Major Chinese asset managers have no plans to divest from fossil fuels, says Greenpeace, ET EnergyWorld

BEIJING: Major Chinese asset managers have invested billions of dollars in fossil fuels and have no plans to phase them out, according to a new Greenpeace report.

The environmental group’s analysis of 16 major Chinese asset managers released on Thursday found they had invested a total of 267.2 billion yuan ($36.79 billion) in carbon-intensive sectors and 74 billion yuan in fossil fuel areas.

Five of them – E Fund, Fullgoal, GF, Southern and China Universal – accounted for more than half of investments in high-carbon technologies.

The E Fund itself, China’s largest asset manager, has invested 40.6 billion yuan in carbon-intensive sectors and 18.9 billion in fossil fuels.

The companies could not be reached by phone Friday and did not respond to faxed requests for comment.

In its responsible investing statement on its website, the E Fund said it was “one of the first asset managers in China to start implementing responsible investing.”

All fund managers said in their corporate reports that they consider climate risk in their investment decisions, in line with the recommendations of the G20 Task Force on Climate-related Financial Disclosures.

Carbon-intensive sectors included ferrous and non-ferrous metals, chemicals, and carbon-intensive heat and power production, as well as fossil fuel investments.

By comparison, European banks such as Barclays, HSBC and BNP Paribas have pledged to reduce financing of fossil fuels.

“Comparisons with international standards will also become more necessary as international investors become more important to Chinese asset managers,” said Yuan Yuan, Greenpeace climate and energy activist in East Asia.

Greenpeace also raised the alarm over “eco-darkwashing” in the investment products of asset managers.

The report found that 16 of the 40 ESG-branded investment products offered by companies invested in industries related to fossil fuels.

Harvest Fund Management’s so-called carbon neutral portfolio had an investment ratio of 80% in industries considered high in carbon emissions, with approximately 60% of investments directed towards companies primarily involved in thermal energy generation.

However, the report indicated that all asset managers had made “significant progress” in managing climate risk.

After Shenzhen published its green finance regulations in 2020, six asset managers in the southern city published environmental protection information for the first time in 2023.

A further seven managers also disclosed their 2023 carbon emissions for the first time.

Further improvements to disclosures may be coming soon.

On May 1, sustainability reporting guidelines came into effect on China’s major stock exchanges, requiring companies to disclose information, including climate and risk management goals.

The poor ratings of Chinese asset managers on ESG investments were the result of China’s desire to brand itself as a global leader in energy transition, especially in industry.

More than 80% of the world’s solar supply chains are based in China, which is also home to the world’s largest renewable energy generation capacity.

However, energy consumption is still dominated by fossil fuels – last year almost 60% of China’s electricity came from coal.