Chinese firms are laggards in climate disclosures, but not for long: asset manager

Trista Chen, the Singapore-based head of investment stewardship for Asia excluding Japan at LGIM, which had US$1.16 billion of assets under management last year, attributed China’s ranking to the absence of regulatory requirements on disclosures aligned to international standards in mainland China’s stock exchanges.

“With growing global convergence on standards through the implementation of the International Sustainability Standards Board’s recommendations, we should see an improvement in the quantity and quality of disclosures from China and the US in the next two years,” she said in an interview.

In the US, large listed companies will have to make climate-related disclosures for financial years starting as early as next year and publish greenhouse-gas emissions from their own facilities and purchased energy the following year. Obligations for smaller companies will be phased in later.

In its eighth climate impact pledge report published on Thursday, LGIM assessed more than 5,000 companies worldwide across 20 “climate critical” sectors, using data from public sources and third-party data providers to come up with scores. The companies together cover 86 per cent of the emissions attributable to LGIM’s corporate debt and equity holdings.

In this year’s voting season, which just finished, LGIM wrote to the chair of the board of more than 2,800 companies on climate issues, up from 1,500 last year. Among those, 492 were identified as having failed to meet expectations and warranting vote sanctions against the chair of the board, up from 342 last year.

Like last year, LGIM has targeted just over 100 large companies across the world that have strong potential to galvanise climate action in their sectors. The asset manager attempts to meet these companies to discuss transition expectations.

It successfully met responsible officials for 81 per cent of the companies, up from 76 per cent last year, an improvement Chen said was largely due to Asian companies.

In China, constructive meetings were held with Cosco Shipping. It has updated its commitment to align with the International Maritime Organisation’s upgraded ambition of net zero emissions by 2050, but failed to upgrade its medium-term operational targets, which have not been updated since 2021, Chen said.

CCB and ICBC have no policies on financing coal mining and usage, and failed to disclose emissions associated with their financing activities, while China Resources Building Materials and Air China have no emissions reduction targets in place, according to LGIM. None of the five companies responded to requests for comment from the Post.

“While the financial market has put pressure on companies, through divestment, engagement and a general increase in climate awareness, there are still gaps in alignment with the ambition of the Paris Agreement,” he said.

“While I am confident that ESG investing will continue to grow in Asia, we should be aware that backlash, primarily seen in the US, could spread to other regions.”