investment market is still relatively small, with a limited range of ESG-related financial products, low market activity and defective financial products to suit the risk-return characteristics of insurers. At the level of industry institutions, from the relevant research conducted by IAMAC, there is still much room for improvement in terms of incorporating ESG factors into the strategic planning, institutional management, investment process, risk management and information disclosure of insurance institutions in China. Insurance institutions need to continue improving their ESG investment management and practice capabilities to carry out ESG investments..
To this end, both the policy side and the market side should carry out the promotion of ESG investment by insurance funds: At the policy end, first, it is necessary to gradually establish and improve the ESG-related policy system, including enhancing the ESG information disclosure system, strengthening ESG investment policy support and setting ESG investment evaluation standards; Second, it is necessary to build a supporting incentive mechanism for ESG investment, including the introduction of incentives to reduce the capital charge by insurers and increase tax concessions for them; Third, ESG-related investment guidelines should be issued, and a government-led ESG information exchange and sharing platform should be established. On the market side, first, it is necessary to strengthen ESG investment infrastructure capacity building; Second, it is essential to build a sound ESG investment practice mechanism; Third, it is needed to increase ESG investment product innovation; Fourth, it is necessary to actively carry out ESG investment international exchange cooperation and encourage other market institutions to improve the ESG investment ecosystem of insurance funds jointly.
At the same time, the Insurance Asset Management Association of China will continue to serve as an industry platform to promote sustainable green investments (ESG investments) by combining the two and playing an active role in addressing climate change and achieving the "dual carbon" goals.
First is the combination of concept promotion and policy guidance. In May this year, under the direction of the China Banking and Insurance Regulatory Commission (CBIRC), the IAMAC joined hands with various institutions in the insurance asset management industry to issue the IAMAC Initiative to Promote the Achievement of "Carbon Peaks" and "Carbon Neutrality" to promote the industry to raise its position further and gain a deep understanding of the "Dual Carbon Strategy" and the significance of green investment. In addition, the IAMAC is working with the regulatory authorities to draw up the Guidelines on ESG Investment by Insurance Funds, which aims to implement the new development concept thoroughly, accelerate the construction of a new development pattern, help achieve the goal of carbon neutrality by reaching the carbon peak, help the enterprises achieve high-quality development, and promote insurance funds to actively serve various economic activities with both environmental and social benefits.
Second is the integration of capacity building and international cooperation. The IAMAC is working with international organisations, professional bodies and higher education institutions to explore the establishment of a curriculum system that is suitable for the development of the industry and aimed at enhancing ESG investment capabilities so as to strengthen the professional capacity of insurance institutions to respond to climate change and adapt to the low-carbon transition. The IAMAC is also deepening its cooperation with domestic and international investment institutions and relevant international organisations to jointly promote the development of sustainable investment concepts, including ESG investment and stewardship management, promote best practice cases in related fields, and contribute to the financial industry's contribution to the achievement of China's "Carbon Peaking, Carbon Neutrality" goals.
Last but not least, I wish China SIF the very best and for China SIF Annual Conference to have great success!
Thank you all!
Executive Vice President and Secretary-General of the China Insurance Asset Management Association
Dec. 7th 2021
The 9th China SIF Annual Conference
Dec. 7th 2021 Beijing 08:45-17:30
Theme: Harmonization and Uniqueness of ESG Investing
Hosts: SynTao Green Finance, Sina Finance
Co-Hosts: United Nations Environment Programme Finance Initiative (UNEP FI), United Nations Sustainable Stock Exchange Initiative (UN SSEi)
Strategic Partners: Moody's, Harvest Fund
Partners: AXA SPDB Investment Managers, RepRisk
Supporters: CDP, IFC, ICMA, Huatai Securities, CBI, TUSDG, SynTao, Shenzhen Finance Institute, CUEB China ESG Institute, CCM CSR Promotion Center, iFinD, Conference Centre Connecting, AIGCC, UK PACT
(in PINYIN order)