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Part I Institutional Investors Engaging in Corporates’ Low-carbon Transition:

Value Exploration and Global Trends 1

加速气候行动：机构投资者参与支持企业低碳转型

中英绿色金融中心报告

2023年3月

A Report for the UK-China Green Finance Centre

March 2023

CATALYSING CLIMATE ACTIONS:

INSTITUTIONAL INVESTORS ENGAGING

IN CORPORATES’ LOW-CARBON TRANSITION

CONTENTS

1.1

1.2

1.3

1.1.1

1.1.2

Foreword

前言

Executive Summary

摘要

Institutional Investors Engaging in Corporates’ Low-carbon Transition:

Value Exploration and Global Trends

机构投资者参与企业低碳转型的价值探索及中外发展趋势

Institutional Investors Engaging in Corporates’ Low-carbon

Transition: Connotation and Signicance

机构投资者参与企业低碳转型的内涵与意义

Global Trends and Best Practices

全球发展趋势与优秀实践

China’s Policy Framework and Market Status

中国的政策框架与市场情况

Role and Duty of Institutional Investors

机构投资者的角色与责任

Corporates’ Low-carbon Transition in Need of Supervision

and Support

企业低碳转型需要督促与支持

2Developing New Ecosystem for Institutional Investors Engaging to Catalyse

Climate Actions of China’s Real Economy

构建机构投资者加速中国实体经济应对气候变化行动生态新格局

2.1 Developing the Strength to Engage in Low-carbon Transition:

Institutional Investors Engaging to Promote Low-carbon Transition of

Corporates in China

培育提升“尽责管理基础实力”：

铸造尽责管理基础，挖掘低碳参与潜力

2.2 Enhancing the Fundamental Strength of Stewardship: Laying the Foundation

for Stewardship and Tapping Low-carbon Engagement Potential

培养塑造“低碳转型参与实力”：

机构投资者参与支持中国企业低碳转型

Catalysing Climate Actions:

Institutional Investors Engaging in Corporates’ Low-carbon Transition

01 02

随着全球气候危机日益紧迫，推动实体经济尽快实现低碳发

展与净零转型已经成为了全球趋势。在共同实现全球气候目

标的远景下，全球的金融机构与金融领域的从业者应该在支

持实体经济低碳转型与可持续发展过程中发挥自身关键影

响力。机构投资者也可以充分发挥自身积极作用，比如利用

好尽责管理这一有力策略，主动与投资组合内的被投企业展

开对话，参与督促并支持高碳企业低碳转型，从而加速实体

经济气候行动。

为探索资产所有者与资产管理者利用自身影响力，督促并支

持被投企业低碳转型的关键作用，尤其是在加速中国实体经

济低碳发展、应对气候变化行动中做出的贡献，2022 年中

英 ESG 领袖论坛聚焦机构投资者参与支持企业低碳转型这

一专题展开深入研究与互动讨论。项目研究课题组通过与多

位中外专家的深度访谈，总结了机构投资者参与被投企业低

碳转型的理念、内涵与践行价值，梳理了机构投资者在这一

领域的优秀实践经验，供读者学习借鉴。此外，项目研究课

题组也通过分析中国在该领域的政策框架、市场情况以及机

构投资者所面临的挑战和机遇，尝试提出相关建议与实施路

径，协助他们更加高效地与相关企业展开以引导和支持企业

实现低碳转型为核心的对话，共同创造更多的可持续效益与

长期价值。

展望未来，机构投资者作为可持续投资的实践者与资本市场

的中坚力量，其长期坚守的可持续投资信念与主动发起的参

与行动必将撬动金融服务业发挥更大势能，支持实体经济加

速低碳转型与气候行动。

道阻且长，行则将至。我们将持续为机构投资者领袖提供交

流与创新的平台，携手推进全球经济的可持续和永续发展。

As the global climate crisis aggravates, the low-carbon

and net-zero transition has prevailed in the world’s real

economy. In the common cause toward global climate

goals, financial institutions and professionals around

the world should play a key role in supporting the

real economy’s low-carbon transition and sustainable

development. Institutional investors can also play

a part. They can catalyse climate action in the real

economy by leveraging the stewardship strategy,

conversing with portfolio investees, and overseeing and

supporting high-emitters’ low-carbon transition.

In 2022, the ESG Leaders Forum intensively researched

and discussed around institutional investors’

engagement in corporates’ low-carbon transition. The

research and discussion aimed to explore asset owners’

and asset managers’ vital role in supervising and

supporting investees’ low-carbon transition, especially

in promoting low-carbon development for China’s real

economy and catalysing the country’s climate action.

The project team conducted in-depth interviews

with a number of Chinese and international experts.

From their opinions, the team extracted the concept,

definition, and real values of institutional investors

engaging in investees’ low-carbon transition, as well

as institutional investors’ best practices. In addition,

the team examined China’s policy framework, market,

and the challenges and opportunities that institutional

investors face in this area. Based on the analysis results,

it provided suggestions and implementation paths to

facilitate dialogue between institutional investors and

their investees and support their efforts in achieving

low-carbon transition and creating benefits and value

for the long term.

Institutional investors are important practitioners of

sustainable investment and the backbone of the capital

market. With a long-term commitment to sustainable

investment with proactive engagements, they will

unleash more potential from the financial services

sector and catalyse the real economy’s low-carbon

transition and climate action in the future.

As long and difficult as the journey may be, consistent

action will get us there. We will continue to provide

institutional investors with the platform for exchanges

and financial innovation. Hand in hand, we will help the

global economy grow sustainably.

Dr. MA Jun ( 马骏博士 )

Co-Chair, The UK-China Green Finance Taskforce

中英绿色金融工作组联席主席

Alderman Sir William Russell ( 罗威爵士 )

Co-Chair, The UK-China Green Finance Taskforce

中英绿色金融工作组联席主席

前言

FOREWORD

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PartIInstitutionalInvestorsEngaginginCorporates’Low-carbonTransition:1ValueExplorationandGlobalTrendsCATALYSINGCLIMATEACTIONS:INSTITUTIONALINVESTORSENGAGINGINCORPORATES’LOW-CARBONTRANSITION加速气候行动：机构投资者参与支持企业低碳转型AReportfortheUK-ChinaGreenFinanceCentre中英绿色金融中心报告March20232023年3月目录CONTENTSForeword01前言1.2GlobalTrendsandBestPractices13全球发展趋势与优秀实践ExecutiveSummary03摘要1.3China’sPolicyFrameworkandMarketStatus31中国的政策框架与市场情况1InstitutionalInvestorsEngaginginCorporates’Low-carbonTransition:052DevelopingNewEcosystemforInstitutionalInvestorsEngagingtoCatalyse39ValueExplorationandGlobalTrendsClimateActionsofChina’sRealEconomy机构投资者参与企业低碳转型的价值探索及中外发展趋势构建机构投资者加速中国实体经济应对气候变化行动生态新格局1.1InstitutionalInvestorsEngaginginCorporates’Low-carbon07Transition:ConnotationandSignificance2.1DevelopingtheStrengthtoEngageinLow-carbonTransition:42InstitutionalInvestorsEngagingtoPromoteLow-carbonTransitionof机构投资者参与企业低碳转型的内涵与意义CorporatesinChina培育提升“尽责管理基础实力”：1.1.1RoleandDutyofInstitutionalInvestors07铸造尽责管理基础，挖掘低碳参与潜力机构投资者的角色与责任1.1.2Corporates’Low-carbonTransitioninNeedofSupervision10andSupport2.2EnhancingtheFundamentalStrengthofStewardship:LayingtheFoundation53forStewardshipandTappingLow-carbonEngagementPotential企业低碳转型需要督促与支持培养塑造“低碳转型参与实力”：机构投资者参与支持中国企业低碳转型01CatalysingClimateActions:FOREW前言ORDInstitutionalInvestorsEngaginginCorporates’Low-carbonTransition02Dr.MAJun(马骏博士)随着全球气候危机日益紧迫，推动实体经济尽快实现低碳发Astheglobalclimatecrisisaggravates,thelow-carbonlow-carbontransitionandcreatingbenefitsandvalueCo-Chair,TheUK-ChinaGreenFinanceTaskforce展与净零转型已经成为了全球趋势。在共同实现全球气候目andnet-zerotransitionhasprevailedintheworld’srealforthelongterm.中英绿色金融工作组联席主席标的远景下，全球的金融机构与金融领域的从业者应该在支economy.Inthecommoncausetowardglobalclimate持实体经济低碳转型与可持续发展过程中发挥自身关键影goals,financialinstitutionsandprofessionalsaroundInstitutionalinvestorsareimportantpractitionersofAldermanSirWilliamRussell(罗威爵士)响力。机构投资者也可以充分发挥自身积极作用，比如利用theworldshouldplayakeyroleinsupportingthesustainableinvestmentandthebackboneofthecapitalCo-Chair,TheUK-ChinaGreenFinanceTaskforce好尽责管理这一有力策略，主动与投资组合内的被投企业展realeconomy’slow-carbontransitionandsustainablemarket.Withalong-termcommitmenttosustainable中英绿色金融工作组联席主席开对话，参与督促并支持高碳企业低碳转型，从而加速实体development.Institutionalinvestorscanalsoplayinvestmentwithproactiveengagements,theywill经济气候行动。apart.Theycancatalyseclimateactionintherealunleashmorepotentialfromthefinancialserviceseconomybyleveragingthestewardshipstrategy,sectorandcatalysetherealeconomy’slow-carbon为探索资产所有者与资产管理者利用自身影响力，督促并支conversingwithportfolioinvestees,andoverseeingandtransitionandclimateactioninthefuture.持被投企业低碳转型的关键作用，尤其是在加速中国实体经supportinghigh-emitters’low-carbontransition.济低碳发展、应对气候变化行动中做出的贡献，2022年中Aslonganddifficultasthejourneymaybe,consistent英ESG领袖论坛聚焦机构投资者参与支持企业低碳转型这In2022,theESGLeadersForumintensivelyresearchedactionwillgetusthere.Wewillcontinuetoprovide一专题展开深入研究与互动讨论。项目研究课题组通过与多anddiscussedaroundinstitutionalinvestors’institutionalinvestorswiththeplatformforexchanges位中外专家的深度访谈，总结了机构投资者参与被投企业低engagementincorporates’low-carbontransition.Theandfinancialinnovation.Handinhand,wewillhelpthe碳转型的理念、内涵与践行价值，梳理了机构投资者在这一researchanddiscussionaimedtoexploreassetowners’globaleconomygrowsustainably.领域的优秀实践经验，供读者学习借鉴。此外，项目研究课andassetmanagers’vitalroleinsupervisingand题组也通过分析中国在该领域的政策框架、市场情况以及机supportinginvestees’low-carbontransition,especially构投资者所面临的挑战和机遇，尝试提出相关建议与实施路inpromotinglow-carbondevelopmentforChina’sreal径，协助他们更加高效地与相关企业展开以引导和支持企业economyandcatalysingthecountry’sclimateaction.实现低碳转型为核心的对话，共同创造更多的可持续效益与Theprojectteamconductedin-depthinterviews长期价值。withanumberofChineseandinternationalexperts.Fromtheiropinions,theteamextractedtheconcept,展望未来，机构投资者作为可持续投资的实践者与资本市场definition,andrealvaluesofinstitutionalinvestors的中坚力量，其长期坚守的可持续投资信念与主动发起的参engagingininvestees’low-carbontransition,aswell与行动必将撬动金融服务业发挥更大势能，支持实体经济加asinstitutionalinvestors’bestpractices.Inaddition,速低碳转型与气候行动。theteamexaminedChina’spolicyframework,market,andthechallengesandopportunitiesthatinstitutional道阻且长，行则将至。我们将持续为机构投资者领袖提供交investorsfaceinthisarea.Basedontheanalysisresults,流与创新的平台，携手推进全球经济的可持续和永续发展。itprovidedsuggestionsandimplementationpathstofacilitatedialoguebetweeninstitutionalinvestorsandtheirinvesteesandsupporttheireffortsinachieving03CatalysingClimateActions:04InstitutionalInvestorsEngaginginCorporates’Low-carbonTransitionEXECUTIVESUMMARYToeffectivelymitigatethenumerousrisksposedbysustainableinvestmentandclimateaction,aswellasafundamentalstrengthofstewardship,thisreportstepistoallocateresourcestostewardship,createatheworld’sgrowingclimate-relatedchallenges,high-reviewofsuccessfulexamplesofengagementpracticerecommendsthatinstitutionalinvestorsevaluatetheirprofessionalstewardshipworkforce,anddevelopoverallemittingcompaniesintherealeconomyneedtoadoptworldwide.Additionally,thereportdiscussesChina’smaturityintermsofestablishingarobuststewardshipprofessionalstewardshipcapabilities.Thethirdstepmoreproactivemeasurestocutemissionontopofdevelopmentbaseandstatusinthisarea,aswellasthesystem,developingproactivestewardshipawareness,istointegrateESGinvestmentresearch,fundamentaltheirexistingeffortstoensuretheattainmentofglobalopportunitiesandchallengesthatinstitutionalinvestorsandstrengtheningtheirsustainabilityinfluence.investmentresearch,andstewardshipwhileconstantlyclimategoals.Astheproviderofcorporatecapitals,faceintheChinesemarket.TheemergingstewardshipTheyshouldassesstheirfundamentalstewardshipstrengtheningandimprovingexpertiseintheseareas.institutionalinvestorsareuniquelypositionedtoshapeandrelatedconceptsinChinahaveenormouscapabilitiestoengageinlow-carbontransitionandtransformcorporatebehaviours.Theypossesstheprospectsandpotentialtobetappedandexploredbyintensivelyandefficiently.Tothatend,thisreportmakesRecommendation3.Adoptastewardshipapproachstrengthandwilltodrivefurtheremissionsreductioninstitutionalinvestors.Institutionalinvestorswithanthefollowingfourrecommendationstoinstitutionalthatcombinesengagementandvoting.Incorporateeffortsofhigh-emittingcompaniesintheirportfolios,eyeontheChinesemarketshouldleveragetheirzealinvestors:intovotingguidelinesthecorporatepracticesintherebycatalysingtherealeconomy’sactionstoclimateandstewardshippotentialandintroducemoreeffectiverespondingtoclimatechange.Speedupcorporateschangeandcontributingtotheattainmentofglobalengagementstrategiesthere.ThefirstsectionofthisRecommendation1.Developastewardshiplow-carbontransition’byactivelyexercisingvotingclimategoals.Thisprocessisdefinedinthisreportreportprovidesathoroughanalysisandassessmentofgovernancestructureandclarifyrelatedinternalrights.Inadditiontoengaginginintensivedialogueasinstitutionalinvestorsengagingincorporates’low-thecontentabove.policiestoensureinternalinformationsharingandwithportfoliocompaniesoncoreissuessuchasclimatecarbontransition,whichrepresentstheapproachforenhanceexternalinformationdisclosure.Regardingchangeandlow-carbontransition,institutionalinvestorsinstitutionalinvestorstofulfiltheirfiduciarydutyandBasedonthis,thesecondpartofthisreportoffersthegovernancestructure,institutionalinvestorsshouldtaketheinitiativetoimprovetheirvotingpolicysafeguardthelong-termvalueofclients’assets.recommendationsandimplementationapproachestoshoulddevelopaneffectiveinternalstewardshipandguidelinestoincludetheconsiderationofportfoliohelpthoseChina-focusedinstitutionalinvestorsmakegovernancestructure,withwell-definedstewardshipcompanies’practicesinclimateactionsandlow-carbonWiththestrengtheningglobalresponsesandactionsbetteruseofinvestorengagementasapowerfultoolresponsibilitiesandfunctionsfromthetoptothetransition.Institutionalinvestorsshouldintegratetocombatclimatechangeinrecentyears,institutionaltopromotelow-carbondevelopmentandnet-zerobottomforconductingstewardshipactivities.RegardinginternalandexternalopinionsforkeymotionsoninvestorshavegrownmoreconcernedthaneverabouttransitionforcorporatesinChina,aswellastosupporttheinternalpolicies,stewardshippoliciesoninvestorcorporateresponsestoclimatechangeandlow-carbontheclimate-andenvironment-relatedrisksoftheirChina’sgoalsofcarbonpeakingandcarbonneutrality.engagementandvotingshouldbedevelopedtotransitionatgeneralmeetingsofshareholders.Theyportfoliocompanies.TheyplaceahighervalueonSpecifically,throughintensiveexternalengagementstandardiseinternalstewardshipgovernanceanditsshouldconductacomprehensivestudybeforefinalisingtheenvironmentalandsocialbenefitsandthelong-andinternalfoundationenhancement,institutionalrelevantdecision-makingprocesses,whileidentifyingavotingdecision,andactivelyparticipateinandvoteattermvaluecreatedbytheirinvestmentpreferencesinvestorsshouldplayanactiveroleincatalysingandmanagingpotentialconflictofinterests.Regardingthegeneralmeetingofshareholders.andbehaviours.Inthisregard,institutionalinvestorsChina’srealeconomy’slow-carbondevelopmentandinformationdisclosure,thepreconditionistoensurehavewidelyadoptedandpromotedstewardshipandactionstocombatclimatechange.Theyshouldfocusinternaldatasharing.TheprogressofstewardshipRecommendation4.Strengthenexternalexchangesinvestorengagementstrategiesthatfocusonurgingondevelopingandenhancingtwocorestrengths:thepracticesshouldbedisclosedtothepublicregularlyandandcollaborationandlaunchcollaborativeandsupportingportfoliocompaniestoaddressclimate-strengthtoengageinlow-carbontransitionandtheproactivelyaccordingtoapplicablepoliciesissuedbyengagementstoprogresscorporatetransitionandrelatedrisksandachievealow-carbontransition.Anfundamentalstrengthofstewardship.domesticregulators,relevantgovernmentdepartments,industrychangesconcertedly.First,Chineseandincreasingnumberofsuccessfulcasestudieshaveandassociations,withreferencetointernationalinternationalinstitutionalinvestorsshouldleverageemergedinboththeinternationalandChinesemarkets.Intermsofdevelopingandstrengtheningthestewardshipreportinganddisclosurestandards.theirrespectivestrengths,learnfromeachother,andTheextensiveexperienceandthemomentumofthesecapabilityofengaginginlow-carbontransition,engagein‘many-on-one’dialoguewithselectedkeypractitionersareworthexploringandlearningfrominthisreportsummarisestheprocessandkeytasksofRecommendation2.Enhancethecapabilityofcorporatestoacceleratetheirdecarbonisationefforts.depth.institutionalinvestorsinvolvedinengagingtopromoteESGinvestmentresearch,climate-relatedriskSecond,institutionalinvestorscanjoinandsupportlow-carbontransitionofcorporatesinChina.Itmanagement,andstewardship,andcreateainternationalandlocalinvestorinitiatives,platforms,orThisreportanalysestheglobaltrendofinstitutionalhighlightsthecriticalaspectsofinstitutionalinvestorstripartitesupportandsynergymechanismof‘ESGalliancesfocusingonclimatechangeandlow-carboninvestorsengagingincorporates’low-carbontransitionengaginginkeycorporates’low-carbontransitionsinvestmentresearch+fundamentalinvestmenttransition,andparticipateinmoreorganisedandandsummarisesbestpracticesthatmaygivereferenceinrelatedindustriesandservesasareferenceforresearch+low-carbontransitionstewardship’.Theextensivecollaborativeengagementsactivities.tootherinstitutionalinvestors.TheanalysisisbasedinstitutionalinvestorstoengagemoreintensivelyfirststepistocontinuallyimproveESGinvestmentoninterviewswithseveralleadingChineseandandefficientlyinpromotinglow-carbontransitioninresearchcapabilitieswhilealsoimprovingclimate-internationalinstitutionalinvestorrepresentativesinChina.Intermsofnurturingandenhancingtherelatedriskmanagementcapabilities.Thesecond05CatalysingClimateActions:PartIInstitutionalInvestorsEngaginginCorporates’Low-carbonTransition:06InstitutionalInvestorsEngaginginCorporates’Low-carbonTransitionValueExplorationandGlobalTrends01PartINSTITUTIONALINVESTORSENGAGINGINCORPORATES’LOW-CARBONTRANSITION:CONNOTATIONANDSIGNIFICANCE1.1InstitutionalInvestorsEngaginginCorporates’Low-carbonTransition:ConnotationandSignificance1.2GlobalTrendsandBestPractices1.3China’sPolicyFrameworkandMarketStatus07CatalysingClimateActions:PartIInstitutionalInvestorsEngaginginCorporates’Low-carbonTransition:08InstitutionalInvestorsEngaginginCorporates’Low-carbonTransitionValueExplorationandGlobalTrends1.1INSTITUTIONALINVESTORSENGAGINGrole,corporateengagementwilldriveimportantindrivingchangesatthecorporatelevel,theindustryINCORPORATES’LOW-CARBONincrementalchangesintheeconomyasawhole2.Tolevel,oramoremacrolevel.TRANSITION:CONNOTATIONANDSIGNIFICANCEconclude,corporateengagementplaysacriticalrole1.1.1RoleandDutyofInstitutionalInvestorsConceptsofStewardship,InvestorEngagement,andCorporateEngagementandtheRelationsBetweenThemInstitutionalinvestorsencompassassetownersandobligationstheyhavebeengiven,theyhavefocused(forexample,sovereignfunds,pensionfunds,andontheenvironmentalandsocialbenefitsandlong-Althoughtheworldhasnotreachedanagreementonthedefinitionsofstewardship,investorengagement,insurancefunds)andassetmanagers(forexample,termvaluecreatedbytheirinvestmentpreferencesandandcorporateengagement,basedonthecoreprinciples3commontotheexistingdefinitionsoftheseinsurancemanagementcorporates,publicfunds,andbehaviour,aswellastheclimate-andenvironment-concepts,theycanbedefinedasfollows:privateequityfunds).Theyareimportantplayersintherelatedrisksandsustainabilityperformanceoftheirglobaleconomy.Inrecentyears,institutionalinvestorsinvestees.STEWARDSHIPhavemademarkedprogress,withanincreasinglylargeassetbaseandanever-growingshareininternationalManyinstitutionalinvestorsareinvestingandItisalsoknownasactiveownership.Itreferstoinvestorsusingtheirinfluencetofulfiltheirfiduciarydutiesmarkets.Theglobalcapitalmarkethasitsstructuremobilisingmoresocialcapitalingreenandlow-carbon(especiallythedutiesofloyaltyandprudencetoprotectthelong-termvalueofthefiduciary’sassets).Theycontinuouslyimprovedanditsfunctionsfullyindustries.Theyareexpandingtheirinvestmentactivelymaximisetheoveralllong-termvalueofexistingorpotentialinvestees,deliveringsustainableperformed.Inthisprocess,institutionalinvestorshavefootprintinlinewithglobalnet-zerogoalstomeetbenefitstotheeconomy,theenvironment,andsociety.becomethedominantforceinthecapitalmarketandtheircommitmentstorespondingtoclimatechange.playedavitalroleindrivingthesustainedgrowthoftheHowever,someinstitutionalinvestorsmayshifttheirInvestorsapproachstewardshipprimarilybybroaderdialogue(investorengagement),exercisingvotingglobaleconomy.portfolioonlybycapitalreallocationoradoptingarights,filingshareholderresolutions,joiningtheboardofdirectorsorservingattheboardcommitteesofvoting-with-their-feet1approachwhileignoringthelow-investees,andetc.Amongthem,investorengagementandvotingarethemostwidelyused.Astheglobalclimatecrisisaggravateandposeseriouscarbontransitionpotentialandprocessofcorporatesthreatstotheearth’secologicalstabilityandhumanfrominhigh-emittingindustries.SuchashiftwillnotINVESTORENGAGEMENTsustainability,theextensiveeconomicgrowthmodeisdrivetransitionamongthesehigh-emittingcorporatesdifficulttosustain.WiththeParisAgreementsignedandmayevenleadtoabreakdowninfinancingforItreferstoproactivecommunicationandinteractionbetweeninvestorsandtheirstakeholdersonhowin2015,ithasbecomeacommongoalformankindtothem,causingbiggersocialproblems.Forinstitutionaltomaximisetheoveralllong-termvalueofexistingorpotentialinvestees.Thepracticeaimstodelivermitigateandrespondtoclimatechange,toholdglobalinvestorsambitioustopromotethenet-zerotransitionsustainablebenefitstotheeconomy,theenvironment,andsociety.Corporateengagementreferstoaveragetemperatureincreasetowellbelow2°Caboveoftherealeconomyandmitigateclimate-relatedrisks,dialogueandcommunicationbetweeninvestorsandexistingorpotentialinvesteesintendedtoenhancepre-industriallevels,andtopursueeffortstolimittheitwouldbemorehelpfultourgeandpromotethelow-investees’ESGsustainabilityandrelevantcapabilitiesandtheirdisclosureandreportingquality.temperatureincreaseto1.5°Cabovepre-industrialcarbontransitionofinvesteesandtheirstakeholders.levels.IthasraisedthebarforcorporatestointensifyCategorisedbytheobjective,inadditiontodialoguewithasingleinvestee(corporateengagement),investortheirresponsestomajorclimate-andenvironment-Corporateengagementisanimportantapproachforengagementincludes1)communicationandinteractionwithrelevantgovernmentdepartments,policyandrelatedrisks.Ithasalsoexplicitlysignalledthefinancialinstitutionalinvestorstoengageintransitionfinancestandardmakers,orregulatorsonhowtoimprovethemarketenvironmentorpromoteengagementinthesectortoincreasetheirsupportfortherealeconomy’sfromtheinvestmentsideandinfluencechangesinthetransitionofstate-ownedenterprises(SOEs)andrespondingtopolicyconsultations(policyengagement);2)low-carbontransitionandsustainabledevelopment.realeconomy.Itisatthecoreofinvestorengagementorganisingdiscussionswithseveralcorporatesonkeytopicsofcommoninterest(thematicengagement);andoneofthekeyapproachesofstewardship.3)participatinginrelevantresearchandpublicdiscussions;4)negotiatingandmonitoringserviceprovidersInstitutionalinvestors,asprovidersofcorporateComparedwithminorityshareholders,institutionalintheinvestmentchain(forexample,communicationandinteractionbetweenassetownersandassetcapital,areinauniquepositiontoshapeandchangeinvestorsarewell-informedandprofessionallymanagers),andetc.Engagementotherthancorporateengagement,suchaspolicyengagement,playsacorporatebehaviour.Theirinvestmentpreferencesandexperienced.Theycanusetheirnaturaladvantagessignificantcomplementaryroleinsupportinginvestors’corporateengagement.Forexample,investorsbehaviourarehighlyinfluentialindrivingthegreenandtosendstrongsignalsdirectlytocorporates,promotinganindustryassociationtointroduceindustryESGassessmentstandardswillfacilitateinvestorlow-carbondevelopmentoftherealeconomy.Onthedemandingandexpectingthemtotakeaction.engagementwithcorporatesintheindustryonESGissues.IntermsofSOEengagement,itoftenrequiresotherhand,institutionalinvestorshaveanobligationCorporateengagementstrengthensthebondbetweendialoguewithrelevantgovernmentdepartmentsbeforethetransitioncanbeeffectivelyfacilitated.Thetoprotectthelong-termvalueoftheirtrustees’assets,institutionalinvestorsandcorporatesandallowsrelationsbetweentheseconceptsarefurtherexplainedinSection1.2ofthisreportbasedontheexistingespeciallytofulfiltheirfiduciarydutiescentredonthemtounderstandeachother,growtogether,andpracticesofinstitutionalinvestors.environmental,socialandcorporategovernance(ESG)establishlong-termrelationships.Successfulcorporateissues.AgainsttheglobaltrendtorespondtoclimateengagementwillleadtoafundamentaltransitionofExercisingvotingrights,StewardshipInvestorengagementchange,theseimportantrolesofinstitutionalinvestorsthebusiness.WhenacorporateengagesinaddressingFilingofshareholderresolutions,etc.havebeenhighlighted.Asaresultoftheresponsibilitiesindustry-levelrisksandtakesanindustryleadershipPolicyengagementThematicengagementOtherengagementsCorporateengagementFigure1-1:IllustrationofStewardship-relatedConceptsSource:Aworkbytheprojectresearchteam1Thisreferstoinvestorssellingtheirsharesordivestdirectlyduetodissatisfactionwiththeperformanceoftheportfoliocompany.2Ceres,EnvironmentalDefenseFund,&KKSAdvisors.TheRoleofInvestorsinSupportingBetterCorporateESGPerformance:InfluenceStrategiesforSustainableandLong-TermValueCreation[R].2019.3Mainlybasedontherelevantpoliciesintroducedbycountries,regionsandorganisationsinrecentyears,aswellasrelevantresearchreportspublishedbyfinancialinstitutionsandresearchinstitutes.09CatalysingClimateActions:PartIInstitutionalInvestorsEngaginginCorporates’Low-carbonTransition:10InstitutionalInvestorsEngaginginCorporates’Low-carbonTransitionValueExplorationandGlobalTrendsInstitutionalinvestorstewardshipbyinvestorthatitisfinanciallybeneficialforinstitutionalinvestors1.1.2CorporatesLow-carbonTransition’inNeedofSupervisionengagement,exercisingvotingrights,andothertocommunicatewithcorporatesonclimatechangeandSupportmeanspromotessustainablechangesatthecorporateandotherenvironmentalissuesandurgingthemtolevel,theindustrylevel,oramoremacrolevel.Italsotransition.ItfurtherrevealstheoriginalmotivationCorporatesarekeyplayersintheglobalresponsetoTorespondtonationalandregionalpoliciesonbenefitsinstitutionalinvestorsinmanyways,themostandvalueofinstitutionalinvestorstourgeandengageclimatechangeandsustainability,bothasconsumersofclimatechangeandsustainabledevelopmentandtocentralofwhichistohelpthemincreasetheirlong-inthelow-carbontransitionofcorporatesandtheirnaturalresourcesandemittersofpollutants,andasthemaximisetheireconomicinterests,manycorporatesterminvestmentreturns.Manystudieshaveshownstakeholders.cornerstoneoftherealeconomy.Climatechangeposeshavelaunchedself-transitionandactionstoreducetransitionandphysicalrisks,bothofwhichcanleadtoemissions.However,onlywiththesecorporateactionsFinancialBenefitsofClimateChangerelatedCorporateEngagementcreditrisk,marketrisk,andliquidityrisk,amongothers,toreduceemissions,theglobalaveragetemperatureseriouslythreateningcorporatesandtheirinvestors9.willrisebyaround2.7°Cin2100,farshortofthe1AstudybyHoepneretal.4foundthatengagementonESGissuescansignificantlyreduceaForexample,thetransitionriskassociatedwithpolicy-1.5°CtargetsetoutintheParisAgreement12.Toholdcorporate’sdownsiderisk,therebybenefitingshareholders.Theriskreductionismostpronouncedinbasedclimateinterventionswilldirectlyleadtothetheglobalaveragetemperatureincreasebelow2°Ctheareaofenvironmentandclimatechange.shelvingofcorporatebrownfieldassets,resultinginorfurtherlimititto1.5°C,itneedsmorethanallthemassiveassetimpairmentsforsomecorporatesinhigh-announcednet-zerotargetsandotherlong-term2Sautneretal.5examinedwhethershareholderengagementaffectsthedownsideriskoftargetemittingindustries10.Withanegativewealtheffect,thisclimate-relatedgoals.Strongerexternalforcesandcorporatesinacasestudyofpensionfunds.Theresultsdemonstratedthatsuccessfulinvestorwouldbeadragonbusinessinvestment,whichwillturnsupportwillbenecessarytoboostthegreenandlow-engagementinESGissuesreducesdownsideriskfortargetcorporates,withengagementinintoaheavyblowtocorporatefinancialandoperationalcarbondevelopmentoftheglobaleconomy.environmentalissuespresentingthemostsignificanteffect.Inengagementinenvironmentalissues,performanceandasubstantialfinancialrisk.Today’sthemostsignificanteffectfallsinengagementinclimatechangeissues.worldseestheconceptofsustainableinvestmentonThecoreofcorporateengagement,centredontherise.High-emittingcorporatesthatfailinlow-carboncorporates’low-carbontransition,isacallforhigh-3Dimsonetal.6examinedchangesininvestorengagementtoaddressESGissuesinlistedcorporatestransitionintimewillfacedifficultiesincreditratingandemittingcorporatestotakemoreinitiativestoreduceintheUSoveradecade.Theyfoundthatwithsuccessfulinvestorengagement,corporateaccountingfinancingcostsandaccess.AccordingtoBloombergemissionstofurthersupporttheachievementofglobalperformanceandgovernanceseesignificantimprovements.Inparticular,institutionalownershipIntelligence’sforecasts11,ifESGinvestmentscontinuetoclimategoals.Forhigh-emittingcorporates,theoriginalincreasesonenvironmentalandsocialissues.Successfulinvestorengagementactionsresultina4.4%grow,globalESGassetsareexpectedtoexceedUS$53economicincentivetotakeactiontoreduceemissionsincreaseinaveragereturns,whileunsuccessfulengagementactionshadnoimpact.trillionby2025,accountingformorethanathirdoftotalliesinshort-termfinancialgains.Insuchcases,theglobalassetsundermanagement(AUM).Comparedtocorporateswilltaketheinitiativewithoutadditional4AstudybyBechtetal.7ontheHermesUKFocusFundrevealedthat,thefund,netoffees,peersleadinginsustainabledevelopment,corporatesurging.However,toachieveglobalclimategoalswilloutperformedtheFTSEAll-ShareIndexby4.9%perannumandsignificantlyoutperformedtheinactiveinreducingemissionsorunwillingtorespondrequirethecorporatestotakefurtheractiontoreducebenchmark.Theexcessreturnisprimarilyrelatedtoshareholderengagementratherthanstocktoinstitutionalinvestors’demandsforESGgovernancetheiremissions,whichmeanshighermarginalcostsselection.inthisregardwillfinditdifficulttoaccesscapital.Asinreducingemissionsandmakesthemhesitateinaresult,theywillbeseriouslyhinderedinlong-termafurtherlow-carbontransition.Itisnecessaryfor5AstudybyBarkoetal.8demonstratedthatinstitutionalinvestorengagementincorporateESGgrowth.institutionalinvestorstostepuptotheplateandissueseffectivelyimprovesacorporate’sESGrating.Additionally,ifthecorporateadaptstorisksassupportthesecorporatesintheirtransition13.Theypertheimprovementrequirementsraisedbystakeholders,itcangeneratehigherstockreturnsandshouldhelpthecorporatesimprovetheirenvironmentalachievebettercorporateperformance.performance,avoidclimate-relatedrisks,andexpandaccesstofinancing.Thatway,thecorporatescanimprovetheiroperationsandboostfinancialgrowth,therebycreatinglong-termvalue.Institutionalinvestorsengagingincorporates’low-theirfiduciarydutiesofloyalty,prudence,anddiligence.carbontransitionisrelatedtoinstitutionalinvestorsTheyshouldfocusonissuesconcerningclimatechangefulfillingoftheirfiduciarydutiestoholders,obtainingandlow-carbontransitionandactivelyengagewithlong-termreturns,andstrengtheningtheircapacitytheirinvestees.Theyshouldassisttheirinvesteesintodealwithclimate-relatedrisks.Itisalsocloselytheirstrategies,capitalallocation,andtechnologyrelatedtobuildingacapitalmarketthatisrobustanddeploymenttoenhancetheirabilitytomanageandsustainableinthelongterm.Inthecurrentglobaldriveaddressclimate-relatedrisksandjointlycatalyseclimateofclimategovernance,institutionalinvestorsshouldactionandsustainablechangesattheinvesteeandexerttheirinfluenceandplayanactiveroleinfulfillingsystemiclevels.4Hoepner,A.G.,Oikonomou,I.,Sautner,Z.,Starks,L.T.,&Zhou,X.ESGShareholderEngagementandDownsideRisk[A].EuropeanCorporateGovernanceInstitute(ECGI)-9Ma,J.&Sun,T.TheImpactofClimateChangeonFinancialStability[J].ModernFinanceGuide,2020.10Ma,J.RoadmapforFinancingChina’sCarbonNeutrality[R].2021.FinanceResearchPaperSeries,2018.11BloombergIntelligence.ESGAssetsMayHit$53trillionby2025,AThirdofGlobalAUM[EB/OL].5Sautner,Z.,&Starks,L.T.ESGandDownsideRisks:ImplicationsforPensionFunds[D].WhartonPensionResearchCouncilWorkingPaper,2021.6Dimson,E.,Karakaş,O.,&Li,X.ActiveOwnership[J].TheReviewofFinancialStudies,2015.https://www.bloomberg.com/professional/blog/esg-assets-may-hit-53-trillion-by-2025-a-third-of-global-aum/7Becht,M.,Franks,J.,Mayer,C.&Rossi,S.ReturnstoShareholderActivism:EvidencefromaClinicalStudyoftheHermesUKFocusFund[J].TheReviewofFinancialStudies,12ClimateActionTracker.Glasgow’s2030CredibilityGap:NetZero’sLipServicetoClimateAction[R].2021.13UN-convenedNet-ZeroAssetOwnerAlliance.TheFutureofInvestorEngagement:ACallforSystematicStewardshiptoAddressSystemicClimateRisk[R].2022.2009.8Barko,T.,Cremers,M.,&Renneboog,L.ShareholderEngagementonEnvironmental,Social,andGovernancePerformance[J].JournalofBusinessEthics,2022.11CatalysingClimateActions:PartIInstitutionalInvestorsEngaginginCorporates’Low-carbonTransition:12InstitutionalInvestorsEngaginginCorporates’Low-carbonTransitionValueExplorationandGlobalTrendsValueCreatedinCorporate’sTransitionEnabledbyInvestorGovernmentsaroundtheworldhavelaunchedactionsregionalpoliciesandstrategies,institutionalinvestorsEngagementfortransitionfinance.Theysupporttheinvestmentarerespondingtoclimatechangeforthegoalofcarbonandfinancingofgreenandlow-carbontechnologiesneutrality.TheyaredevelopingtheirowncarbonIMPROVINGCORPORATEENVIRONMENT-RELATEDPERFORMANCEANDPERFORMANCEandthedevelopmentofgreenindustries.Additionally,reductionstrategiesandreducingdirectandindirecttheyfocusonfinancingandsupportinghigh-emittingcarbonemissionsfromtheiroperationstomeettheirUsingacomprehensivesampleoflistedcompaniesinover40countries,Dycketal.14demonstratedthatcorporatesinthelow-carbontransitionandintroducecommitmentstoclimatechange.Forinvestors,however,institutionalinvestorsareverystrongindrivingenvironmentalandsocialperformanceatthecorporatepoliciestosupportdecarbonisationandthesustainableitisevenmorecriticaltoachieveanet-zeroportfolio,levelglobally.Investordemandsaredrivingcorporatestocontinuouslyimprovetheirenvironmentalanddevelopmentoftherealeconomyintheirjurisdictions.inwhichstewardshippracticeiscrucial.Furthermore,socialperformance.Thepublicsectorinsomecountriesisdevelopinginunleashingtheinvestmentsector’spotentialinfinancialstandardsandintroducingdisclosuretransitionfinance,institutionalinvestorsneedtoEXPANDINGACCESSTOCORPORATEFINANCINGrequirementsandpolicyincentivesfortransitionproactivelymeasuretheimpactoftheirportfolio’sactivities20.Theyalsopromotefinancialinstitutionstocarbonemissionsonglobalwarming.Moreover,theySrivastavaetal.15exploredtheimpactofstakeholderESGengagementinthecorporatefinancinganddevelopinnovativetransitionfinanceproducts.AmongshouldleveragetheiruniquepositionandinfluencetoborrowingabilityduringtheCOVID-19pandemicbasedoncorporate-leveldatafrom51countries.Thetheexistingfinancialproducts,bondsandloansarefurthersupporthigh-emittingcorporatesintheirlow-resultsshowthatcorporateswithhigherlevelsofstakeholderESGengagementareabletoobtainmoretwoactiveareasofglobalpracticeintransitionfinance,carbontransitionandsustainabledevelopment.debtfinancingduringthepandemic16,andthatthiseffectismorepronouncedforriskiercorporates.whichareofthelargestscale21.DrivenbynationalandMoreover,stakeholderengagementfacilitatescorporatesandfirmsinemergingeconomiesthatarelessasset-intensivetoobtainmoredebtfinancing.National/RegionalStrategiestoPromoteLow-CarbonTransitionOPTIMISINGBUSINESSOPERATIONSANDIMPROVINGFINANCIALPERFORMANCEEffecting,guiding,andincentivisingAccordingtotheKayReview17ofUK,stewardshipforarangeofactivitiesandissues,asacorefunctionofExpectationsforrespondingtoclimateEngagementinlow-carbontransitiontheequitymarket,candrivegrowthincorporates’operationalandfinancialperformance,withbenefitschangethatcanlastformanyyears.Inabroadercontext,stewardshipcanenhancetheoverallstabilityofthefinancialmarketandcontributetoeconomicgrowth.Beneficiaries/ClientsInstitutionalInvestorsCorporatesAccordingtoOdelletal.’sanalysis18,constructiveengagementwithaninvestee’sboardmembersandFulfillingfiduciarydutiesLong-termvaluereturnmanagementteamstoimproveitsESGprofilecandriveprogressinitsoverallbusinessoperationsandimproveitsriskmanagement.SupportingtoachieveHeetal.19studiedtheeffectsofESGengagementfromtheperspectiveofmanagerialmisconductusingGlobalClimateGoalsasampleofChineselistedcompaniesfrom2010to2020.ThestudyshowsthatESGengagementcansignificantlycurbmanagerialmisconduct.TheeffectismorepronouncedincorporateswithlowerFigure1-2:CorporateEngagementactsasa‘Catalyst’tosupportClimateActionsinformationtransparency,lowerinstitutionalownership,andthatvoluntarilydiscloseESGinformation.RecentyearshasseenarapidgrowthingreenfinanceTransitionfinanceaimstomeetthefinancialneedsInsummary,existingnationalandregionalpoliciesSource:Aworkbytheprojectresearchteamworldwide.Theexpandingmarketsizehasenabledofhigh-emittingindustriesinlow-carbontransitionintopromotelow-carbontransitioneffect,guide,andthrivinggreenindustrieswithenvironmentalandamoreextensiveandlargermanner.Toachievethis,incentivisebeneficiariesandclients,institutionaltomovetowardsnet-zeroemissions.Theseinitiativesecologicalbenefits,whichplayanimportantroleinitprovidesfinancialservicesfortraditionalcarbon-investors,andcorporatestotakeactionsinsupportwillsupportthegreenandlow-carbondevelopmentsupportingtheglobalresponsetoclimatechange.intensiveandenvironmentally-riskymarketentities,ofglobalclimatechangegoalsinmanyaspects.Inoftherealeconomy,whichinturnwillacceleratetheHowever,asuccessfulglobalresponsetoclimateeconomicactivities,andassetprojectsintheirtransitionthistransmissionchain,corporateengagementbyachievementofglobalclimategoals.Moreover,thischangealsoneedsadequatefinancialsupportforthetolow-carbonandnet-zero.Thispracticebridgesandinstitutionalinvestorsactsasacatalyst.Specifically,processwillfurtherenhancethelong-termvalueoflow-carbontransitionofhigh-emittingindustries.Tocomplementsareasthatarebeyondthereachofgreeninstitutionalinvestorsaredrivenbybothnationalandinvestees,whichwillrewardinstitutionalinvestorswiththisend,transitionfinance,amoreflexible,targeted,finance,thuscontributingtotheachievementofglobalregionalstrategicguidancetopromotelow-carbonlong-termfinancialandoperationalperformance.Itandadaptablefinancialsupportinstrument,isclimategoalsmoreefficiently.transitionandbeneficiaries’andclients’expectationstodemonstratesthatinstitutionalinvestorswillcreatemainstreamingintheinternationalcapitalmarket.respondtoclimatechange.Theyareactivelyengagedvaluesforthemselves,investees,andsocietybyindialoguewithinvesteestoaddressclimate-relatedactivelycarryingoutcorporateengagement,urgingrisks,positionthemselvesforlow-carbontransition,andandsupportingtheirlow-carbontransition.Themostseizenewdevelopmentopportunities,andurgethemvaluableisthecatalysingrole,whichisimportantfortheworldtosuccessfullyrespondtoclimatechangeandachieveclimategoals.14Dyck,A.,Lins,K.V.,Roth,L.,&Wagner,H.F.DoInstitutionalInvestorsDriveCorporateSocialResponsibility?InternationalEvidence[J].JournalofFinancialEconomics,2019.20Forexample,inNovember2021,thePeople’sBankofChinalaunchedtheCarbonEmissionReductionSupportTool,whichadoptsa“lendingfirst,thenborrowing”15Srivastava,J.,Sampath,A.,&Gopalakrishnan,B.IsESGtheKeytoUnlockDebtFinancingDuringtheCOVID-19Pandemic?InternationalEvidence[J].FinanceResearchLetters,2022.mechanismtoprovidefundingat60%oftheprincipalamountofeligiblecarbonemissionreductionloansissuedbynationalbankstocorporatesinkeyareasofcarbon16ForeveryunitincreaseinESGscore,debtfinancingincreasesby0.02%.emissionreduction,suchascleanenergy,energyconservationandenvironmentalprotection,andcarbonemissionreductiontechnologies.Atthesametime,theBankof17Kay,J.TheKayReviewofUKEquityMarketsandLong-termDecisionMakingFinalReport[R].2012.Englandincorporatedclimategovernanceanddisclosurerequirementsforbondissuersintoitscorporatebondpurchaseprogram,andannounceditsownmedium-and18Odell,J.,&Ali,U.ESGInvestinginEmergingandFrontierMarkets[J].JournalofAppliedCorporateFinance,2016.long-termcarbonintensityandnet-zeroemissionstargetsfortheprogram’sinvestmentportfolio.19He,F.,Du,H.,&Yu,B.CorporateESGPerformanceandManagerMisconduct:EvidencefromChina[J].InternationalReviewofFinancialAnalysis,2022.21TheMacroandGreenFinanceLaboftheNationalSchoolofDevelopment,PekingUniversity.AStudyontheMechanismofTransitionFinancetoSupportLow-carbonTransformationofCoalPowerEnterprises[R].2022.13CatalysingClimateActions:PartIInstitutionalInvestorsEngaginginCorporates’Low-carbonTransition:14InstitutionalInvestorsEngaginginCorporates’Low-carbonTransitionValueExplorationandGlobalTrends1Amajortrend:Engagingincorporate’smaterialclimatechangeissues1.2Inrecentyears,climatechangehasbecomeamajorclimatechangeandemissionreduction)andfrequentlyareaofconcernforinstitutionalinvestorsaroundtheengagingwithcorporatesinthem22.Forexample,theGLOBALTRENDSANDBESTPRACTICESworld.Astimegoeson,theimpactofclimatechangeUNPrinciplesforResponsibleInvestment(UNPRI),oncorporatevaluewillbemoreprominent.ForwhichprovidesexamplesofESG-relatedengagementWiththestrengtheningglobalresponsesandactionspractitionersareworthexploringandlearningfromininstitutionalinvestors,ithasbecomeadecisiveabilitypractices,hasthelargestnumberofengagementstocombatclimatechangeinrecentyears,institutionaldepth.fortheirportfoliostowithstandrisksandadapttowithinvesteesonthetopicofclimatechange,farinvestorshavegrownmoreconcernedthaneverthelong-termimpactsofclimatechange.ThishasledexceedingthenumberofgeneralESGtopicsandabouttheclimate-andenvironment-relatedrisksTothisend,theprojectresearchteamanalysesthetoanincreaseininstitutionalinvestors’engagementotherESGtopics23.ISSESG,theinvestmentresearchoftheirinvestees.Theyplaceahighervalueontheglobaltrendofinstitutionalinvestorsengaginginwithinvesteesonclimatechange-relatedtopics.MorebranchofInstitutionalShareholderServices(ISS),environmentalandsocialbenefitsandthelong-corporates’low-carbontransitionandsummarisesbestinstitutionalinvestorsarehelpingcorporatestoaddressfoundthatclimatechangeistheengagementtopictermvaluecreatedbytheirinvestmentpreferencespracticesthatmaygivereferencetootherinstitutionalclimaterisksandtransitionalopportunitiesthroughmostconcerninginvestmentcompaniesinasurveyofandbehaviours.Inthisregard,institutionalinvestorsinvestors.Theanalysisisbasedoninterviewswithconstructive,goal-oriented,andongoingdialogue133investmentcompaniesworldwide24.ThesefigureshavewidelyadoptedandpromotedstewardshipandseveralleadingChineseandinternationalinstitutionalwiththeirinvestees’boardsandexecutives.Intoday’sillustratetheemphasisandattentionthatinstitutionalinvestorengagementstrategiesthatfocusonurginginvestorrepresentativesinsustainableinvestmentwaveofglobalESGinvestments,inadditiontogeneralinvestorshaveplacedoncorporateclimategovernanceandsupportingportfoliocompaniestoaddressclimate-andclimateaction,aswellasareviewofsuccessfulcorporatestrategicissues,institutionalinvestorsandinvestorengagementtourgecorporateresponserelatedrisksandachievealow-carbontransition.Anengagementpracticesworldwide.Thissectionpresentsarefocusingonenvironmentaltopics(particularly,toclimatechangeinrecentyears.increasingnumberofsuccessfulcasestudieshavetheprojectresearchteam’skeyfindingsfrominterviewsemergedinboththeinternationalandChinesemarkets.anddesktopresearch.ImpaxAssetManagementTheextensiveexperienceandthemomentumofthese‘Webelievethatproactiveengagementandinteractionwithinvesteesdemonstrateinvestors’commitmenttoactiveownershipandtheyarealsopartofourfiduciarydutiestoourclients.Weputhighpriorityoninvesteeengagement.Ontheonehand,wehelpinvestees(especiallythosefacingsignificantclimate-relatedrisksandopportunities)enhancetheirstrategies,practices,anddisclosureinthecontextoflow-carbontransitiontohighlighttheirintrinsiclong-termvalue.Ontheotherhand,fromourperspectiveasanassetmanager,wecanobtainadeeperunderstandingoftheirbusinesssustainabilityandbebetterpositionedtomakeaccuratejudgementsonindustryrisksandopportunitiesandtogeneraterelativelystableexcessreturnsforourclientsoverthelongterm.Furthermore,in-depthandfrequentdialogueswithcorporatesonclimate-relatedissuesenrichourunderstandingofclimate-relatedrisksineachmarket.Additionally,weembedclimate-relatedissuesintoourfundamentalinvestmentresearchanddeepenourresearchandanalysisofthelow-carbontransitionofkeyindustriesbasedonthelatestinternalandexternalclimate-relateddata.’AllianzGlobalInvestor‘Climatechangeisoneofthethreemajorthemesinourengagementwithinvestees,alongsideplanetaryboundariesandinclusivecapitalism.Inrecentyears,thesignificanceofenvironmentalissuesinourinteractionswithcorporateshasbeensteadilyincreasing,withnumerousdiscussionscentredoncorporateclimate-relatedriskassessmentsandexploringwaysforcorporatestoincludeclimate-relatedrisksandlow-carbontransitionintotheirstrategies,operations,andproductplanning.Toaddressthis,wehaveestablishedanapproachcalledClimateEngagementwithOutcomes(CEWO)forhigh-emissionsindustriesandcompanies.Underthisstrategy,weinitiatedialogueswithhigh-emissionscorporatesthroughquestionnaires,systematicallyevaluatetheirclimateprofiles,includingrelevantsocialandgovernanceindicators,identifyclimate-relatedissuesthatsignificantlyimpactcorporatesinhigh-emissionsindustries,andengageindialogueswiththemonthoseissues.Thisensuresthattheycananticipateandmitigateclimate-relatedrisksandsteadilytransitiontowardsanet-zerovision.’22TheUK-ChinaGreenFinanceCenter.TheValueCreationofActiveEngagement[R].2021.23UNPrinciplesforResponsibleInvestment(UNPRI).ListedEquitySnapshot2017-2020[R].2020.24InstitutionalShareholderServices(ISS)ESG.StewardshipExcellence:Engagementin2021[R].2021.15CatalysingClimateActions:PartIInstitutionalInvestorsEngaginginCorporates’Low-carbonTransition:16InstitutionalInvestorsEngaginginCorporates’Low-carbonTransitionValueExplorationandGlobalTrendsMoreimportantly,leadinginstitutionalinvestorsdoOnlybymeetingtheserequirementsandfocusing1CASEnotstopatengagingindialoguewithcorporatesononidentifyingthecorporate’smaterialissuescangeneralclimatetopics.Theycapitalisetheirinsightintoinstitutionalinvestorssetclearer,morerealistic,BoseraFund’sEngagementinaChineseChemicalCompany:climate-relatedrisksandopportunities,trendsandandmeasurableobjectivesandmilestonesforthe——Improvingclimateandenvironmentalinformationdisclosureprioritiesforlow-carbontransitionacrosssectorsandcorporatestheyengagewith.Thatway,theycanhelpmarketpractices.Withthose,theyworkwithcorporatesthecorporateschartalogicaltransitionpathwaybasedBoseraAssetManagementCo.,Limited(hereinafterreferredtoas“BoseraFund”)hasresearchedandinvestedtoidentifymaterialissues25significantlyimpactfulontheseobjectives.Itwillprovidemoretargetedinthischemicalcompanyforovereightyearsandhasagoodunderstandingofitsoveralloperations.Undertheonthecorporate’seconomic,environmental,andguidanceandassistanceinthecorporate’ssubsequentinternationalassessmentframework,thecompanylaggedbehindinternationalbestpracticesincarbonemissions,socialaspectsandontheassessmentandcorporatetransition,thusmakingthedialoguewiththeinvesteeschemicalsafety,andwaterresources.Afterthoroughresearchandsurveys,BoseraFundrecognisedthatthestakeholders’decision-making.Theyprioritisedialoguemoreefficientandtheresultsofthetransitionachievedcompanyhastakensomesustainableactionsinitspastoperations.However,internationalratingagencies’ratingwithcorporatesonthesematerialissuesandmonitorbytheengagementmorevisible.Inaddition,identifyingresultsfailedtofullyreflectthecompany’sactualstatusduetolong-termlagsininformationdisclosure.Boseraandsupporttheirtransitionintheseareas.ThroughmaterialissueshelpsinstitutionalinvestorsunderstandFundsisassistingthecompanyinimprovingitsperformancethroughtargetedcommunicationontopicsthatinterviewsandresearch,theprojectresearchteamthematerialissuesofthecorporateandtheindustryareimportanttotheindustryandhavesignificantroomforcorporateperformanceimprovement.Ithopesthatfoundthatinstitutionalinvestorsfirstidentifythekeyasawhole,researchfromamorecomprehensivethispracticewillincreasethemarket’srecognitionofthecompany’ssustainableperformance,therebyfurthertopicsforcorporates’low-carbontransition.Afterperspective,andaccumulaterelevantdata.Italsohelpsenhancingthecompany’svalue.that,theleadingonescarefullyselectthemostcriticalinstitutionalinvestorsengageindeeperandmorematerialissuesthatdirectlyconcerncorporate’seffectivedialoguewithmorecorporatesanddrivemoreInsteadofinterveninginthelistedcompany’sspecificoperations,BoseraFundinteractswithitbythemeansofeconomic,environmentalandsocialaspectsandaffectsystematictransition.enquiryemails,telephonecommunications,andfieldresearchandexpressestoitBoseraFund’sconcernaboutitscorporatestakeholders’assessmentanddecision-sustainablebusinessperformance.BoseraFundhasbeenactiveinprovidingsustainableadvicetothecompanyinmaking.Theyprioritisein-depthdialogueandexchangetheenduringcommunication.ThecompanyhasalsolaunchedthetransitiontoagreencompanyandimproveditswithcorporatesonthesematerialissuesratherthanESGperformance.just‘box-ticking’.TheybelievethatmeaningfulandeffectiveengagementonthethemeofclimatechangeFirst,intermsofcarbontargetsandmanagement,thecompanyhasfollowedtheUnitedNationsshouldgobeyonddiscussinggeneralkeytopics,suchSustainableDevelopmentGoals(SDGs)andpreparedandpublishedsystemdocumentsregardingasaskingcorporatestoimprovetheirESGratingsandcarbonemissions.climategovernance.ItisimportanttolookdeepertodiscoverwhichkeyfactorscontributetolowESGratingsSecond,intermsofenvironmentalinformationdisclosure,thecompanyhasimprovedtheorweakclimategovernance,orkeytopicsinwhichsub-transparencyonsustainableinvestmentandundertakenCDPclimatechangeandwatersafetysectorshaveamaterialimpactoncorporatesandtheirinformationdisclosure.stakeholders.Byprioritisingdialoguewithcorporatesonthesematerialissues,institutionalinvestorscanactThird,intermsofemissionreductionandresourceutilisation,thecompanyhastakenmeasurestomoreeffectivelyinurgingthecorporates’low-carbonreducetheintensityofgreenhousegasemissionsandincreasethewaterrecyclingrate.Additionally,transition.Todoso,institutionalinvestorsmustfirstthecompanyhasbeenactivelyandsteadilypromotingenvironmentallyfriendlyproducts,suchashaveextensiveindustryresearchandexperience.Theybiodegradableplastics,initsbusiness.shouldincludeclimatechangeintomacroanalysisandActiveshareholderaction,includingvotingandinteraction,isanimportantpartofBoseraFund’sresponsiblecasestudiestounderstandcurrentsectoralcarboninvestment.BoseraFundbelievesthatitisvaluableforESGinvestorstobedirectlyengagedininvestees’corporateemissions,especiallyhigh-carbonsectors,andrelevantgovernance,especiallyinemergingmarkets.InsituationswherethereisinadequateESG-relateddatadisclosure,stateandlocalemissionreductiongoalsandlow-carbonregulationisnotinplace,andcorporatedisclosureisnotmandatory,engagementincorporategovernancecandevelopmentpolicies.TheymustbeabletoidentifyhelpcorporatesimprovetheirsustainableperformanceandassistandsuperviseinvesteesinpractisingESGthepathwaysandkeyareasofemissionreductioninconcepts.varioussectors.Inaddition,institutionalinvestorsneedtobeabletoassesstheirinvestees’climateresilienceandtoidentifyandquantifythemultipleclimate-relatedrisksfacedbytheirinvestees.Theyshouldactivelyengageinscenarioanalysistoassesstheirinvestees’resistancetoclimate-relateduncertaintiesatthestrategicandoperationallevels.25ThesustainabilityreportingstandardsissuedbytheGlobalReportingInitiative(GRI)requireorganisationstoidentify,analyzeandreportonissuesthatreflectsignificanteconomic,environmentalandsocialimpactsoftheorganisationandsubstantivelyinfluencetheassessmentsanddecisionsofstakeholders,basedonthe“MaterialityPrinciple”.17CatalysingClimateActions:PartIInstitutionalInvestorsEngaginginCorporates’Low-carbonTransition:18InstitutionalInvestorsEngaginginCorporates’Low-carbonTransitionValueExplorationandGlobalTrends2EquippedwithfundamentalsofstewardshipisaprerequisitetoGovernancestructuresandinternalpoliciesengageeffectivelyItisessentialforinstitutionalinvestorstewardshiptoestablishasoundSuccessfulandeffectiveinstitutionalinvestortheirreadinessandexecutionintheseareasandstewardshipgovernancestructure,developinternalstewardshippolicies,anddefineengagementincorporates’low-carbontransitionincreasingtheirmaturityintheseareas.Bothleadingimplementationanddecision-makingprocessesandallparties’responsibilities.isensurebyawell-developedinternalgovernanceandgrowinginstitutionalinvestorsagreethattheyneedThroughinterviewsandresearch,theprojectresearchteamfoundthatleadingstructure,aclearstewardshippolicy,activeESGtobeequippedwiththesefundamentalelementsandinstitutionalinvestorsareconstantlyimprovingtheirinternalgovernancetobetterresearchinvestmentandin-depthintegrationwithaproactiveapproachtostewardship.Onlybythatcansupportandensuretheimplementationofstewardship.investmentdecisions,andcontinuousimprovementtheyinvestmoreinintensivedialoguewithcorporatesofrelevantinformationdisclosure.Throughinterviewsoncoretopicssuchasclimatechangeandlow-carbonForexample,theyestablishaclearstewardshipgovernancestructureandandresearch,theprojectresearchteamfoundthattransitionandhelpinvesteesaddressclimate-relatedaccountabilitymechanism,definetheresponsibilitiesofallpositionsinvolvedinleadinginstitutionalinvestorsoftenviewtheirworkinrisks.Thatway,theycanexerttheirsustainabilitystewardship,andstandardisethedecision-makingprocess.theseareasasfundamentaltoamoresegmentedorinfluencetoguideandsupportcorporatesintheirlow-focusedengagement.Theyareconstantlyreviewingcarbontransition.Theyhavededicatedpositionsintheboardofdirectorsandthemanagementtoco-ordinateinternalstewardship,deployrelevantstrategies,andcoordinatetheirBoseraFundimplementation.‘Attheboardlevel,weimplementanESGinvestmentreportingmechanismfortheboard’sStrategyTheyestablishaseparatestewardshipdepartmentorastewardshipfunctionwithinCommittee.Atthecorporatelevel,wehaveanESGInvestmentCommitteeresponsiblefordevelopingtheinvestmentresearchdepartment.Thedepartmentorfunctionundertakesclimatestrategiesandrelatedpoliciesandoverseeingtheirexecution.Atthedepartmentallevel,wehavespecificstewardshiptasksandensuresmoothcollaborationandcooperationESGgroupsthatconductESGresearch,sharefindingswithinvestmentresearchteams,andcollaboratebetweendepartments,especiallywithfundmanagers/portfoliomanagers.withthemtooptimisetheESGevaluationsystemandcarryoutESGduediligence.WehavecomprehensiveESGinvestmentpolicies,includingresponsibleinvestingpolicy,activeownershippolicy,andpolicyforTheydevelopandissueseparateinternalstewardshippolicies,includingvotingatgeneralmeetingsofinvestees,embeddingESGconsiderationsintoourinvestmentprocess.engagementandvotingpolicies,orincorporatestewardship-relatedpoliciesandToeffectivelyintegratetheESGinvestmentphilosophywithoureverydayinvestmentactivitiesandregulationsintotheirinvestmentpolicy.helpinvesteesgeneratelong-termESGvalue,weadopta“fundamentals+ESG”investmentresearchframeworkthatrequiresouranalyststoconsiderESGfactorsinfundamentalresearch,engageinvesteesonIntheinternalstewardshippolicies,theydefinetheoverallmotivationandsustainabilityissuesandincludefeedbackininvestmentrecommendations.Wepractisesustainableproxyobjectivesforstewardship,integrationwiththeinvestmentprocessandinvestmentvotingoninvestees’motionsbywayofactiveownershipandseamlesslycombineESGresearch,responsibledecisions,internalgovernanceandresourceinput,policies,regulations,andmanagement,andinvestmentdecision-makingonourinternalintegratedinvestmentplatform.’standardstobeobserved,assetclassestobecovered,engagementandvotingprocesses,themesandsectorstobefocusedon,andetc.ChinaAMC‘ChinaAMChascomprehensiveESGpolicies,includingResponsibleInvestingPolicy,ListedCompanyCommunicationPolicy,andProxyVotingPolicy,thattakesmajorESGrisksintoconsideration.WenotonlyincorporateESGconsiderationsintoourinvestmentphilosophyandoverallcompanystrategyinawaythatreflectsChina’srealityanddrawsuponadvancedoverseasexperience,butalsoputESGinvestingintoactionthroughoutouractiveequityinvestmentmanagement.WepioneeredintheindustryindirectlyinstallinganESGinvestmentteamintheinvestmentdepartmentandapplyasix-stepESGinvestmentprocess(strategyformation,fundamentalanalysis,portfoliomanagement,riskmanagement,listedcompanycommunication,andregulartracking),workingtoappropriatelymanageESGrisksanddeliversustainedsuperiorreturnstoinvestorsinthelongrun.’19CatalysingClimateActions:PartIInstitutionalInvestorsEngaginginCorporates’Low-carbonTransition:20InstitutionalInvestorsEngaginginCorporates’Low-carbonTransitionValueExplorationandGlobalTrendsESGinvestmentresearchcapabilitiesandintegrationwithinvestmentdecisionsInformationdisclosureToperformstewardship,especiallytopromotecorporates’sustainabilityandlow-Thequalityofstewardship-relatedinformationdisclosureisgenerallyindicativeofinstitutionalinvestors’carbontransition,itiscrucialforinstitutionalinvestorstocontinuouslyimprovestewardshipcapacity.Throughinterviewsandresearch,theprojectresearchteamfoundthatinstitutionalinvestorstheirinvestmentresearchcapabilitiesinESG,conductESGinvestmentresearch,andgenerallyimprovetheirinformationdisclosureinstewardshipinthreeways.deeplyintegratesuchresearchwithinvestmentdecisions.First,institutionalinvestorsmaketheirinternalstewardshippoliciesavailabletorelevantThroughinterviewsandresearch,theprojectresearchteamfoundthatmostbeneficiariesandcustomers,collectfeedback,andreviewandrevisethemonaregularinstitutionalinvestorsexperiencedinclimate-relatedengagementpracticesbasis.SomeleadinginstitutionalinvestorsseekgreatertransparencybymakingtheirhavestrongESGinvestmentresearchteamsandwell-developedESGinvestmentinternalstewardshippoliciesavailabletothepublic.frameworksanddatabases.TheseelementsprovidecomprehensiveandprofessionalESGdata,assessments,andresearchsupportforinstitutionalinvestorsSecond,institutionalinvestorsrecordandupdatetheprocessandoutcomesofeachinspecificstewardshippractices,includingvotingandengagement.stewardshipitemindetailintheirinternalsystems.Stewardship,especiallyengagementininvestees’governance,usuallyspansalongperiod,andtheresultstypicallytakealongAstheycontinuetoexplorestewardshippractices,theywillallocatemoreresourcestimetoshow.Duringtheprocess,changesinparticipantsandinternalpoliciesarealmosttostrengthentheirESGinvestmentresearchcapabilitiesandimprovetheirinternalunavoidable.ItisthereforeessentialtokeepdetailedrecordsoftheengagementprocessESGresearchsystems.Thatway,theycanbettersupporthigherqualitydialogueandmilestonesandtosharetheinformationoninternalplatforms.ItallowsinstitutionalwiththeirinvesteesonabroaderrangeofESGissues.investorstoconsiderthecontinuityofstewardshipandengagementwhenmakinginternalpolicyorpersonnelchangesandhires,andhelpsstewardshipteamsworkinamoreefficientInstitutionalinvestorsalsofocusontheintegrationofESGinvestmentresearchwithandintegratedmanner.fundamentalinvestmentresearch,fullyintegratingtheconsiderationofkeyESGfactorsintotheirinvestmentdecisionsandprocess.ItinjectsmoreimpetusintoThird,thequalityofinformationdisclosurebyinstitutionalinvestorsisalsoreflectedthemselvesandtheirinvesteestojointlyexploresustainabledevelopmentpracticesinproactivedisclosureoftheactualprogressofstewardship.Suchdisclosureincludessuchaslow-carbontransition.specificinvestorengagements,exerciseofvotingrights,andsubmissionofshareholderresolutionsormotions.Intermsofdisclosingtheexecutionofcorporateengagements,TheseinstitutionalinvestorsalsoindicatedthatESGstewardshippracticesallowleadinginstitutionalinvestorswilldisclosethenumberofengagementsduringthereportinginstitutionalinvestorstobetterunderstandtheirinvestees’ESGperformanceandperiodandtheoverallimplementationofengagementprogrammes.TheywillalsodisclosecollecthigherqualityESGdata.IthelpsthemfurtherenhancetheirESGinvestmentexamplesofengagementswithkeycorporateswhileavoidingsensitiveinformation,aswellresearchcapabilitiestosupportinvestmentdecisions,formingavirtuouscycleastheescalationmeasurestakenforengagements.Leadinginstitutionalinvestorsengaginginternallyandexternally.invotewilldisclosetheirvotingrecordonacase-by-casebasisandclarifythereasonbehindeachvote.AllianzGlobalInvestors‘Wehavecomprehensiveinternalpoliciesonstewardshipandarigorousmethodologyandattachhighimportancetointernalinformationsharingandcorrespondingdisclosure.AllengagementandvotingrecordsofAllianzGlobalInvestor,alongwiththeirrespectiveoutcomes,aresharedonourCollaborativeResearchandInvestmentPlatform,sothatallportfoliomanagersandanalystscanincorporatethisinformationintotheirinvestmentdecision-making.Wehavealsodevelopedaseriesofdetailedclimateandsustainability-relatedpolicydocuments,suchastheStewardshipStatement,ClimatePolicyStatement,SustainabilityRiskManagementPolicyStatement,andGlobalCorporateGovernanceGuidelines,whicharemadepublic.Inaddition,wepubliclydiscloseourannualsustainabilityandstewardshipreportsaswellasdetailedvotingrecords,toensureourtransparencyanddisclosurequalityinstewardshipandsustainability.’21CatalysingClimateActions:PartIInstitutionalInvestorsEngaginginCorporates’Low-carbonTransition:22InstitutionalInvestorsEngaginginCorporates’Low-carbonTransitionValueExplorationandGlobalTrendsDefineeffectiveengagementincorporates’low-carbontransition——3helpingcorporatessettransitiongoalsonengagementissues,mapthetransitionpathways,andtrackthetransitionprogressonanongoingbasisAsmentionedabove,institutionalinvestorstendtoThecorestepininstitutionalinvestors’engagementandprogressonthesetopics.Thatway,theywillhelptosetitsdecarbonisationgoalsbyphase,institutionalconcerncorporateresponsetoclimatechangeandpracticeissettinggoalswithcorporatesonthetopicsitachieveitsdecarbonisationgoalsateachstageandinvestorsneedtoconsidertwothings.Thefirstisprogressonthelow-carbontransition,toidentifytobeengagedin.Onlywithclearengagementgoalssetnet-zerocommitment.However,leadinginstitutionalwhetherthecorporate’scapitalexpenditureplansbytopicswithasubstantialimpactoncorporates,andtocaninstitutionalinvestorsjudgetheeffectivenessofinvestorsseethisasonlythefirststeptowardsphasearealignedwithitsdecarbonisationgoalsanddrivechangesonthesematerialissues.However,thetheirengagementeffortsandmakepublictheresultssuccessfulengagementinlow-carbontransition.thesecondiswhetherthechosentechnologypathwaysinstitutionalinvestorsinterviewednotedthateffectiveachievedundertheirinfluenceandimpact.Therefore,havethegreatestpotentialtoreduceemissions.Incorporateengagementinlow-carbontransitionneedstypicallyinengagementinclimate-relatedtopics,Throughinterviewsandresearch,theprojectresearchthisway,institutionalinvestorscanensurethatthemorethansettingandachievingtransitiongoalsinstitutionalinvestorswillfirstidentifyingkeyclimateteamfoundthatwhilehelpingcorporatessetclear,corporate’spathwaytothetransitiongoalisalignedandmilestonesontheengagedmaterialissue.Itischangetopicsthathaveamaterialimpactonthepractical,andmeasurablegoalsandmilestoneswithitslong-termnet-zerocommitmentandisthemostnecessarytopayadditionalattentiontowhethercorporate.Afterthat,theywillhelpthecorporatesetformaterialissues,leadinginstitutionalinvestorscost-effectiveforthecorporate.thecorporate’sspecificpathwaytothesegoalsandmorespecificandmeasurabletransitiongoalsforthesethinkfurtheraboutthepathwaystothesegoalsandmilestonesaresufficientlyclear,feasible,andconsistentmaterialissuestobeengagedin.Theywillthenworkmilestones.Moreover,theycontinuouslymonitortheAdditionally,leadinginstitutionalinvestorscontinuouslywiththenet-zerocommitmentsandmilestonessetbywiththecorporatetoidentifytimelinesandmilestonestransitionprogressuntilthegoalsareachieved.trackandmeasuretheprogressofcorporatetransitionthecorporate.ateachstagetoreachthegoals,driveitspracticesandtheoutcomesoftheirengagementuntiltheultimatetransitiongoalisachieved.BycontinuouslyHSBCAssetManagementGoalsandPathwaystrackingandmeasuringtheoutcomesoftheirMilestonesengagement,theymakeasuccessfulengagementin‘Withthephilosophythatstewardshipandengagementcontributetovaluecreationofourportfoliolow-carbontransition.Institutionalinvestorsinterviewedcompanies,weadoptbothatop-downstewardshipstrategycoveringkeythemessuchasclimatechangeindicatedthattheytypicallytrackandassesstheandbiodiversity,andabottom-upapproachtoidentifyprioritycompaniesforobjectives-ledengagement.progressoflow-carbontransitionbyreferringtoOnclimatechange,wetypicallyencourageportfoliocompaniestocommittonet-zeroemissions,includeinternationalindicatorsandstandardsforassessingjusttransitionconsiderations,assisttheminsettinginterimtargets,andimprovethequalityoftheirclimatecorporateemissionsreductions(forexample,therelateddisclosure(forexampleScope1,2and3emissions).Inadditiontothis,werecommendthatcompaniesClimateAction100+NetZeroCompanyBenchmark),asprovideclimaterelatedKPIswhichisalignedwithinternationaldisclosurepractices,thisincludesmanagementwellasdomesticandinternationalcorporates’climateprocessesformonitoringanddisclosingclimate-relatedrisks,timeperiodsformonitoringthoserisks,andthetransitionpracticesanddisclosures.roleoftheboardormanagementteam(sustainabilitycommitteeorsimilarbody).’AchievetheTrackthegoalsprogressSchrodersTheyfocusnotonlyonengagementoutcomesbutTheyalsotakeintoaccountapplicablepoliciesalsowhetherthepathwaystotheoutcomesareclearandstandardsandthesituationintheirregion.‘Therearemultiplewaystomakeprogressonnet-zeroemissiontargetsforinvestmentportfolios.Oneenoughforimplementationandconsistentwithwayistoshiftinvestmentsfromhighercarboncompaniestolowercarbonones.Theotheristoengagethecorporate’snet-zerocommitmentandphasedInstitutionalinvestorsarealsoopentothewithcompaniestoencouragethemtosettargetsandshareknowledgetosupporttheirdecarbonisationdecarbonisationgoals.Foracorporate,theachievementpossibilitythatacorporatemayfacedifficultiesinefforts.Thefirstcanbedoneimmediately,butcouldleadtoheavilyconcentratedportfoliosandmaynotofatransitiongoalmayprovethatithassuccessfullythetransitionorthatthetransitionpathwayisnoleadtodecarbonisationofthedivestedassets.Theother,whichwearefocusingon,candrivesystem-widetransitioneditselfonakeytopic.However,agreaterlongerrelevanttothecurrentscenario.decarbonisationbutrequiresaplanifengagementisnotsuccessful.Basedonthis,wehavedevelopedaconcernofthebeneficiariesandthepubliciswhetherclimateengagementandescalationframework(ClimateEngagementandEscalationFramework),whichclearlythetransitiononthiskeytopicactuallysupportstheInthatcase,institutionalinvestorswilldiscusslaysoutourexpectationsofcompanies,howweplantomonitorthemandwhatweplantodoiftheydonotcorporate’seffortstoaddressclimatechangeandwiththecorporateondevelopingamoretakeaction.Weexpecttofocusourclimateengagementeffortsonaround1,000prioritycompaniesthroughachievelong-termsustainabilityandnet-zero.Toappropriatepathwayormilestones,andcontinueto2030.’supportthis,institutionalinvestorsneedtoconsidertosupportthetransitionuntilitslong-termgoalsthespecificarrangementsforandtransitionpathwaysandnet-zerocommitmentareachieved.tothisgoal.Forexample,whenrequestingacorporate23CatalysingClimateActions:PartIInstitutionalInvestorsEngaginginCorporates’Low-carbonTransition:2423I加ns速tit气ut候ion行a动lIn：vestorsEngaginginCorporates’Low-carbonTransitionValueExplorationandGlobalTrends机构投资者参与支持企业低碳转型2CASE4Furthershapingtheecosystemforengagementincorporates’low-carbontransitionthroughpolicyandthematicengagementeffortsSchroders’EngagementinaHongKongIndustryMachineryandEquipmentOurdecisiontoengagereflectsinpartourviewthatInadditiontotheconventionalengagementwithainstitutionalinvestorsdiscusswithrelevantindustryCompany:climatechangeisamaterialESGriskforthecompany,singleinvestee,institutionalinvestorsarelaunchingassociation,expertsinthearea,andmultiplekey——Improvingcarbonemissiontargetsasisthecaseformanycompaniesinvolvedinthepolicyandthematicengagement,amongothercorporatestopromoteunifiedactionofthesemanufacturingindustry.Priortotheengagementtheengagementpractices,withdifferentplayerstofulfilcorporatesonkeytopicsofcommoninterest(thematiccompanyhadalreadysignificantlyincreasedtheirtheirfiduciaryduties.Thatway,theyplaytheirroleasengagement).Sometimes,policysupportisrequireddisclosureonESGissuesinthepast2years,andshareholdersandexercisetheirinfluencetosupport(forexample,theengagingcorporateisaSOEorachievedmaterialreductioninScope1and2emissionthegreenandlow-carbondevelopmentoftherealthereisalackofuniversalcorporateenvironmentalintensity.Lookingahead,thecompanyhadalsomadeeconomy.Throughinterviewsandresearch,theprojectandclimatedisclosurestandards).Inthosecases,newcommitmentstoreduceScope1and2emissionsresearchteamfoundthatinrecentyears,institutionalleadinginstitutionalinvestorswillengageindialogueby60%by2030,alongsideexpressinganambitioninvestorshaveactivelyengagedindialogueandwithcompetentgovernmentdepartments,policyandtobecomeanetzeroorganisationandmapScope3communicationwithinvestees.Theyaimtoimprovestandardmakers,orregulators,orrespondtopolicyemissions.theenvironmentalperformanceofinvesteesandconsultationtoseekpolicysupport(policyengagement).enhancetheirabilitytoaddressclimate-relatedrisksForinstitutionalinvestors,policyengagementandotherClimatechangeisaprioritythemesetoutinourWewantedtofollowuptounderstandwherethethroughcorporateengagementactivities.ThishasengagementsplayasignificantroleincomplementingEngagementblueprint,whichestablishesandcompanysawthegreatestscopeforemissionsledtonumerousengagementoutcomes,butalsotocorporateengagement.AsclimatechangeactionisarticulatesSchrodersPLC(hereinafterreferredtoreductionandencouragethecompanytogainformalchallengesthathaveledtodeeperthinkingamongincreasinglyurgent,institutionalinvestorsareexploringas“Schroders”)’guidingprinciplesforouractiveaccreditationoftheiremissiontargetstheScience-institutionalinvestors.Inmanycases,institutionaldifferentengagementapproachestoeffectivelyownershipefforts.Theblueprintisforward-BasedTargetsInitiative(SBTi).investorshaveengagedindialoguewithinvesteesaddresssystemicissues,suchasthematicandpolicylookingandactsasacompasstoguideourdesireonkeylow-carbontransitionissues,suggestingengagements,tocatalyseamorescalabletransition.togenerateinvestmentreturnsforourclientsbyThecompanywascollaborativeinthediscussionandpossibletransitionpathwaysandinitiatives,andthesupportingthetransitiontoalow-carboneconomy.receptivetooursuggestionofSBTivalidation.TheycorporateshaverespondedpositivelyandcooperatedSchrodersnotedthattheyareworkingonmappingScope3fully.However,thecarbonreductionshavebeenlessOneofthedesiredlong-termoutcomesundertheemissionstobeconsistentwiththeSBTimethodology,thansignificantandthetransitionhasnotbeenas‘Wesupportclimate-relatedinitiativesinitiatedClimateChangethemeexpressedintheblueprintandthetimingofanyrelated-targetsandvalidationeffectiveasitcouldhavebeen.Leadinginstitutionalbyrelevantindustryassociationsandactivelyisforcompaniestohaverobustgovernanceandprocesscouldbecontingentonthetimingofthiswork.investorshavecometorealisethatthesekeylow-contributeourviewsandexperiencetopublicoversightofclimate-relatedrisks,asthisiscriticalThecompanyagreedtofollowupwithmoredetails.carbontransitionissuesaretheresultofacombinationpolicyconsultationsrelatedtoclimatechange,fordealingwiththestrategicandfinancialrisksWealsodiscussedtheneedforgreaterscrutinyinoffactors.PromotingcorporateactiononthesekeyincludingregulationsintheUK,EU,HongKongandthatcanbetriggeredbyclimatechange.OneofourmonitoringScope3emissionsandtheimportanceoflow-carbontransitionissuesrequiresmorethanjustSingapore.’priorityasksisforthedisclosureofkeyinformationsupplychainmonitoringmorebroadly.urgingcorporatestotransformthemselves.Itismoreonmaterialclimatefactorsthatcouldimpactimportanttoseekpolicysupportandunifiedactionthecompany.AnotherareaoffocusisclimateThecompanyalsooutlinedthestepstheyaretakingtoamongmultiplecorporatestopromoteasystematicalignment,whereweaimtoengagewithcompaniesshifttheirproductmixfromfuel-poweredproductstoshiftintheseissuesfrommultipleperspectivesandtoencouragethemtodeveloparobustandinclusivebattery-powered,whichcouldpotentiallyreduceScopepenetratethecorporates.Thatway,thecorporatespathtonet-zero,throughsettinglong,mediumand3emissionsaswellasbenefitingtheenvironmentmorewillbeassistedmoreeffectivelyintheirlow-carbonshort-termsciencebasedemissiontargets,coveringbroadly.transition.Scope1,2andrelevantScope3emissions,andpublishingadetailedtransitionplantoexplainhowTheengagement,togetherwithimprovementsinToaddressthesechallengesanddrivemorefruitfultheyplantomeetthosetargets.disclosureandtargetsetting,providesusconfidencecorporatetransition,leadinginstitutionalinvestorsthatmanagementisfocusedonmanagingemissionsgobeyonddialoguewithasingleinvestee(corporatewell.Wewillcontinuetomonitorthecompany’sengagement).SomekeytopicsinvolvemultipleprogressonclimateandotherESGissues,andfollow-corporatesorrequirediscussionwithmultipleupontheimprovementsdiscussed.corporates(forexample,researchanddevelopmentofadvancedlow-carbontechnologiesandinvestmentinsharedinfrastructure).Forsuchtopics,leading25CatalysingClimateActions:PartIInstitutionalInvestorsEngaginginCorporates’Low-carbonTransition:26InstitutionalInvestorsEngaginginCorporates’Low-carbonTransitionValueExplorationandGlobalTrends3CASEInthiscontext,weengagedwiththiscompanyEarlyon,weprovidedthecompanywithaphysicalclimateriskassessmentthatthecompanylaterusedwhichisoneofthelargestgasdistributorsinChinaasastartingpointforconductingasurveyofsitemanagersontheirperceivedphysicalclimaterisksandImpaxAssetManagement’sEngagementasalong-terminvestorongreenhousegas(GHG)forcarryingoutaforward-lookingpilotfinancialimpactanalysisofextremeweatherrisks.inaChineseEnergyandUtilitiesemissionsdisclosure,sustainability-relatedtarget-Company:settingandphysicalclimateriskmanagement.Duringtwoengagementsin2021——ImprovinggreenhousegasemissionsreportingandphysicalclimateriskTheobjectiveswesetforengagingwiththiswefoundthatthecompanyhadmadesignificantimprovements.Forexample,thecompanyhasmanagementcompanywere:improveditsESGdisclosures;itsGHGemissionsreportingisnowverifiedagainstinternationallyagreedISOstandards;andthecompanyhasalsosetmid-termemissionsreductiontargets.EngagementisastrategicallyimportantpartofStartpubliclyreportinggreenhousegas(GHG)ImpaxAssetManagement’sinvestmentprocedureemissionsAsof31May2022becauseithelpsusdeterminehowcompaniesunderstandtheirownriskandopportunityDiscloseGHGemissionsdatatoCDP,acharitywemeasuredobjectives1,2,3,5and6hadbeenachievedandobjectives4and7remainedongoing.landscapes.Engagementsalsohelpusimprovethatrunsaglobaldisclosuresystemforinvestors,Wewillcontinueengagingwiththiscompanythroughvotinganddialoguesregularlytocloselywatchtheourpricingofrisks—particularlyemergingcompaniesandgovernmentstomanagetheirprogressofitsESGandsustainabilitydevelopmentsontheproposedchangeswehaverecommended.onessuchasphysicalclimaterisksandwaterenvironmentalimpactsavailability.Fromtheengagementwiththiscompany(andmanyotherswehavedoneinAsia-Pacific),wehavelearntSetGHGemissionreductiontargetsandreportontwothings.Firstly,itisalongprocesstopromotechangesforcompaniesinAsia.ThemindsetofplayersIn2021progressinmanyAsianmarketsisstilltop-downdriven,soitishardtopromotechangesatthecompany-levelusingabottom-upapproach.Forthisreason,itiscriticalforinvestorstoengagewithcompaniesonourpolicyadvocacyworkcontinuedtofocusLinkperformance-basedexecutiveremunerationtosomespecificissuesbutalsowithregulatorsfromthepolicyadvocacyangle.Bothprocessesrequireaonfinancingnetzero,greeningthefinancialclimatetargetsgoodunderstandingofmarketattributesandpersistencetobringchanges.system,andnatureandaddressingbiodiversityloss.Intherun-uptotheCOP26climatesummit,Discloselocalised,plant-levelphysicallocationdataSecondly,welearntitisvaluableforforeigninstitutionalinvestorslikeustoaskquestions.TheImpaxAssetManagementactivelycontributedconcentratedownershipstructureofmanyAsiancompaniesunderminedthevoicesofminoritytocommitmentsandcallstoactionthatwereRaiseawarenessaboutphysicalclimaterisksshareholdersinmanycases,anditisoftenquitechallengingforforeigninstitutionalinvestorstogetannouncedinGlasgow,includingtheemergenceaccesstoAsiancompanies.Thatsaid,whenweaskedESG-relatedquestionstosomecompanies,theyofcoalitionscommittingtoambitiousactioninCommittomitigatingprocessesforphysicalclimatewouldgenuinelyadmittheywerestillinasteeplearningcurveformanyissues,soeachengagementkeyareassuchaspower,transport,natureandrisksturnedouttobeaneffectivecommunicationtohelpbothinvestorsandcompaniesclosethegapoffinance.misunderstandingandexpectationsfromdifferentperspectives.Sinceearly2018wehavehadseveralone-on-oneengagementswiththiscompanybothin-personandvirtuallytodiscussprogressonarangeofissues,includingsustainabilityreportinganddisclosures,climaterisksandcorporategovernance.27CatalysingClimateActions:PartIInstitutionalInvestorsEngaginginCorporates’Low-carbonTransition:28InstitutionalInvestorsEngaginginCorporates’Low-carbonTransitionValueExplorationandGlobalTrendsLeveragingdiversestewardshiptoolsandactivelycollaboratingwithEngagementandvotinggohandinhandEFund5peerstodriveengagementprogress:ExercisingVotingRightandForinstitutionalinvestorswithvotingrights,‘WebelievethatactivelyexercisingourvotingCollaborativeEngagingexercisingthem,eitherinpersonorbyproxy,isrightsisessentialtoeffectivelyleverageourcomplementaryandmutuallyreinforcingwithinfluenceoninvesteecompanies.Tothisend,Inadditiontoinvestorengagementssuchascorporate,thematic,andpolicyengagements,institutionalinvestorsinvestorengagement.InstitutionalinvestorsourESGandsectoranalystscollaboratetointerviewedsuggestedmoreinstitutionalinvestorsbeencouragedtousemorediversestewardshipapproachesusuallycommunicatewiththeinvesteeandvoteprovidecomprehensiveandprofessionalvoting(forexample,exercisingvotingrightsandsubmittingshareholderresolutionsormotions).Theyalsorecommendedduringthegeneralmeetingofshareholders.recommendationsforproposalsrelatedtoourcollaborationwithpeersandcollaborativeengagementtofurtheraccelerateprogressininvestorengagementinvesteecompanies.Ultimately,ourportfoliopracticescentredonlow-carbontransition.LeadinginstitutionalinvestorshaveawealthofexperienceandinsightInasurveyof150assetownerspracticingmanagersandinvestmentcommitteemaketheinbothareas.stewardshipbyISS26,57%oftheassetownerssaidvotingdecisionscollectively.WeunderstandthetheysupportedproxyvotingorofferingvotingimportanceofcommunicatingourstancetoStewardshipBroaderExercisingFilingguidelinestoexternalassetmanagers.Moreover,investeecompaniesbeforevotingonproposalsApproaches32%saidtheydelegatesvotingresponsibilitiestothatconcernus.Bydoingthis,wecanprovideDialogueVotingShareholder...externalassetmanagers.constructivesuggestionsandhelpthemmakepositivechanges.Byexercisingourvotingrights,(InvestorRightsResolutionsTheinstitutionalinvestorsinterviewednotedwecanpromotethesustainabilityofinvesteeEngagement)thatifinstitutionalinvestorswithvotingrightscompaniesandfosteralong-term,harmoniousonlypracticeengagementbutdonotvote,itwillrelationshipwiththem.Forus,activeownershipishavenomaterialeffectwhetherthecorporate’snotjustaboutmaximizingshareholdervaluebutcommitmentintheengagementpracticeisalsocontributingtothegreatergoodofsociety.’deliveredornot.Onthecontrary,ifinstitutionalinvestorsonlyvotebutdonotexplicitlyFidelityInternationalcommunicatetheirexpectationsandreasonsforvotingwiththecorporate,itwillnotbefairtothe‘FidelityInternationaliscommittedtobothcorporate.Worse,itindicatesthatinstitutionalengagementandproxyvoting.Bothengagementinvestorsarefailingtotakeadynamicviewofandproxyvotingworkhand-in-handandonethecorporate’stransitionpotential.Exercisingisneededfortheothertobeeffective.Withoutvotingrightsisonewaytogettheattentionofthevoting,investorslackinfluenceovertheinvesteesinvesteeandhelpinstitutionalinvestorsopenupandthereisnoincentiveforcompaniestodeliverdialoguewiththeinvesteemorequickly.theirpromisesmadeduringengagement.Withoutengagement,therelacksaplatformpriorvotingInterviewsbytheprojectresearchteamrevealedforinvestors’expectationstobeputacrosstothatwheninstitutionalinvestorsidentifymotionsinvestees.Ontheotherhand,engagementprovidesthatareinconsistentwithtotheirsustainableanopportunityfortwo-wayunderstandingandinvestmentprinciplesandphilosophy,theydocommunicationbetweeninvestorsandinvesteenotusuallyvoteagainstthemdirectly.Instead,companies.Engagementprovidesanopportunitytheycommunicatewiththecorporateaboutforinvestorstocommunicatetheirpoliciesandthesemotionsandclarifytheirconcerns,witharequirements,whileprovidingaspaceforinvestorsviewtofacilitatingthecorporate’stransition.Thetotakeadynamicviewofinvestees’transitionandinstitutionalinvestorsinterviewedsaidthattheyESGdevelopmentpotentialsaswell.Collectively,donotvote‘forthesakeofvoting’or‘forthesaketheseengagementshelprelationshipbuildingofopposing’.Theyaremoreinterestedinopeningbetweenbothparties.’updialoguewiththecorporateandpushingittomoveinamorepositivedirection.26ISS.2020AssetOwnerStewardshipSurvey:SummaryofResults[R].2020.29CatalysingClimateActions:PartIInstitutionalInvestorsEngaginginCorporates’Low-carbonTransition:30InstitutionalInvestorsEngaginginCorporates’Low-carbonTransitionValueExplorationandGlobalTrendsCollaborativeengagementisoneofthemosteffectiveapproachesandadoptedbythecorporate’smanagementandisexpectedtoberolledoutstepbystep.InresponsetoInclimate-relatedengagementpractice,institutionalalliancesshareacommonpurpose:toleveragetheir4CASEChinaAMC’sEngagementthecorporate’sfeedback,ChinaAMCandmembersofinvestorsoftenseecollaborativeengagementasrespectivestrengthsandinfluenceandpromoteinaChineseAutomotiveothercorporatecommunicationworkinggroupshaveoneofthemosteffectivemeanstodriveprogresslocalandglobalhigh-emittingcorporatestotakekeydevelopedalong-termcorporateengagementplan.ofcorporates’low-carbontransition.Thisisbecauselow-carbontransitionactionsinlinewiththeParisManufacturingCompany:Theyarealsoabouttoconfirmtheprogressandresultstheshareholdingstructureoftheworld’stopcarbonAgreementgoalsbyworkingwithmoreoftheirpeers.ofthecorporateengagementthroughregularfollow-upemittersoftencomprisesinstitutionalinvestorsona——Improvingclimatecommunications.globalscale,resultinginfragmentedownership.InthisFidelityInternationalinformationdisclosureandcontext,themosteffectivemeansofdrivingchangespracticesThroughcommunicationwiththecorporate,Chinainthesehigh-emittingcorporatesiscollaborative‘CollaborativeengagementisoneoftheAMChasrecognisedthenecessityandimportanceengagementwithotherinstitutionalinvestors.InengagementapproachesusedoftenbyFidelityChinaAssetManagementCo.,Ltd.(hereinafterreferredofinvestors’engagementinlistedcompanies’recentyears,leadinginstitutionalinvestorshavejoinedInternational.Comparedtoone-on-onetoas“ChinaAMC”)activelyrespondstosustainabilitysustainabledevelopment.Today,inthecontextofrelevantinvestorinitiatives,platforms,oralliances,engagement,thisapproachcanamplifyinvestors’initiativeslaunchedbyinternationalorganisationsandChina’sgoalsofcarbonpeakingandcarbonneutrality,andworkedwithotherinstitutionalinvestorsforimpacttopromotecompanies’understandingofimprovescorporateclimatedisclosureandpracticesSOEsrepresentedbythecorporate,tendtorespondengagementinhigh-emittingcorporatestoadvanceinvestors’ESGexpectationandrequirements,whilethroughitsengagementininvestorcommunicationpositivelytopolicytrends.Theyareacceleratingtheirtheirdecarbonisationprocess.Theseinitiatives,advancingthewaytheyaremanaged.Inaddition,groups.ItbecamethefirstChineseassetmanagertolow-carbontransitioninbothautomotiveproductplatforms,orallianceshavegatheredinstitutionalcollaborativeengagementthatinvolvesbothsignuptotheClimateAction100+in2018andjoineddevelopmentandmanufacturingtechnology,withainvestorsfromaroundtheworldtocreatesuccessfulChineseandforeigninvestorscanprovidefullscopeitsAsianAdvisoryGroup.AsamemberoftheCorporaterapidlyincreasingawarenessofsustainability.However,examplesofengagementpracticeincorporates’low-totheirrespectivestrengths,i.e.,acombinationofCommunicationWorkingGrouptheinitiativebelongsthereisasignificantgapbetweentheinternationalcarbontransitionthathavedrivenmilestoneprogress.localexpertiseandoverseasexperiencetoenhanceto,ChinaAMCadvisedlargelocalcorporates,includingsustainabilityperformanceassessmentsystemandTheClimateAction100+,theworld’slargestinitiativeoftheeffectivenessofengagement.’aChineseautomanufacturer,onclimatedisclosuretoChina’sregulatoryrequirementsandgeneralindustrycollaborativeengagementbyinstitutionalinvestorsindrivetheclimategoalssetintheParisAgreement.practices.Therefore,thereisanurgentneedforresponsetoclimatechange,hasmorethan700globalTheResponsibleInvestmentAssociationChinesegovernmentdepartments,regulators,industryinstitutionalinvestorsignatories,withoverUS$68trillionSinceChinaannouncedthegoalsofcarbonpeakingorganisations,andinvestorstoworktogethertoguideinAUM.InstitutionalinvestorsignatoriestotheinitiativeRIAandcarbonneutrality,thecorporatehasrespondedlistedcompaniesininformationdisclosureandbestpushtheworld’s166largestgreenhousegas(GHG)positivelyandaccelerateditscarbonreductionbypractices,soastoacceleratelow-carbontransitionstepemitters,whichaccountfor80%ofglobalindustrialCECoptimisingitsproductionprocessesandfocusingonbystep.GHGemissions,toacceleratetheirclimateactioninlinethedevelopmentofnewenergyvehicles.However,withtheglobalgoalofnet-zeroemissionsby2050ortheClimateEngagementCanadaitsenvironmentalandclimateinformationdisclosureTothisend,ChinaAMCwillcontinuetoexertitssoonerbycommunicatingwithandengaginginthesemostlyfollowsnationaldisclosurerequirementswhileexternalinfluenceandsignuptosustainabilitycorporates27.Bytheendof2022,75%oftheClimateCeresSHARElacksunderstandingofmajorinternationalframeworksinitiativeslaunchedbyinternationalorganisationstoAction100+engagedcorporates,drivenbyinstitutionalforclimateinformationdisclosure.ByengagingintheenhanceinteractionandraiseawarenesswithChineseinvestors,hadmadeanet-zeroemissioncommitment28.TheCoalitionforTheShareholdercorporateontopicsrelatedtoclimateandlow-carbonlistedcompaniesonESG-relatedtopicssuchasclimateTherearemanyotherinitiatives,platforms,oralliancesEnvironmentallyAssociationforResearchtransition,ChinaAMChopestoaddressthecorporate’schangeandlong-termsustainabledevelopment.workingtobringtogetherglobalandlocalinstitutionalResponsibleEconomicsconcernsonhowtofurtherimproveitsenvironmentalinvestorstofacilitatethetransitionofhigh-emittingandEducationinformationdisclosureandassistitinimprovingitsItwillalsosignuptogreenfinanceinitiativesofcorporatestonet-zeroemissionsandlow-carbon.carbonreductionactionmechanismsandpractices.theChinesegovernment,regulators,andindustryForexample,theClimateEngagementCanada(CEC)EngagetoPromoteCanada’sJustassociations,aimingtocommunicateinternationalandwaslaunchedin2019.ItisledbyaninvestornetworkTransitiontoaNet-zeroEconomyAsamemberoftheCorporateCommunicationWorkingdomesticsustainablepolicytrendstoChineselistedcomprisedoftheResponsibleInvestmentAssociationGrouptheinitiativebelongsto,ChinaAMCcollaboratedcompaniesandprovidemoreprofessionalsolutions(RIA)ofCanada,theShareholderAssociationforwithmembersofotherworkinggroupstoundertakeandadviceonlow-carbontransition.ResearchandEducation(SHARE)ofCanada,andthecorporateengagementinthecorporate,mainlyintheCoalitionforEnvironmentallyResponsibleEconomicsformofmeetingswiththecorporate’smanagement.Additionally,regardingthecommunication’simpacton(Ceres).ItprovidesaplatformfordialoguebetweenAfterresearchanddiscussion,ChinaAMCpresentedChinaAMC’ssustainableinvestment,theengagementtheCanadianfinancialcommunityandrealcorporates,andexplainedtheClimateAction100+NetZeropracticehasdeepenedChinaAMC’sunderstandingbringingtogetherforcestopromoteCanada’sjustCompanyBenchmarkandDisclosureFrameworkoftheclimate-relatedrisksandopportunitiesfacingtransitiontoanet-zeroeconomy.TheestablishmentIndicatorstothecorporate’smanagement.ItsuggestedtheautomotivemanufacturingindustryandthelistedoftheCECisagoodexampleforothercountriestothatthecorporateprovidedetailedmaterialsandcompaniesinit.ItwillallowChinaAMC’sinvestmentestablishplatformstopromotelocalclimate-relatedinformationonitscarbonneutralitystrategyinresearchteamtomorecomprehensivelyandaccuratelyengagement.Institutionalinvestorsthathavejoineditscompanyreportandtrytoassessthelifecyclemeasurelistedcompanies’sustainability-relatedorexpecttojoinmoresuchinitiatives,platforms,oremissionsofitsvehicles,startingwithitsflagshipperformancewhenmakinginvestmentdecisions.model,soastoreflectitsproducts’cleantechnology27helatestdataisfromtheofficialClimateAction100+website.https://www.climateaction100.orgadvantagesanddemonstratetooverseasanddomestic28ClimateAction100+.2022YearinReview:AProgressUpdate[R].2023.investorstheeffortsmadebylocalChineseautomakersinnet-zerotransition.Theproposalwasaccepted31CatalysingClimateActions:PartIInstitutionalInvestorsEngaginginCorporates’Low-carbonTransition:32InstitutionalInvestorsEngaginginCorporates’Low-carbonTransitionValueExplorationandGlobalTrends1.3ThegoalsofcarbonpeakingandcarbonneutralityIn2015,theCentralCommitteeoftheCommunistPartytargetarealandmarkclimateambitionandacoreofChina(CPC)andtheStateCouncilofthePeople’sCHINA’SPOLICYFRAMEWORKANDinitiativetomoveChinafromanindustrialtoanRepublicofChinaissuedtheOpinionsonAcceleratingMARKETSTATUSecologicalcivilisation.TheynotonlyreflectChina’sfulltheConstructionofEcologicalCivilisationandtherecognitionoftheimportanceandurgencyofclimateIntegratedReformPlanforPromotingEcologicalAsoneoftheworld’slargesteconomiesandlargestGHGemitters,ChinaplaysacriticalparttosuccessfulglobalchangebutalsodemonstratethatChinatakesupitsProgress,amongotherdocuments.In2016,theresponsetoclimatechangewithitsdecarbonisationaction.Chinesecorporates’low-carbontransitionisalsoresponsibilitiesasamajorglobalplayerforaddressingPeople’sBankofChina(PBoC),theMinistryofFinance,crucialtoglobalgreenchangesandthedevelopmentofanewgreeneconomy.Inrecentyears,withChina’sfast-globalclimatechange.Regardingthecapitalmarket,theandtheDevelopmentandReformCommission,andgrowingeconomyandimprovingcapitalmarket,institutionalinvestorshavebecomeanimportantdriverbehindgoalswillpromotethesecondtransformationofChina’sfourotherministriesandcommissionsjointlyissuedChina’seconomicandsocialtransition.TherehasbeenanincreasedfocusonhowtheycaninfluenceChineseeconomicsupplystructure.TheywillalsopromptatheGuidelinesforEstablishingtheGreenFinancecorporates’low-carbontransitionthrougheffectivestewardship.ThissectionpresentsthepolicyframeworkandcomprehensivetransitionofChina’sindustryfromaSystem.Sincethen,ChinahasformedagreenfinancemarketstatusforinstitutionalinvestorstopracticestewardshipinChina,especiallyinvestorengagementwithahigh-carbonconsumingstructuretoalow-carbonandframeworkwithfivepillars:policyandstandardfocusonpromotingcorporates’low-carbontransition.Itisaccompaniedbytheprojectresearchteam’sanalysisofenvironmentally-friendlyone.systems,informationdisclosurerequirements,incentiveandreflectionsonthecurrentchallengesandopportunitiesfacedbyinstitutionalinvestors.andrestraintmechanisms,productandmarketTowardthegoalsofcarbonpeakingandcarbonsystems,andinternationalcollaboration.Animprovedpolicysystemandfinancialecosystemtosupportneutrality,theestablishmentofasoundsystemof1thegoalsofcarbonpeakingandcarbonneutralityprovidesstrongsupportingpolicieslaystheessentialgroundworkfor“FivePillars”oftheGreenChinatoadvancecomprehensivetransition,economicFinanceSysteminChinasupportforinstitutionalinvestorstoengageincorporates’low-carbongrowth,reform,andinnovation.Inrecentyears,Chinatransition.hasmadeeffortsinpolicies.Competentdepartmentspolicyandhaveintroducedsupportingimplementationplansstandardforkeysectorsandindustriestoachievethegoalsofsystemscarbonpeakingandcarbonneutrality.A‘1+N’policysystem29forChina’scarbonpeakingandcarboninformationneutralityhasbeenbasicallyestablished,whichdisclosureprovidescorporates,financialinstitutions,andotherrequirementsmarketplayerswithcontinuouspolicysupportandworkmomentumtoachievethegoals.Sofar,thereincentivehavebeentwomajorpathstobuildthefinancialandrestraintecosystemforcarbonpeakingandcarbonneutrality.mechanismsThefirstistoimprovethegreenfinancesystemtoguidefundsintogreenandlow-carbonareas.Thesecondistoexplorethetransitionfinanceframeworktopromotehigh-emittingindustries’low-carbontransition.SupportInstitutionalInvestorstoEngageinCorporates’Low-CarbonTransition2030BuildaFinancialEcosystemfortheGoalsInSeptember2020,ChinesePresidentXiJinpingChinaaimstoPeakproductandannouncedinhisspeechatthe75thGeneralDebateCarbonDioxidemarketoftheUnitedNationsGeneralAssemblythatChinawillEmissionsbeforesystemsscaleupitsnationallydeterminedcontributionsandadoptstrongerpoliciesandmeasures.ChinaaimstoImprovetheBuildaFinancialpeakcarbondioxideemissionsbefore2030andachieveGreenFinanceEcosystemforcarbonneutralitybefore2060.theGoalsSystemChinaaimstoAchieve2060EstablishaSoundSystemofinternationalCarbonNeutralitybeforeSupportingPoliciesfortheGoalscollaboration29InChina’s1+Npolicyframeworkforcarbonpeaking,carbonneutrality,‘1’meanstheWorkingGuidanceforCarbonDioxidePeakingandCarbonNeutralityinFullandFaithfulImplementationoftheNewDevelopmentPhilosophyissuedbytheCPCCentralCommitteeandtheStateCouncil,whichservesastheprogrammaticdocumentthatsetsforththeoverallobjectiveandlong-termgoals,and‘N’meansasetofpolicydocumentsrepresentedbytheActionPlanforCarbonDioxidePeakingBefore2030issuedbytheStateCouncil,whichprovidedetailedimplementationplansforcarbonpeakingindifferentfieldsandsectors,suchasenergy,industry,transportation,andurban-ruralconstruction.Thispolicyframeworkhasbasicallybeenestablished.33CatalysingClimateActions:PartIInstitutionalInvestorsEngaginginCorporates’Low-carbonTransition:34InstitutionalInvestorsEngaginginCorporates’Low-carbonTransitionValueExplorationandGlobalTrendsBasedonthat,Chinahasestablishedoneoftheworld’sgoalsofcarbonpeakingandcarbonneutrality.Thus,largestgreenfinancemarkets.Bytheendofthethirdbasedonthesoundgreenfinancesystem,Chinaisquarterof2022,thebalanceofChina’sgreenloansexploringatransitionfinanceframeworkforinlinewithindomesticandforeigncurrenciestotalledCN¥20.9internationalpracticesandfillingthefinancialgapthattrillion,anincreaseof41.4%year-on-year30,andthegreenfinancefailstofill.Thatway,itsupportshigh-stocksizeofitsgreenbondswasCN¥1.2trillioninmid-emittingindustries’low-carbontransitionandbuildsayear,rankingsecondintheworld31.morecomprehensiveandsolidfinancialecosystemforthegoalsofcarbonpeakingandcarbonneutrality.20.9trillion1.2trillionForexamplethebalanceofChina’sthestocksizeofitsgreengreenloansindomesticandforeigncurrenciesbondstotalledanincreaseofintheworldInJune2022In2021year-on-year2ndtheInternationalPlatformonSustainablethePBoClauncheditsresearchprogramon41.4%Finance(IPSF),ajointinitiativeofChina,thetransitionfinance.IthasinitiallydefinedtheEU,andothereconomies,releasedanupdatedbasicprinciplesoftransitionfinanceandThesettingofthegoalsofcarbonpeakingandcarboninlate2021versionoftheCommonGroundTaxonomyorganisedresearchontransitionfinanceneutralityhasusheredinaneweraofhistorical-ClimateChangeMitigation.Itidentifies72standardsforsteel,coalpower,andconstructionsignificanceforgreenfinance.Toachievethegoals,thePBoClaunchedanewmonetarypolicyeconomicactivitiesthatsignificantlycontributeandbuildingmaterials,amongothersectors.itrequiresalargeamountofcapitalintogreenandtoolinlate2021tosupportcarbonemissiontoclimatechangemitigation,layingthelow-carbonsectors.ItisestimatedthattheamountofreductionprojectsthroughcheaplendingtofoundationfortheinterconnectionbetweenThesedevelopmentsandarrangementsreflectthegreenandlow-carboninvestmentneededcouldreachfinancialinstitutions.theChineseandforeigngreendebtmarketsgreatimportanceChinaattachestotheeffortsinhundredsofbillionsofRMBinthenext30yearsorandfacilitatingcross-borderinvestmentanddevelopingtransitionfinanceandmobilisingtheso32.AsChina’sgreenfinancialsystemimproves,theTodate,overCN¥300billionhasbeenissuedinfinancingforgreenandlow-carbontransition.capitalmarkettoengageineconomicandsocialscaleofgreenandlow-carboninvestmentwillshowarelending,transitioninthenextstep.Theysetprioritiesforrapidgrowth.ItwillprovideambitiousandpreparedInNovember2022financialinstitutionstosimultaneouslypromotefinancialinstitutionswithabroadermarketandmoresupportingcarbonemissionreductionloansofinvestmentandfinancingingreenandlow-carbonopportunitiestoinvestingreenandlow-carbonsectors.overCN¥510billionG20leadersendorsedtheChina-ledG20industriesandfinancialsupportforthetransitionThatway,suchinstitutionscanrapidlybuilduptheirTransitionFinanceFramework.Itwasthefirstofhigh-emittingindustries.Thesupportivegreenandlow-carboninvestmentcapabilitiesandandfacilitating100millionmetrictonnesoftimefortheworldtoagreeonfinancialsupportpolicysystemandfinancialecosystemfortheexpandtheirinvestmentfootprintingreenandlow-carbondioxideequivalenttobereducedinforlow-carbontransitionandforChinatogaingoalsofcarbonpeakingandcarbonneutralitycarbonindustries.202233.aninternationalvoiceinpromotingglobalareseeingcontinuousimprovements.Withtheirstandardisationoftransitionfinance.strongguidanceandsupport,itwillbecomeaToachievethelong-termgoalofcarbonneutrality,itInthenextphase,thepolicywillexpanditsmainstreamforinstitutionalinvestorstopracticerequiresnotonlygreenandlow-carbonindustriesbutcoveragetoincludemorefinancialinstitutions.stewardshipandplayanactiveroleinsupportingalsothecooperationandtransitionofhigh-emittingChinesecorporates’low-carbontransition.industries.High-emittingindustriessuchaspowergeneration,petrochemicals,chemicals,andbuildingmaterialsareimportantsectorsinChina’seconomy.TheirprogressinreducingcarbonemissionshasaprofoundimpactonChina’sprogressinindustrialrestructuringandupgradingandpacetowardthe30ThePeople’sBankofChina,StatisticalReportonLoanDirectionofFinancialInstitutionsintheThirdQuarterof2022[R].2022.31ResearchBureauofThePeople’sBankofChina,ImprovetheGreenFinanceSysteminSupportofGreen,Low-Carbon,andHigh-QualityDevelopment[J].2022.32Ma,J.ImprovingtheGreenFinanceSystemwiththeAimofCarbonNeutrality[J].FinancialTimes.2021.33ExcerptfromthespeechbyYiGang,GovernorofPBoC,atthelaunchceremonyofChinaBeijingGreenExchangeinBeijing,on4February2023.35CatalysingClimateActions:PartIInstitutionalInvestorsEngaginginCorporates’Low-carbonTransition:36InstitutionalInvestorsEngaginginCorporates’Low-carbonTransitionValueExplorationandGlobalTrendsDrivenbymultipleforces,institutionalinvestorsactivelypracticelocalThefast-growingsustainableinvestmentlandscapehasFurthermore,theprogressofstewardshipinChina2stewardshipandincreasetheirawarenesstoengageinpromotingledtoincreasingattentiontosustainableinvestmentiscloselyrelatedtocontinuousimprovementstothestrategies,suchasstewardship,intheChinesemarket.relevantpolicysystem.Inadditiontothebottom-Chinesecorporates’low-carbontransitionInparticular,thelong-termsustainablevaluecreatedbyupactionsofinstitutionalinvestors,anothercorepromotinginvestees’sustainabledevelopmentthroughconditionfortheimplementationandprogressofLeadinginstitutionalinvestorsintheglobalmarketForexample,asoftheendof2022,theClimateActionsinvestorengagementandtheexerciseofvotingrightsstewardshippracticesinChinaistop-downpolicyhaveawealthofpracticalexperienceinstewardship.As100+hadorganisedglobalinstitutionalinvestorstohasbeenmorewidelyrecognisedinrecentyears.Moreguidance.InSeptember2018,theChinaSecuritiesdiscussedinSection1.2ofthisreport,therehavebeenaengageintenkeyChinesecorporatestofacilitatetheirsustainableinstitutionalinvestorsfocusingontheRegulatoryCommission(CSRC)issuedtherevisedgrowingnumberofsuccessfulexamplesofengagementtransitiontoanet-zeroeconomyinallaspects.TheChinesemarkethaverealisedthatratherthanavoidingCodeofCorporateGovernanceofListedCompanies.practiceinlow-carbontransitionintheChineseandcorporateshaveseenbreakthroughsintheirnet-zeroinvestinginacertaincategoryofcorporates,itismoreInthenewedition,itexplicitlyencouragesinstitutionalothercapitalmarkets.Stewardshipisnewtothecommitments,strategiesandobjectives,governanceeffectivetoengageinthelow-carbontransitionprocessinvestorstoexercisetheirshareholderrightstoengageChinesemarket.Nonetheless,institutionalinvestorsandinformationdisclosureareas.Sofar,Climateandimprovecorporatebehaviour.ItwillbenefitbothinthegovernanceoflistedcompaniesinChina,withanhavebeenmoreactiveinpracticingstewardshipinActions100+haseightlocalChineseinstitutionaltheinvestorsthemselvesandsociety.emphasisonlistedcompanies’greendevelopmentandChinainrecentyears,asthecountry’sfinancialmarketinvestorsassignatories,whopracticeengagementESG-relateddisclosure.Sincethen,asmoreapplicableopensup,sustainableinvestmentgrowsrapidly,andthecollaborativelywithglobalinstitutionalinvestors.Itpoliciesandguidelineshavebeenissued,institutionalpolicysystemimproves.Overseasandlocalinstitutionaldemonstrateshowlocalinstitutionalinvestorsvalueinvestors’corporateengagementaroundESG-relatedinvestorshaveincreasedawarenessofandinterestandpracticecross-regionalexchangeandcollaborationtopicsinChinahasbeenclarifiedandhighlighted.inhelpingChinesecorporatesinitiateandimplementonclimatechangeandstewardship.low-carbontransitionplans.ThereisagrowingtrendForlocalsustainableinstitutionalinvestors2022towardslocalisedimplementationanddevelopmentofAtthesametime,thewaveofsustainableinvestmentAprilrelevantpractices.TheseChina-focusedinstitutionalcontinuestofuelstewardshipinChina.AsChina’sproactiveengagementincorporates’low-theCSRCissuedtheGuidelinesonInvestorinvestorshavesetengagementinfacilitatingChinesesupportingpolicysystemandfinancialecosystemforcarbontransitionhelpsthemfast-tracktheirRelationsManagementofListedCompanies.Incorporates’low-carbontransitiononeoftheprioritiesinthegoalsofcarbonpeakingandcarbonneutralitysustainableinvestmentprocessatthecurrentthispaper,ESGinformationissetaspartofthetheirsustainableinvestmentprocess.Theyhavebeenimproves,sustainableinvestmentinChinaisscalingupstage.Specifically,theycanaccessmorelong-communicationbetweenlistedcompaniesandmoreactiveindialogueonlow-carbontransitionwithrapidly.Thecapitalmarkethasbeenfullymobilised.termcapital,practicetheirsustainableinvestmentinvestorsininvestorrelationsmanagement.ChinesecorporatesandtakenupthepowerfulvotingInstitutionalinvestorsaredevelopinginnovativephilosophy,andstrengthentheirabilitytomanagerightstocommunicatetheirexpectationsforsuchsustainablefinancialinvestmenttoolstochannelclimate-relatedrisksintheengagement.JunetheChinaBankingandInsuranceRegulatorytransitionatgeneralmeetingsofshareholders.resourcestothebackboneofgreenandlow-carbonCommission(CBIRC)issuedtheGreenFinancetransition.ForoverseasinstitutionalinvestorsGuidelinesfortheBankingandInsuranceTheprogressofstewardshipinChinaisfirstandSectors.ItguidesChinesebankingandinsuranceforemostaresultofChina’sopenerfinancialmarket.By31October2022,198carbonneutrality-theme/proactiveengagementinChinesecorporates’institutionstoserveeconomicactivitieswithInrecentyears,Chinahascontinuedtodeepenitsconceptfundsand73ESGfundshadbeenissuedlow-carbontransitionhelpsthembroadentheirbothenvironmentalandsocialbenefitsandtofinancialreformsandopeningup.Asaresult,theacrossthedomesticmarket.communicationchannelswithChineseinvestees.enhancepost-lendingandpost-investmentESGownershipofChina’sA-sharelistedcompanieshasThatway,theycanhaveabetterunderstandingmanagement.beenlessconcentrated,withtheaveragesharesoftheChinesemarket,regulation,andtrends.heldbycontrollingshareholderssteadilydeclining.198carbonneutrality-theme/73ESGfundsMoreover,itprovidestheseoverseasinstitutionalSep-theInsuranceAssetManagementAssociationAscontrollingshareholders’absolutedominanceinconceptfundsinvestorswithmoreopportunitiestoworkwithtembeofChina(IAMAC)issuedtheESGStewardshipChinesecorporatesreduce,institutionalinvestorshaveoutstandinglocalindustrypartnerstosupportgainedabiggervoice.TheirengagementinChina’sBy30September2022,domesticcarbonneutralityChinesecorporates’sustainabledevelopment.ProposalfortheChineseInsuranceAssetA-sharemarketisontherise,withtheirshareholdingpublicfundstotalledCN¥197.6billion,up561%fromManagementSector.Itisdesignedtoencourageincreasing34.Thus,institutionalinvestorshavemoreCN¥30billionin2017.Inaddition,asmentionedabove,activeengagementdomesticinsuranceassetmanagementroomandopportunitiestodeepentheirstewardshipinChinesecorporates’low-carbontransitionhelpsinstitutionstoadoptthestewardshipapproachpracticesinChina.TakethenumberofChineseinstitutionalinvestorsgainlong-termreturnsintheinprogressingcorporates’greentransition.signatoriestoUNPRIasanexample,whichreached123Chinesemarketandfulfiltheirfiduciarydutiestobytheendof202235.ThesesignatoriescommittofollowCN￥197.6billion561%holders.Inthatcourse,theycanworktogethertoThesepoliciesandguidelineshavecreatedathesecondprincipleoftheUNPRI,‘Wewillbeactivedrivesustainablechangesatthesystemiclevel.ThesefavourablepolicyenvironmentforinstitutionalownersandincorporateESGissuesintoourownershipdomesticcarbonneutralityfromCN¥30billioninbenefitsarekeymotivationsforinstitutionalinvestorsinvestorstopracticestewardshipinChina.policiesandpractices.’Notablyin2017andbefore,thepublicfundstotalled2017.topaymoreattentiontoandexpandtheirengagementTheyguideinstitutionalinvestorstoengageinnumberofChinesesignatorieswasonlyinsingledigits.practicesinthelow-carbontransitionintheChineseprogressingChinesecorporates’sustainableTheincreasereflectsthattheChinesecapitalmarkethasESG-themedpublicfundstotalledCN¥22.51billion,upmarket.developmentandlow-carbontransition.Inbeenembracingandsupportingstewardship-related37%fromCN¥16.42billionin201736.thefuture,relevantregulatorsandindustryconceptsinrecentyears.Additionally,moreChineseassociationsmayintroducemoreapplicableandforeigninstitutionalinvestorshavecasttheireyesCN￥225.1billion37%policies,guidelines,orcodesinduecoursetotoclimate-relatedengagementinChineseinvestees.encourageinstitutionalinvestorstocontinueESG-themedpublicfundsfromCN¥16.42billionintointensifytheirpracticesandpromotethetotalled2017developmentofstewardshiponalargerscaleinChina.34FidelityInternational,FidelityInternationalChinaStewardshipReport2022[R].2022.35ThelatestdataisfromtheofficialUNPRIwebsite.https://www.unpri.org/36FidelityInternational,ZhongOuAMC,AntWealthManagementThinkTank,andCITICSecurities.2022ChinaSustainableInvestingWhitePaper[R].2022.37CatalysingClimateActions:PartIInstitutionalInvestorsEngaginginCorporates’Low-carbonTransition:38InstitutionalInvestorsEngaginginCorporates’Low-carbonTransitionValueExplorationandGlobalTrendsInthefaceofbothchallengesandopportunities,thereisanurgent3needforinstitutionalinvestorstotaketheleadinprogressingengagementincorporates’low-carbontransitionandstewardship.ThesupportandassistancefrommultiplesourceshavecreatesufficientspaceforinstitutionalinvestorstopracticestewardshipintheChinesemarket,especiallythroughinvestorengagementtopromotecorporates’low-carbontransition.However,therearestillchallengesforinstitutionalinvestorsinfast-trackingengagementincorporates’low-carbontransitionandstewardshipinChinainthefollowingareas:IntermsofthepolicyenvironmentforIntermsofinstitutionalinvestors’internalIntermsofinstitutionalinvestors’Inthemidstofchallenges,thereareoftenopportunities.institutionalinvestorsgovernanceengagementpracticesThestewardshipmarketinChinaisalargelyunexploredrealm.Inthisregard,thekeytobreakthroughsinChina’ssupportingpolicysystemforthegoalsofthereisashortageofprofessionalsintoidentifyeffectiveengagementprocesses,stewardshipinChinaliesininstitutionalinvestorscarbonpeakingandcarbonneutralityhastakensustainableinvestment,ESG,andstewardship.approaches,andpriorities,institutionalfocusingontheChinesemarket.Theycanactasshapeandbeenimproved.However,thereisstillUndersuchcircumstances,itischallengingforinvestorsmusthaveknowledgeandcapacitypractitionersofstewardshipandinitiatorsofcorporatealackofuniversalandclearpolicies,guidelines,institutionalinvestorstoallocateresources,inmanyareas.Theyinclude1)anextensiveengagementdialoguetomobilisestewardshipinitiativesorstandardsincertainkeyareas,whichimpedesstrengtheninternalcollaboration,andcombineunderstandingoftheChineseculture,andpotentialfromtheinsideandlaunchmoregoodinstitutionalinvestorstobreaknewgroundfundamentalinvestmentresearch,ESGpolicies,andmarketenvironment;2)theinvestorengagementpracticesinChina.Ittakeslongforintheirexistingengagementpractices.Forinvestmentresearch,andstewardshiptogiveabilitytousetheappropriatelanguagewhengoodengagementpracticesforlow-carbontransitiontoexample,thereisstillalackofuniversalandfullplaytothepositiveroleofinternalfunctionscommunicatingwithcorporatesandtoidentifytakeeffect.ContinuoustrialanderrorandmatchingaremandatorycorporateESGdisclosurestandards.thatcomplementandsupporteachotherandkeycommunicationchannels;3)andinsightintooftenprerequisitesforrapidprogress.EveninthefaceAsaresult,institutionalinvestorshavenoaccessefficientlyproduceoutcomes.low-carbontransitioninhigh-emittingsectors.ofmultiplechallengesintheexploration,institutionaltoconsistentandcomparablehigh-qualityTheknowledgeandcapacitywilltaketimeandinvestorscanbreakthroughandcreatemorelong-termESGdatatomeasuretheeffectivenessoftheirrepeatedpracticalexplorationbyinstitutionalvalue,aslongastheyconsistentlybelieveinhelpingengagementpractices.investors.China’srealeconomyachieveanet-zerotransition.39CatalysingClimateActions:PartIIDevelopingNewEcosystemforInstitutionalInvestorsEngagingto40InstitutionalInvestorsEngaginginCorporates’Low-carbonTransitionCatalyseClimateActionsofChina’sRealEconomy02PartDEVELOPINGNEWECOSYSTEMFORINSTITUTIONALINVESTORSENGAGINGTOCATALYSECLIMATEACTIONSOFCHINA’SREALECONOMY——Howdoinstitutionalinvestorsengagetopromotelow-carbontransitionofcorporatesinChina?DevelopingtheStrengthtoEngageinLow-carbonTransition:2.1InstitutionalInvestorsEngagingtoPromoteLow-carbonTransitionofCorporatesinChinaEnhancingtheFundamentalStrengthofStewardship:Laying2.2theFoundationforStewardshipandTappingLow-carbonEngagementPotential41CatalysingClimateActions:PartIIDevelopingNewEcosystemforInstitutionalInvestorsEngagingto42InstitutionalInvestorsEngaginginCorporates’Low-carbonTransitionCatalyseClimateActionsofChina’sRealEconomyBasedonthis,thesecondpartofthisreportoffersengaginginlow-carbontransition,institutionalinvestors2.1recommendationsandimplementationapproachestomustthinkabouthowtobetterutilisetheirresourceshelpthoseChina-focusedinstitutionalinvestorsmakeandleveragetheirstrengthstopromotetheirportfolioDEVELOPINGTHESTRENGTHTObetteruseofinvestorengagement.Itisapowerfulcompanies’low-carbontransition.‘ThefundamentalENGAGEINLOW-CARBONTRANSITION:tooltopromotelow-carbondevelopmentandnet-zerostrengthofstewardship’ofinstitutionalinvestorsisINSTITUTIONALINVESTORSENGAGINGtransitionforcorporatesinChina,aswellastosupportembodiedinthereadinessandmaturityofinstitutionalTOPROMOTELOW-CARBONChina’sgoalsofcarbonpeakingandcarbonneutrality.investors’engagement.ItreflectswhetherasolidTRANSITIONOFCORPORATESINCHINASpecifically,throughintensiveexternalengagementstewardshipfoundationisinplacetocarryoutin-andinternalfoundationenhancement,institutionaldepththeengagementworkforlow-carbontransition.investorsshouldcatalyseChina’srealeconomy’sTonurtureandenhancethefundamentalstrengthoflow-carbondevelopmentandactionstocombatstewardship,institutionalinvestorsmustcontinuouslyclimatechange.Theyshouldfocusondevelopingandimprovetheirinternalsystemsforstewardship,enhancingtwocorestrengths:thestrengthtoengageinincludinginvestorengagementandexercisingvotinglow-carbontransitionandthefundamentalstrengthofrights.Theyshouldalsoformaproactiveawarenessofstewardship.stewardshipandstrengthentheinfluenceofsustainabledevelopment,soastopreparethemselvesforin-depth‘Thestrengthtoengageinlow-carbontransition’engagementinlow-carbontransition.Inthispart,theofinstitutionalinvestorsisembodiedintheirprojectresearchteamputsforwardspecificsuggestionsdeepinvolvementinthelow-carbontransitionofandimplementationapproachesforhowtodevelop,Chinesecorporates.Thatway,theycontributetothetrain,andcontinuouslyimprovethetwo‘strengths’ofachievementofChina’scarbonpeakingandcarboninstitutionalinvestors.neutralitygoals.TostrengthenthecapabilityofAsChinapursueshigh-qualityeconomicdevelopment,Intotheirowninvestment,researchandengagementthecarbonpeakingandcarbonneutralitygoalshavepractices,institutionalinvestorsshouldalsofullybeenintroducedandcorrespondingpolicieshavebeenincorporatecatalysingcorporatesinkeyhigh-carbondeployed.Theyhavebroughthugetransformationindustriesinlow-carbontransition.Theyshouldactivelychallengestohigh-carbonindustriessuchaspowerdevelopandtrainthe‘thestrengthtoengageinlow-generation,petrochemicals,chemicalsandbuildingcarbontransition’andlaunchpolicyengagementmaterials.Therefore,itisofutmostimportanceforandengagementsinotherforms.Thatway,theycanChina’seconomicrestructuringtostudyandpromotesupportandurgeChinesecorporatestocarryoutthesteadyandorderlyprogressofcorporatesintheseemissionreductionactionsandjointlyacceleratekeyindustriestowardslow-carbondevelopment.China’srealeconomytocopewithclimatechange.Tothisend,theprojectresearchteamsummarisestheprocessandkeytasksofinstitutionalinvestorsinvolvedinengagingtopromotelow-carbontransitionofcorporatesinChina.Ithighlightsthecriticalaspectsofinstitutionalinvestorsengaginginkeycorporates’low-carbontransitionsinrelatedindustries.Italsoservesasareferenceforinstitutionalinvestorstoengagemoreintensivelyandefficientlyinpromotinglow-carbontransitioninChina.43CatalysingClimateActions:PartIIDevelopingNewEcosystemforInstitutionalInvestorsEngagingto44InstitutionalInvestorsEngaginginCorporates’Low-carbonTransitionCatalyseClimateActionsofChina’sRealEconomyInstitutionalInvestorsEngagingtoPromoteLow-carbonConductingEngagementActionsTransitionofCorporatesinChina:ProcessandKeyTasksBasedontheadequateunderstandingandanalysisofthelow-carbontransitionofcorporatesindailyinvestmentresearch,institutionalinvestorsshouldengageinspecificlow-carbontransitioneffortfromtwoaspectsrespectively.InvestmentresearchknowledgebuildingUnderstandindustries’carbonemissionstatusUnderstandthestateandConductingengagementactionslocalcarbonemissionreductiongoalsandlow-carbondevelopmentpoliciesAnalysetheRecognisekeyissuesthatrequiretobejointlypromotedThematicengagement,Ontheonehandopportunitiesandbymultiplecorporatesand/orlobbyforpolicyactionpolicyengagementchallengesoflow-institutionalinvestorsshouldtaketheinitiativetoidentifykeyissuesoflow-carbontransitioncarbontransitionfacedthatneedtobejointlypromotedbymultiplerelevantcorporatesand/orlobbyforpolicyactionbythecorporatesandsupport.Theymayassemblediscussionsonthekeyissuesofcommoninterestorconcern(i.e.,thematicengagement).AnotherapproachistoconductdialogueswithrelevantgovernmentExplorecorporates’(Single)corporateengagementdepartments,policyandstandardmakersorregulators,andrespondtopolicyconsultation(i.e.,low-carbontransitionpolicyengagement).Asmentionedabove,thethematicandpolicyengagementofinstitutionalinvestorspathwaysandtheIdentifyandIdentifyandSetclearandDeveloplow-Tracktheresultswillalsoplayacriticalroleinsupportingcorporateengagement.Thus,itisalsoimportanttofocusonkeytocutcarbonpreparealistofkeyprioritisetheinclusivegoalscarbontransitionandassessthetheengagementofdifferentparticipantsandadoptadiversifiedapproachtopromotethesystematicemissionlow-carbontransitionmaterialissuesandmilestonespathwaysachievementstransformationofeachlow-carbontransitionpriority.Thatway,corporateswillbefacilitatedtorealiselow-issues/topicsforcarbontransition.Inaddition,toavoidineffectiveengagementasmuchaspossible,institutionalinvestorsIdentifytargettargetcorporateneedtoidentifythekeyissuesthatarerelatedtoorneedtobediscussedwithmultiplecorporates.Inthatcorporatestoprocess,theinvestorsshouldpromoteunifiedactionsandsolutionsamongthem.Institutionalinvestorsmaybeengagedandalsoneedtomakejudgementsaccordingtotheextentthatcorporatesareinfluencedbynationalstrategiesdefinepriorityandpoliciesorthemarket.Theyshoulddeterminewhetherthecorporatesneedtofurtherenlistthehelpofrelevantgovernmentdepartments,policyandstandardmakersorregulators.Atthisstage,specificthematicOngoingDialogueandpolicyengagementpracticesinChinathatinstitutionalinvestorscouldconsiderinclude:Figure2-1:InstitutionalInvestorsEngagingtoPromoteLow-carbonTransitionofCorporatesinChina:ProcessandKeyTasksSource:AworkbytheprojectresearchteamInvestmentResearchKnowledgeBuildingInstitutionalinvestorsmayexpecttoacceleratethereductiongoalsandrelatedlow-carbondevelopmentThematicengagement:InstitutionalinvestorsPolicyengagement:Institutionalinvestorsshouldlow-carbontransitionofcorporatesinChinathroughpoliciessetbythestateandlocalgovernmentsforshouldfirstidentifythekeyissuesthatneedtobeactivelyrespondtoandprovidefeedbackonthein-depthengagementtopromotetheachievementoftheseindustries.Moreover,theyshouldanalyseandjointlypromotedbymultiplerelatedcorporates.proposedpoliciesrelatedtoclimatechangeandlow-China’scarbonpeakingandcarbonneutralitygoals.identifytheopportunitiesandchallengesfacedbytheAfterthat,theyshouldcollaboratewithrelevantcarbontransitiontobeintroducedbycompetentForthatpurpose,theyshouldcontinuetoconductcorporatesduringtheprocessoflow-carbontransitionassociations,keycorporates,researchinstitutionsgovernmentdepartments,policyandstandardrelevantresearchonthecurrentsituation,trendsandexplorelow-carbontransitionpathwaysandcruxandexpertsinrelatedfields.Together,theyshouldmakersandregulators.Theinvestorsmayevenandfuturedevelopmentdirectionofthelow-carbonofemissionreduction.Theoutcomesoftheirdailyconductthematicindustryresearchandcapacitycooperatewiththemonthebasisofthegeneraltransitionofhigh-carbonindustriesinChinaintheirinvestmentresearchcanhelpinstitutionalinvestorsbuildingonlow-carbontransition,collectivelyestablishmentofthesupportpolicysystemfordailyinvestmentresearchwork.Suchindustriesincludeestablishamoresystematicknowledgeframe,formapublishresearchfindingsonlow-carbontransition,China’scarbonpeakingandcarbonneutralitygoalspowergeneration,petrochemicals,chemicalsandmorecomprehensiveknowledgepool,andaccumulateanddevelopgroup/industrylow-carbontransitiontojointlyissuemoredetailedandthoroughpolicies.buildingmaterials.Theyshouldalsoincludeclimatemultipleelementsofcorporates’low-carbontransition.andsustainabledevelopmentstandards.Thatway,Institutionalinvestorsshouldprovidesupportchangeinmacroanalysisandcasestudies.Specifically,Withallthese,institutionalinvestorscanefficientlytheycanraisetheawarenessandattentiontowardsinformationtorelevantgovernmentdepartments,theyshouldfullyunderstandthecurrentstatusofanalysethecruxtoemissionreduction,layingasolidlow-carbontransitionwithrealactionsandadvocatepolicyandstandardmakersandregulators.carbonemissionsinkeyindustriesinChina,especiallyfoundationforinstitutionalinvestorstocarryoutamoreunifiednet-zerotransitionactionamongSuchinformationincludesthebestpracticesthehigh-carbonindustries,thecarbonemissionspecificengagementwork.Chinesecorporates.andexperienceaccumulatedthroughcorporateengagementandthematicengagement.Itwillbeawaytocontributetoahealthypolicyenvironmenttosupportthegreenandlow-carbondevelopmentoftherealeconomy.45CatalysingClimateActions:PartIIDevelopingNewEcosystemforInstitutionalInvestorsEngagingto46InstitutionalInvestorsEngaginginCorporates’Low-carbonTransitionCatalyseClimateActionsofChina’sRealEconomyTable1:Exampleofthekeyissues/topicsofinstitutionalinvestorsengagingtopromotelow-carbontransitionofcorporatesinChinaOntheotherhandCommitmenttoMakecarbonpeakingandcarbonneutralitycommitmentsconsistentwithcarbonpeakingandcarbonneu-China'scarbonpeakingandcarbonneutralitygoalsproposedbythecompetentinstitutionalinvestorsshouldengageinadialoguewithasingleprioritycorporatebyidentifyingtralitydepartment/association(ifany).andprioritisingtargetengagedportfoliocompanies.Thisisknownas‘corporateengagement’inthetraditionalsense.Foraone-on-onedialoguewithasinglecorporate,theinstitutionalinvestorshouldfirstEncouragecorporatestodevelopacarbonpeakingandcarbonneutralityselectthekeyportfoliocompaniesthathavethemostpotentialforlow-carbontransitionanddeterminetheprioritythereof.Normallyspeaking,institutionalinvestorsholdtheequityofthousandsofcorporatesintheircommitmentaheadofthe‘30/60’goals.portfolios.Yet,consideringthelimitationofresources,institutionalinvestorscanonlyconductcommunicationanddialoguein-depthwithafewkeycorporatesfirstorinbatches.ThismeansthatinstitutionalinvestorsSetsdetailedandphasedreductiontargetsbasedoncorporates'carbonneedtoidentifytheclimate-relatedrisksandopportunitiesfacedbyportfoliocompaniestheandassesstheirclimateresiliencebasedontheircarbonemissionsandenvironmentalbenefits.Thatway,theycanscreenpeakingandcarbonneutralitycommitments,includingquantifiedshort-,outthekeyportfoliocompaniesthathavethemostpotentialforlow-carbontransition,prioritisethemandcompilealist.Intheprocessofprioritising,institutionalinvestorsshouldalsoconsidertheirownshareholdingsEmissionmedium-andlong-termemissionreductiontargets.andownershipcoverageofthesekeycorporates,aswellasthedegreeofengagementandwillingnessofotherinstitutionalinvestors.TheyshouldstrikeabalancebetweenimprovingthefinancialperformanceoftheReductionTargetsClarifythescopeandboundaryofGHGaccounting,andtheemissionportfolioandpromotingitslow-carbontransition.Prioritisingportfoliocompaniesforengagementcanalsohelpinstitutionalinvestorsunderstandthereadinessofcorporatestomakealow-carbontransition.Beingreductiontargetsshouldcoverscopeoneandscopetwoemissions,aswellasinformed,institutionalinvestorscanbewellpreparedtoprovidepertinentadvicetocorporatesinfavouroftheirtransitionneeds.scopethreeemissionsthataresignificant(basedonthefactualsituationofAfterprioritisingtheengagedportfoliocompaniesandcompilingalist,institutionalinvestorscanengageincorporates).thekeycorporates.Inon-goingdialogue,theycanurgethecorporatestomakealow-carbontransition.Intheprocessofon-goingdialogue,institutionalinvestorsshouldattachgreatimportancetothefivekeytasks:Developspecifictransitionapproaches/initiativestoachieveshort-,medium-andlong-termemissionreductiontargets,planthetechnicalapproachesforeachphaseaswellasthecapitalexpenditureplans.IdentifythesourcesofGHGemissionsinvolvedinthetransitionapproaches/TransitionPlaninitiatives(correspondingtotherangeofGHGemissionscoveredbythereductiontarget).Incorporate‘JustTransition’toassesstheimpactoftransitionapproaches/initiativesonothersustainabilitygoals(e.g.,UNSDGs),andidentifycountermeasures.1）Identifyandpreparealistofkeyissues/topicsoncorporates’low-carbontransitionfortargetAttheboardlevel,designaterelevantpersonnelorestablishacarbonneutral/corporates.Firstly,institutionalinvestorsshouldOntheotherhand,theyshouldexplorethekeyclimatechange/sustainabledevelopmentcommitteetocoordinateandoverseeaccumulateresearchfindingsandknowledgeissues/topicsfacedbycorporatesduringlow-fromdailyinvestmentresearch,includingacarbontransitionsuitableforChina’srealityrelatedworkonclimatechangeandlow-carbontransition.deepunderstandingofclimate-relatedrisksaccordingtoChina’sdevelopmentstageandandopportunities,aswellasthetrendsandcharacteristics.TheyshouldfullyconsiderAtthemanagementlevel,designateexecutivesandsetupspecialteams/prioritiesoflow-carbontransitioninChina’sChina’ssustainabledevelopmentandstrategieshigh-emittingindustriesandmarketpractices.relatedtolow-carbontransitionincludingdepartmentstocoordinatetheimplementationoflow-carbontransitionBasedonthose,institutionalinvestorscanChina’scarbonpeakingandcarbonneutralityidentifythekeyissues/topicsoflow-carbongoals.Basedontheaboveconsiderations,theyInternalactionsacrossinternaldepartments.transitionfacedbythecorporatestheyengageshouldformalistofthekeyissues/topicsofGovernanceinandpreparealist.Duringthisprocess,Chinesecorporates’engagementinlow-carbonEnsurethattheboardandmanagementareequippedtomanageclimaterisksinstitutionalinvestorsshouldactivelydrawtransitionthattakesboththeinternationaloninternationalbestpracticesandhigh-leveltrendsandChinesepracticesintoaccount.andopportunities,buildingcapacitywherenecessary.standardsandconsidertheconsistencyoftheTable1illustratesanexampleofthekeyissues/keyissues/topicswithglobalnet-zerogoalsandtopicsofinstitutionalinvestors’engagementinLinkphasedemissionreductiontargetstoemissionreductionandsustainabledevelopmentstrategies.Theyshouldlow-carbontransitionofChinesecorporates.ItpromotethealignmentofChinesecorporatesprovidesareferenceforinstitutionalinvestorstransformationpathways/implementationofmeasures,andperformancewithinternationaldevelopmenttrendsandthetocompilealistofthekeyissues/topicsofformationofinternationalbasicconsensus.engagedcorporates’engagementinlow-carbonassessmentindicators.transitionaccordingtothepracticalsituation.Refertotheclimate-relatedinformationdisclosurerequirementsandguidelinesissuedbyinternationalauthorities(e.g.,TCFD,ISSB,etc.)orwidelyusedathomeandabroad,andcarryoutinformationdisclosurerelatedtoInformationclimatechangeandlow-carbontransitioninconjunctionwiththerequirementsDisclosureofdomesticauthorities/associations(ifany).Publishindependentreportsonaregularbasis,ordisclosemilestonereductiontargets,implementationstatusofreductionandtransformationactions,andarrangementsfornextstepsinannual/ESGreports.Source:Aworkbytheprojectresearchteam47CatalysingClimateActions:PartIIDevelopingNewEcosystemforInstitutionalInvestorsEngagingto48InstitutionalInvestorsEngaginginCorporates’Low-carbonTransitionCatalyseClimateActionsofChina’sRealEconomy2）Identifyandprioritisethematerialissues3）Setclear,realisticandmeasurabletran-4）Basedonthetransitiongoalsandmile-5）Continuouslytrackprogressandreviewofpriorityengagementamongthekeyis-sitiongoalsandmilestonesforthematerialstones,assistcorporatesdeveloptransitionmilestonesinatimelymanner,cooperatesues/topics.issuesandensurethatthefinalgoalsare‘in-planswithclearpathways.withcorporateswithalong-term,openatti-clusive’.tudeuntilthefinalgoalisreached.Substantivelow-carbontransitionkeyissue/Afterdefiningthegoalsandmilestones,topicsareimportantenoughamongnumerousSettingtransitiongoalsandmilestonesforinstitutionalinvestorsshouldlaunchtheirInstitutionalinvestorsshouldfirstdefineissues/topicsinthisfield.Asmentionedabove,corporatesontheengagementissuesisaworkaccordingly.Specifically,theyshouldthetransitiongoals,milestonesandmaterialissuesusuallyhavecriticalimpactsonfundamentalelementofcorporateengagementbasethemselvesonthesetransitiongoalscorrespondingtransitionpathwayswiththetheeconomic,environmentalandsocialaspectsforinstitutionalinvestors.Beforeorduringandmilestonessetforthecorporatesonengagedcorporates.Afterthat,theyshouldofcorporatesandtheassessmentanddecision-thedialoguewithcorporates,institutionaltheengagementissue,combinedwiththecontinuouslytrackthetransitionperformancemakingofcorporates’stakeholders.investorsshouldensurethatthetransitionaccumulationofdailyinvestmentresearchandofthecorporatesontheengagementgoalsandmilestonessetforcorporatesonthetheactualsituationandneedsoftheengagedissues.Theyshouldevaluatethecorporates’Therefore,institutionalinvestorsshoulddiscussselectedengagementissuesareclear,realisticcorporates.Theyshouldworkwiththeengagedtransitionprogresswithrelevantdomesticwithengagedcorporatestoselectthesematerialandmeasurable.Thisisthekeytoensurethecorporatestoanalyseandderiveadetailed,andinternationalevaluationindicatorsandissuesaftercompilingthelistoffocustopicsforcontinuityandeffectivenessofthedialogue.clearandmostcost-effectivetransitionpathway.standards(e.g.,theClimateAction100+NetZerolow-carbontransition.TheyshouldprioritiseTheyshouldhelptheengagedcorporatesplanCompanyBenchmark),aswellasthepracticalthedialoguewithcorporatesonthesematerialWhileensuringthattheoutcomesofthepractical,concreteandimplementabletransitionexperienceanddisclosureofdomesticandissuesandinvestresourcesintheengagementengagementaretrulysupportiveofChina’ssolutionsfromvariousaspectstoachieveinternationalcorporatesonclimatetransition.practicesonthem.carbonpeakingandcarbonneutralitygoals,thegoalsandmilestonesandrealiselong-institutionalinvestorsshouldpayspecialtermsustainabledevelopmentandnet-zeroInstitutionalinvestorsshould,astheygainMoreover,theyshouldhelptheengagedattentiontothe‘inclusiveness’ofthetransitioncommitment.adeeperunderstandingoftheengagedcorporatessolvethedifficultiestheyfaceongoalssetforcorporates.Thefinalgoalssetforcorporates,promptlyidentifythedifficultiesthesetopicsandpromotethelow-carbontheengagementissueshouldallowinstitutionalInstitutionalinvestorsshouldalsosortoutandfacedbytheengagedcorporatesinthelow-transitionofcorporatesonthem.Itisworthinvestorstoadjustthemilestonesandthesummariseexcellentpracticesathomeandcarbontransition.Inthatcase,theyshouldnotingthat,inadditiontoselectingmaterialpathwayaccordingtotheinternaldevelopmentabroad,andsharewithcorporatesandgiveproactivelyhelpthecorporatesfindbetterissueswiththeengagedcorporates,institutionalandtransformationofcorporates,externalthemmoredirectguidanceinthefollow-upsolutionsandcommunicatewiththemwithainvestorsshouldalsohaveadeepunderstandingpolicyandmarketshifts.Suchadjustmentscommunicationanddialogues.long-termandopenattitude.Theyshouldworkoftheiroverallbusiness,operationmanagement,shouldensuretheachievementofthefinaltogethertoachieveamoremacroandlong-termculturalvaluesandlocalpoliciesthroughduegoals.sustainabledevelopmentvisionandnet-zerodiligenceanddialogue.Theyshouldbekeenlycommitment.awareofthedifferencesbetweenengagedThe‘inclusiveness’ofthefinaltargetsisalsocorporatesandtheirpeersinaddressingclimatereflectedthatgoalsthataretooharshwillchangeissues.In-depthstudyoftherelevantnotbesetinthecommunicationwithsomerisksandopportunitiesfacedbycorporatesengagedcorporatesfacingmajortransformationcanhelpcorporatesidentifythematerialissuesdifficultiesorintheearlystageoftransition.Thisrequiringexternalassistanceandsupportmorepracticewillensurethatthegoalssetarerealisticaccurately.andachievablefortheengagedcorporates.Forthesecorporates,institutionalinvestorsshouldalsoadopta‘progressive’approachtocommunication.Theyshouldupgradethegoalsovertime,dependingontheactionsofanddialogueswiththeengagedcorporates.Thisapproachcangivethesecorporatestheconfidencetotakethe“firststep”oftransitionandhelpthemovercomingthechallenges.49CatalysingClimateActions:PartIIDevelopingNewEcosystemforInstitutionalInvestorsEngagingto50InstitutionalInvestorsEngaginginCorporates’Low-carbonTransitionCatalyseClimateActionsofChina’sRealEconomyFidelityInternational’sEngagementCaseStudywithaChineseCementManufacturingCompanyandReflectionsforChineseCementCompaniesFidelityInternational’sEngagementCaseStudywithaChineseCementManufacturer:ReflectionsforChineseCementCompanies:FidelityInternational(hereinafterreferredreceivedanincreaseinitssustainabilityscoreinproactiveinlimitingitsenergyThechemicalreactionsinherentinthecementproductiontoas“Fidelity”)adoptsanactivesustainable2021and2022byanexternalthird-partyratingsconsumptionpertonneofcementasaccountforupto60%ofcement’scarbonemissions,whichinvestingapproachinguidingitsdecisionstoprovider,demonstratingitseffortsincontinuouswellasboostingitsoveralloperatingisoneofthekeychallengesfacedinlow-carbontransitionhaveapositiveimpactonsociety.Inalongimprovement.advicefromFidelity,anexternalefficiency.Whilethecompanyofcementcompanies.Inordertopowertheirtransition,run,engagementwithcompaniesandindustrythird-partyratingsproviderraisedthecompany’scurrentlyhasthelowestemissionFidelitybelievesthatinvestorsneedtotakeadynamicviewgroupsisthekeytoimprovingcompanybehaviorsustainabilityscorein2021,andupgradeditdensityamonglargecementofacompany’stransitionandESGdevelopmentpotentials,andperformance,andthereforeisatthecoreofagainin2022,demonstratingacontinuousproducerswhenmeasuredbyunitandbepreparedtoengageandpartnerwiththemovertheFidelity’ssustainableinvestingapproach.Fidelityimprovement.ofoutput,theycontinuedfollowinglongterm.Asmentionedintheabovecase,Fidelity’syearsofrequirescompaniestodisclosepositiveprogressoursuggestionsofestablishingmid-engagementwiththeleadingcompanyhaseffectivelyhelpedonESGtopicssuchasgenderdiversity,climateFurtheranalysisintothecompany’soperationstermcarbonreductiongoalsaswellitstransitionanddevelopment.Beingtheindustry’sleader,changerisks,shareholderrights,andsupplyrevealedthatthecompanywassellingitsassettingamorestringenttargettotheirprogresshasdroveothercompaniesintheindustrytochainmanagement.Currently,climatechange,effortsshortbasedonhowitwasdisclosingandachieve6percenttotalreductioninkeeppaceandacceleratetransition.Asseen,long-termandgreenhousegasemissions,andotherrelatedbenchmarkingitsemissionsdata.Forexample,emissionintensityby2025.practicalengagementbetweeninvestorsandcompaniescantopicshavebecomethefocusandhottopicsofsomeglobalsustainabilityratingagencieshaveefficaciouslypromotepositiveimpactincompanies,therebyFidelity’scompanyengagement.beenratingthecompanybasedonemissionsMoreover,thecompanyhastakenitenablingreformswithintheindustry.permilliondollarsofrevenue,butthisoverlooksuponitselftoexplorenewwaystoCuttingemissionsinthecementindustryisoneofthebasicdynamicsoftheglobalcementreduceitsemissionsofcarbonandInaddition,oneofthechallengesfacedbysustainableinvestorscrucialtoChina’snationaldrivetowardsnetzeroindustry:prices,productionandconsumptionotherharmfulgreenhousegases.isthelackofeffectiveinformationdisclosureoncompanies’by2060.Infacilitatingdecarbonizationwithinarehighlylocalizedduetohighshippingcosts.Forexample,ithasdevelopedanlow-carbontransitionstrategiesandtheirimplementationthecementindustry,Fidelity’sequityresearchConsequently,thepricesofcementinChinaefficientsystemtocurbnitrogenprogress.Withoutrelevantinformationtosupportanalysisandandsustainableinvestingteamshavestartedtendstobe40to50percentcheaperthanintheoxideemissions,whichinmanyformopinions,effectivecommunicationcanbeimpeded.speakingtothemanagementofChina’ssecond-West.Werealizedthatapplyingrevenue-basedcaseshavegreaterglobalwarminglargestproduceraboutemissionstargetsinlateemissionsmetricswouldbynatureplacethepotentialthancarbondioxideTothisend,FidelityhasalsoimproveditsownESGrating2020.ThiscompanyisaleaderinthedomesticChinesecompanyinadisadvantagedpositioninemissions.couldcausemoreglobalframeworktoensureeffectivetransformationofESGdatacementproductionindustry,headquarteredcomparisontoitsglobalpeers.Instead,utilizingwarmingthancarbonemissions.toguideinvestmentdecisions.Atthesametime,wealsoinAnhuiProvince,andlistedinbothA-sharevolume-basedmetricsthatreflectemissionsperencourageallcementcompanies,regardlessoftheirstageofandH-sharemarkets.Sincethen,FidelityhasunitofactualcementproductionwouldprovideThereareotherindicatorsthatothertransition,tosystematicallysortoutanddisclosetheirESGmaintainedin-depthcommunicationwiththeamoreaccuratecross-bordercomparisonlargecementmakersinChinaarepracticestoimprovecommunicationefficiencywithinvestors.companyandactivelyexploreddecarbonizationandabetterpictureofthecompany’scarbonstartingtofollowthecompany’spathwaysinordertoimprovethecompany’sreductionefforts.WesuggestedthecompanyleadinESGcommitments,astheoverallESGcompetitiveness.tocommunicatethisclearlytoexternalgovernmentpushesaheadwithsustainabilityratingsagencies,suchthatnationwidedecarbonizationtargets.Priorourfirstengagementwiththecompany,thecompany’seffortscanbere-evaluated.Webelievethatthedrivetowardnetthecompany’smanagementhadbeguntoSubsequently,thecompanyreceivedanupgradezero,ontopofseriousengagementactivelyadvanceitsESGandsustainableintheirESGratings.byinvestors,willeventuallyhelpdevelopment.Therefore,reflectingsomeofeventuallyfirmupagreenerpathfortheimprovementsthecompanyhasmadeinWhileFidelityhasprovidedadviceandChina’scementindustry.responsetoFidelity’sadvice,thecompany’sencouragement,thecompanyhasalsobeen51CI加nas速ttait气luyst候iionng行aC动llIinm：vaetsetoArcstiEonngsa:ginginCorporates’Low-carbonTransitionPartIIDevelopingNewEcosystemforInstitutionalInvestorsEngagingto5251机构投资者参与支持企业低碳转型CatalyseClimateActionsofChina’sRealEconomyAllianzGlobalInvestor’sEngagementCaseStudywithaEuropeanOil&GasCompanyandReflectionsforChinesePetrochemicalCompaniesAllianzGlobalInvestor’sEngagementFeb20192020CaseStudywithaEuropeanOil&GasCompany:Intheyear2020,throughthecollaborativeeffortsofdifferentinvestorsandstakeholders,thecompanyAsanactiveassetmanager,AllianzGlobalThefirstengagementmeetingwiththecompanywasfinallyannouncedastrengthenedversionofclimatesenseofthelevelofaccountability,transparencyInvestor(hereinafterreferredtoas“AllianzGI”)heldbackinFeb2019whenitannouncedanupdatedambitionswithmoretangibleevidence.Thekeyonlobbyingaswellastheexecutiveincentiveiscommittedtodrivingpositivechangeandversionofclimatechangestrategyaweekearlier,andmeasuresincludediminishingoilproductsalesby30%structureandrespectivealignmentwiththefirm’sbelievesthatconstructiveengagementdialogueourpurposewastokickstarttheconversationandandgrowingenergyproductionbyhalffromLNGanddecarbonisationjourney.Asaconsequenceofthewithinvesteecompaniesisessential.Withintheunderstandmoredetails.Thestrategy’sprimarygoalshalffromelectricity,mainlyfromrenewables.Besides,dialogueandevidenceofsuchitems,AllianzGImanysustainabilitytopics,weconsiderclimateincludeda15%reductiontargetby2025onitsabsoluteitalsoconfirmstheambitionofachievingNetZerosupportedthefirm’sresolutionarounditsclimatechangeamonghumanity’smostpressingGHGemissions(Scope1+Scope2)basedonabottom-by2050inScope1+2+3andreducingtheScope3strategy.challengesandhassignificantimplicationsforupcalculationapproach,majorlythroughreducedemissionsofitsEuropeancustomersby30%inabsoluteallthreeESGelements.Alotofourdiscussionsflaring,electrificationofindustrialsprocesses,andvalue.Althoughthecontentssoundmaterial,the‘NetReflectionsforChinesePetrochemicalwithinvesteecompaniesfocusonclimateriskreductioninmethaneemissionamongotheractions.Zeroby2050TogetherwithSociety’commitmentCompanies:assessments,exploringhowcompaniesreflectAlthoughthecompanyhascompletedarelativelywaslaterchallengedonitshonestybyafewinvestorclimateriskandthelow-carbontransitionincomprehensivelifecycleanalysisofitsproductstoactivists.WealsoconsideritessentialtoengagewithTosupportChinesepetrochemicalcompanies’theirstrategy,operations,andproductpipelines.betterassessitsScope3emissions,itstressedthatthecompanyoncemoretounderstandhowitwilllow-carbontransition,webelieveinthenecessityClimatechange,planetaryboundaries,andScope3emissionsarepartlyunderthecontrolofensureachievingthegoals.todevelopcustomizedactivestewardshipinclusivecapitalismaltogetherformAllianzGI’sclients,sothat’sleftoutoftheirdecarbonisationstrategiesaccordingtodifferentlistedcompanies’three-pillarstrategicsustainabilitythemes.targets.Inthelateroccasion,weengagedwiththecompany’sorganisationaltypes,shareholderstructuresandexecutivesontheirsay-on-climatetoinformourvotesuniquecompetitiveadvantages.EngagementsneedGiventheabovefocus,weidentifiedthisForanO&Gcompany,Scope3emissionscanaccountattheAGMandmakesurethattheirclimateplansweretobedrivenbyambitiousoutcomes,whereasaEuropeanmulti-nationalenergyandpetroleumforasmuchas85%ofitstotalGHGemissions.Asambitiousenough.Wehavealsoinformedthecompanysustainabletransitioninthelongrunwouldalwayscompanyasoneofthefewsignificantlistedsuch,it’simportanttohaveagoodunderstandingofthatAllianzGIbelieveson-goingtrackingandmonitoringrequireaprofitablepathwaywithconcreteshortplayersintheindustryglobally.ItoperatesinhowtheCompanyisaddressingthemwhilewealsoisakeyelementtosuccessfulengagementoutcomes.andmid-termtargets.morethan130countriesanddealswiththeappreciatethatscope3GHGreductionswillbedrivenInthefuture,wewillcontinuetrackingthecompany’sbusinessalongtheentireoilandgasvaluebypolicymakersandtheenforcementofregulation,climateactionandnet-zeroalignmentswithafocusAdditionally,wealsoconsidermore‘active’chain.Itaccountsfor2%oftheOil&Gaschangesinconsumerbehaviorsinparticular.Therefore,onwherethecompanycanmakeadifference.Asanmeasurescanmakeadifferencewhenprivateandproductionand0.4%oftheglobalO&Greserves.withajointeffortofourglobalstewardshipteamexample,whichwasalsomentionedintheengagementindependentengagementscontinuouslymeetConsideringthatthenet-zerotransitionandportfoliomanagers,wekeptourdiscussionson-meeting,wewillencouragethefirmtoworkwithobstacles.Collaborativeengagementsbyajointpathwayofthiscompanyhasimplicationsforgoingwiththecompanyduringarangeofoccasions,anyrelevantthink-tankontheestablishmentofandeffortofinvestorsandescalationstrategiessuchitself,itspeersaswellasthesupplychain,weincludingpre-AGM/EGMengagements,regularcontributiontoanindustry-widedecarbonisationassendingopenletterscanalwaysbepowerfulinitiatedthisengagementactivitysincemoreconversationsonbusinessstrategies,dialoguestoframeworkalignedtotheParisAgreementoflimitingtoolsforshareholders,aslongasthey’rewithgoodthanthreeyearsagoandhavewitnessedaddressallegedcontroversiesinnewprojects,andglobalwarmingto1.5°C.intentions.trackableprogressalongwithourrecurringthematicengagementspecificallyonclimateambitions.conversations.ItisoneofthemostadvancedWecommunicatedourexpectationsanddemonstratedThroughthediscussions,weevaluatedandfoundWiththeincreasingnumberofguidelinesandandtransparentinitsdecarbonisationstrategythematerialitythatthecompanyshouldamenditsthatthecompany’sclimateapproachissupportedbyregulationspromptingpetrochemicalcompanies’withaclearconsiderationforajusttransitionclimatestrategy–includeScope3GHGreductionanet-zeroambitionby2050includingallemissionslow-carbontransitioninChina,weexpecttoseenotonlytowardsemployeesbutalsolocaltargets,rebalancetheportfoliomixtowardslow-carbon(scopes1-3)aswellasconcreteshort-andmedium-theirportfoliomix’saccelerationtowardslow-communities.technologies(i.e.renewableenergies,biofuels,CCS)andtermtargets.Thelatterisessentialgiventhecurrentcarbontechnologieswithgreaterefficiency.setquantitativesustainability-relatedKPIstoexecutivedecadeiscriticaltodecarbonisingthefirm’senergyAllianzGIwouldcontinuetosupportourinvesteecompensation.Inthemeantime,wealsoreinstatemix.Throughthisengagement,AllianzGIgotagoodcompaniesbysharingknowledgeonindustrybestthatmaintainingtheO&Gbusinessistheconditiontopractices.developaprofitableandreliablerenewablebusiness,whichisthekeytoasustainabletransitioninthelongrun.53CatalysingClimateActions:PartIIDevelopingNewEcosystemforInstitutionalInvestorsEngagingto54InstitutionalInvestorsEngaginginCorporates’Low-carbonTransitionCatalyseClimateActionsofChina’sRealEconomyRecommendation1.Developastewardshipgovernancestructureandclarifyrelatedinternalpoliciestoensureinternalinformationsharingandenhanceexternalinformationdisclosure.2.2ENHANCINGTHEFUNDAMENTALRegardinginstitutionalinvestorsshoulddevelopaneffectiveinternalstewardshipgovernanceSTRENGTHOFSTEWARDSHIP:LAYINGthestructure,withwell-definedstewardshipresponsibilitiesandfunctionsfromthetoptotheTHEFOUNDATIONFORSTEWARDSHIPgovernancebottomforconductingstewardshipactivities.AtleastonepersonshouldbeproposedinANDTAPPINGLOW-CARBONstructuretheboardofdirectorsandmanagementtocoordinateinternalstewardship,supervisedailyENGAGEMENTPOTENTIALimplementation,andapprovepivotalstewardshipdecisions.Atthedepartmentallevel,anindependentdepartmentorpositionswithintheexistinginvestmentresearchdepartmentInstitutionalinvestorspaycloseattentiontoandinvesttotaptheirpotentialforengaginginlow-carbonshouldbeestablishedtocarryoutrelatedworkinstewardship.Itsresponsibilitiesinnurturingtheirown‘strengthtoengageinlow-transitionandfollowthepaceofleadinginstitutionalshouldincludeformulatinganddisclosinginternalstewardshippolicies,evaluatingandcarbontransition’andactivelycarryingoutinvestorinvestorsinthisfield.Forinstitutionalinvestorswhointegratingvotingsuggestions,andconductingdialogueswithportfoliocompanies.Ifanengagementworkwiththethemeoflow-carbonhaveseasonedexperienceinconductinginvestorindependentdepartmentissetup,itisnecessarytostrengthenthecollaborationandtransition.Meanwhile,theyshouldalsoattachequalengagementpractices,theyshouldexaminetheirinformationexchangebetweenthedepartmentandtheinvestmentresearchdepartment,importancetonurturingandimprovingtheirownpreparationandimplementationbasedonthefundmanagers/portfoliomanagers.Thatway,thethreepartiescanbeensuredto‘fundamentalstrengthofstewardship’.Institutionalfollowingrecommendationsandfurtherimprovetheirengageinspecificdialoguesandvotingdecisionsunderthepremiseofclearrightsandinvestorsshouldactivelyconsiderandexaminetheir‘fundamentalstrengthofstewardship’.Theyshouldresponsibilitiesandavoidingpotentialconflictsofinterest.Allpartiesshallactivelyengagematurityinestablishingandimprovingastewardshipbuildthemselvesintoindustryleadersinlow-carboninandcontributewhileensuringtheindependenceofdecisionsrelatedtostewardship.system,formingaproactiveawarenessthereof,andtransition,andmobilisetheirpeerstojointlybuildanewstrengtheningtheimpactofsustainabledevelopment.ecologicallandscape.Insuchalandscape,institutionalRegardingstewardshippoliciesoninvestorengagementandvotingshouldbedeveloped.TheTheyshouldmeasurewhethertheyhaveasolidinvestorswillexpeditewithconcertedeffortChina’srealtheinternalpurposeistostandardiseinternalstewardshipgovernanceanditsrelevantdecision-foundationforstewardshiptocarryoutin-deptheconomyinrespondingtoclimatechange.policiesmakingprocessesandidentifyandmanagepotentialconflictofinterests.Institutionalengagementinlow-carbontransition.Asmentionedinvestorsshouldspecifyintheirpoliciesthefollowingaspectsoftheirstewardship.1)Theearlier,‘fundamentalstrengthofstewardship’istheStewardshipoverallmotivationandobjectives.Theyincludetherequirementsandexpectationsforthefoundationforinstitutionalinvestorstothoroughlyforlow-carbonportfoliocompanies,andtheconsistencywiththeiroverallinvestmentgoalsandstrategies.engageinlow-carbontransitionwork.Itisaprerequisite2)Internalgovernanceandresourceinvestment.Theyincludethepositionsinvolvedforin-depthcommunicationwithcorporatesonthesetransitioninstewardship,powerandresponsibilityallocationanddecision-makingprocesses,coreissuesrelatedtoChina’ssustainabledevelopmentintegrationofinvestmentprocessesandinvestmentdecisions,theprofessionalismandandevenglobalsuccessfulresponsetoclimatechange.sGovernacontributionsofrelevantpersonnel,aswellastheresourcesinvestedandmeasurestakenSomeinstitutionalinvestorsarewillingorinitiallytructuncetoimprovethequalityandefficiencyofstewardship.3)Relevantinternationalanddomesticengagedinthelow-carbontransitionofcorporatespolicies,regulations,andstandards.Theconsistencyoftheirownstewardshipwiththebuthavenotyetformedacompleteinternalsystemrespecificrulesinthesepolicies,regulationsandstandardsshouldbeexplained.4)Theorestablishedcorrespondingstewardshipcapabilities.CollaborativeEngagingscopeofcoverage.Itincludestheassetcategoriescovered(suchasallassets,specificassetForthem,thenurturingof‘fundamentalstrengthofernalcategories,orentrustedmanagementassets)andthefocusofstewardship(suchastopicsstewardship’isparticularlycrucial.PossessingtheIntpoliciesandindustriesofconcern,focustopicsofpriorityengagement,keyvotingissues,etc.).5)‘fundamentalstrengthofstewardship’isasourceofThemethodsandprocessesadopted.Theyincludethemethodsandprocessesfordialogueconfidencetofurtherenhancethe‘strengthtoengageVotingandexpansionwiththeportfoliocompanies,theprocessesandstandardsforexercisinginlow-carbontransition’.votingrights,toolsformeasuringandtrackingthetransitionofthecorporates.TheinvestorshouldclarifyhowitidentifiesandmanagespotentialinternalandexternalconflictsofTothisend,theprojectresearchteamproposesfourinterestindifferentworkprocesses.6)Otherrelevantcontentthatneedstobeclarified.specificsuggestionstoassistinstitutionalinvestorsnurtureandenhancethe‘fundamentalstrengthofESGinvestmentNurturingandFundamentalRegardingitisrecommendedthatinstitutionalinvestorsrecordandsharefeedbackonstewardshipstewardship’.Itisrecommendedthatinstitutionalresearchenhancingtheinvestmentinformationworkitembyitemintheirinternalsystems.Thispracticecanensurethatfeedbackcanbeinvestorswhoarecurrentlyintheinitialstageoffundamentaldisclosuresharedinternallyandfacilitatereal-timetrackingandfollow-up.Onthepremiseofinternalinvestorengagementgiveprioritytonurturingtheresearchinformationexchangeandsharing,institutionalinvestorsshoulddisclosetheprogressoffollowingfundamentalcapabilitiestocarryoutstrengthofstewardshippracticestothepublicregularlyandproactively.Suchdisclosureshouldcomplystewardshippractices.Itwillbeadvisableforthemstewardshipwithapplicablepoliciesissuedbydomesticregulators,relevantgovernmentdepartments,andassociations,withreferencetointernationalstewardshipreportinganddisclosureInformationstandards.Institutionalinvestorsshouldprovidefeedbackthroughpublicdisclosureondisclosurehowthepublichasimplementedrelevantstewardshipinaccordancewithinternalpoliciesandrelevantstandards.Moreover,theyshouldintegratestewardshipintodailyinvestmentFigure2-2:NurturingandEnhancingtheFundamentalStrengthofresearchworkandinvestmentdecision-makingprocesses.Whendisclosingtothepublic,Stewardshipinstitutionalinvestorsshouldalsofocusonintegrating,disclosing,andcommunicatingwithpeersthemostrepresentativeandsuccessfulengagementpractices.WithsuchSource:Aworkbytheprojectresearchteaminformation,theirpeers,especiallythoseatanearlystageofthisfield,canlearnlessonsandgrowtogether.55CatalysingClimateActions:PartIIDevelopingNewEcosystemforInstitutionalInvestorsEngagingto56InstitutionalInvestorsEngaginginCorporates’Low-carbonTransitionCatalyseClimateActionsofChina’sRealEconomyRecommendation2.EnhancethecapabilityofESGinvestmentresearch,climate-relatedriskstep3management,andstewardship,andcreateatripartitesupportandsynergymechanismof‘ESGinvestmentresearch+fundamentalinvestmentresearch+low-carbontransitionstewardship’.ThethirdstepistointegrateESGinvestmentresearch,fundamentalstep1step2investmentresearch,andstewardshipwhileconstantlystrengtheningandThefirststepistocontinuallyimproveESGThesecondstepistoallocateimprovingexpertiseintheseareas.investmentresearchcapabilitieswhilealsoresourcestostewardship,createaOntheonehand,institutionalimprovingclimate-relatedriskmanagementprofessionalstewardshipworkforce,investorsshouldintegrateESGcapabilities.IntermsofESGinvestmentandanddevelopoverallprofessionalinvestmentresearchandfundamentalresearch,amorespecialisedESGteamshouldbestewardshipcapabilities.First,investmentresearch.Theyshouldfullyestablish.MultipleexternalprofessionaldatabasesinstitutionalinvestorsshouldenhanceincorporateconsiderationsofkeyESGshouldbeflexiblyleveragedtobuildhigh-qualitythetrainingoftheirstaff.Theyfactors(suchasaddressingclimateandwide-rangingESGdatabases.Self-ownedESGshouldorganiseregularorirregularchange)intoinvestmentdecision-evaluationmodelsandanalyticalframeworkstheoreticalandpracticalseminarsmakingandinvestmentprocessesshouldbedevelopedandestablished.Theseanddiscussionsonstewardship,toprovidesupportresearchandpracticesprovidecomprehensiveandprofessionalsustainableinvestment,andmotivatestewardship.OntheotherESGevaluationandresearchsupportformoretransitionfinance.Thesesessionshand,throughin-depthstewardshipfocusedandresponsiblemanagementwork.Inshouldbedesignedtodevelopacenteringonlow-carbontransition,termsofclimateriskmanagement,institutionalforward-lookingmindsetintermsofinstitutionalinvestorsshouldobtaininvestorsshouldcontinuouslyimprovetheirabilitystewardshipamongthestaff.Thisanall-aroundunderstandingofthetoidentify,quantify,andmanageclimaterisks.qualityisaguaranteeofunhinderedportfoliocompaniesandaccumulateTheyshouldensurethattheinvestmentstrategiescollaborationbetweenallpartiesinclimate-relateddataandfeedbackareconsistentwiththeirunderstandingofclimatetheimplementationofstewardship.thereof.Withsuchinformation,relatedrisksandtheimpactontherealeconomy.Second,institutionalinvestorsshouldtheycancontinuouslyimproveSpecifically,1)theyshouldfullyunderstandtherecruitstewardshipprofessionalsESGinvestmentresearchandclimaterelatedrisksfacedbycorporatesinkeywithalong-termfocusoncarbonfundamentalinvestmentresearchindustriesandmakeforward-lookingjudgmentsneutrality,climatechange,andsystemanddatabase,soastoandidentificationofthevariousclimateriskssustainabledevelopment,whohavemorecomprehensivelyevaluatethefacedbyportfoliocompanies.Forsignificantaninternationalperspectiveandareportfoliocompanies.Inthisway,arisks,theyshouldquantifytheimpacts.2)Theyfamiliarwiththelocalculture,policiestripartitesupportandcoordinationshoulddevelopenvironmentalbenefitandcarbonandmarketenvironment.Withsuchmechanismof‘stewardshipforESGemissionassessmenttools,establishatrackinghires,institutionalinvestorscaninvestmentresearch+fundamentaldatabasetocontinuouslyassessandmonitorthestrengthentheirpoolofstewardshipinvestmentresearch+low-carboncarbonfootprintofinvestmentportfolios,andprofessionalsandprepareforlong-transition’canbeforged.Institutionalmeasurethecarbonintensitythereof.3)Theytermandsustainableprofessionalinvestorscanjoinforcestoimplementshouldconductclimateriskscenarioanalysistostewardship.stewardshiptaskswithlow-carbondissecttheimpactofclimaterelatedrisksonthetransitionasthecoreandstrengtheninvestmentportfolio.Theyshouldalsoassessinvestmentresearchcapabilitiestotherobustnessandsensitivityoftheinvestmentimproveinvestmentdecision-making.portfolioundervariousscenarios,andevaluatetheresilienceandcompetitivenessoftheportfoliocompaniesunderthesescenarios.57CatalysingClimateActions:PartIIDevelopingNewEcosystemforInstitutionalInvestorsEngagingto58InstitutionalInvestorsEngaginginCorporates’Low-carbonTransitionCatalyseClimateActionsofChina’sRealEconomyRecommendation3.Adoptastewardshipapproachthatcombinesengagementandvoting.Recommendation4.StrengthenexternalexchangesandcollaborationandlaunchIncorporateintovotingguidelinesthecorporatepracticesinrespondingtoclimatechange.Speedcollaborativeengagementstoprogresscorporatetransitionandindustrychangesupcorporates’low-carbontransitionbyactivelyexercisingvotingrights.concertedly.Itisrecommendedthatinstitutionalinvestorswithinandvoteatthegeneralmeetingofshareholders.ItisrecommendedthatinstitutionalinvestorsstrengthenexternalexchangesandcooperationandlaunchvotingrightsadoptastewardshipapproachthatNotably,institutionalinvestorsshouldconsidercastingcollaborativeengagement.Theyshouldadoptacollaborativeapproachandintegrateforcestocollectivelycombinesengagementandvotingtoacceleratetheanegativevoteontwooccasions.OneisthattheypromoteChinesecorporatestofulfilltheirlow-carbontransitionassoonaspossible.Bypoolinggreaterinfluencelow-carbontransitionofportfoliocompanies.InbelievethattheproposalsuggestedbythecorporateandeffectivelypromotingsystematictransitioninvariousindustriesinChina,especiallyhigh-carbonindustries,additiontoengaginginintensivedialoguewithportfolioisinconsistentwiththeprinciplesandconceptsinandcarryingoutunifiednet-zeroaction,theycanadvancetherealisationofChina’scarbonpeakingandcarboncompaniesoncoreissuessuchasclimatechangeandtheirownvotingpolicyguidelines.Theotheristhattheneutralitygoals.low-carbontransition,institutionalinvestorsshouldimplementationoftheproposalwouldhaveanegativeimprovetheirvotingpolicyandguidelines.IntheseimpactonthecorporateitselfandsocietyinaddressingFirst,ChineseandinternationalinstitutionalSecond,institutionalinvestorscanjoinanddocuments,theyshouldincludetheconsiderationofclimatechangeandotheraspects.However,beforeinvestorsshouldleveragetheirrespectivesupportinternationalandlocalinvestorportfoliocompanies’practicesinclimateactionsandcastinganegativevote,institutionalinvestorsshouldstrengths,learnfromeachother,andengageinitiatives,platforms,oralliancesfocusinglow-carbontransition.Specifically,theyshoulddefineconductin-depthinternaldiscussionsandresearchin‘many-on-one’dialoguewithselectedkeyonclimatechangeandlow-carbontransition,theirvotingactionsandprinciplesforshareholders’ontheproposalsinquestionandcomposeapositioncorporatestoacceleratetheirdecarbonisationandlaunchmoreorganisedandextensivemeetingsinvolvingrelevantcontent,andtheinternalpaperwithsufficientreasonsandarguments.Withthisefforts.Comparedtointernationalinstitutionalcollaborativeengagementsactivities.votingprocessandresourcesinvestedtomakemorepaper,theyshouldcommunicatewiththecorporateinvestors,localinstitutionalinvestorshaveaInstitutionalinvestorsshouldforwardlyjoincomprehensiveandprofessionalvotingdecisions.andhelpitfindbettersolutions.TheyshouldleadthebetterunderstandingofChina’sculture,policies,internationallyrepresentativeinvestorinitiatives,corporatetowardsamorelong-termandsustainableandmarketenvironment,andhaveaccumulatedplatforms,oralliancessuchastheClimateActionAtthesametime,institutionalinvestorsshouldactivelydirectionandtoassisttheglobalresponsetoclimatemorelocalresources.Theyshouldactivelyhelp100+,theAsiaInvestorGrouponClimateChangeseekrelevantvotingsuggestionsfromprofessionalchange.Instewardship,institutionalinvestorsshouldinternationalinstitutionalinvestorsunderstand(AIGCC),UNPRI,GlasgowFinancialAllianceforNetthird-partyserviceproviders,proxyvotingconsultants,alwayspromotelow-carbontransitionofcorporates,China’snationalconditionsandculture,connectZero(GFANZ),Net-ZeroAssetManagersInitiativeexperts,andresearchinstitutionsforkeygeneraladdressclimatechange,andtaplong-termvalue.TheywithkeyChinesecorporates,coordinatelocal(NZAMI),UN-convenedNet-ZeroAssetOwnermeetingsofshareholdersrelatedtocorporates’shouldfullyconveythisconcepttocorporateswhenresources,andbroadenlocalcommunicationAlliance(NZAOA).Theyshouldfervidlyparticipateresponsetoclimatechangeandlow-carbontransition.exercisingvotingrightsandengagingindialoguewithchannels.TheyshouldsupportinternationalincollaborativeengagementorresearchorganisedMeanwhile,theyshouldconductacomprehensivestudythem.institutionalinvestorsinconductingsmootherbytheseinvestorinitiatives,platformsoralliances.beforefinalisingavotingdecision,andactivelyengagedialogueswithkeyChinesecorporates,cultivateLeadinginstitutionalinvestorsshouldworktogetherandestablishsuccessiveandcloserelationshipswithindustryassociationsandresearchinstitutionswiththem.Comparedtolocalinstitutionaltobuildlocalcollaborativeengagementplatformtoinvestors,internationalinstitutionalinvestorssupportthelow-carbontransitionofkeyChinesehavealonghistoryofstewardshipwithrichandcorporatesandimplementChina’scarbonpeakingexcellentexperienceintools,processes,policies,andcarbonneutralitygoals.Suchplatformscanandstandardsthatarevaluablereference.Theybroadlygathermultipleforces,mainlyinstitutionalshouldactivelydiscussandexchangewithlocalinvestors.LeadinginstitutionalinvestorsshouldinstitutionalinvestorsonhowtoconductmorejointlyselectChina’skeycorporatestocarryoutefficientdialogueswithcorporates,strengthencollaborativeengagementfocusedonpromotingmutualunderstandingandtrust,andestablishathelow-carbontransitionofcorporatesandhealthycooperativerelationship.Incollaborativesummarisebestpractices.Theyshouldresearchengagement,internationalinstitutionalinvestorsanddevelopindicatorsandstandardstoevaluateshouldalsoenergeticallycontributetheirowntheprogressoflow-carbontransitionofChinesepracticalexperienceandexcellentpractices.Atthecorporates.Basedonthefindings,theyshouldsametime,theyshouldmaintainanopenattitudedevelopamethodologyandguideforinstitutionaltoguidekeyChinesecorporatestoalignwithhigh-investorengagingtocatalyselow-carbontransitionlevelinternationalstandardsforaddressingclimateofkeyChinesecorporates.Lastbutnotleast,theychangeandinternationaldevelopmenttrends.shouldorganisecorporatesandrelevantpartiestoTheyshouldalsopromoteChinesecorporatescarryoutthematiccapacity-buildingactivitiesonthethatactivelyengageinlow-carbontransitionkeyissues/topicsrelatedtolow-carbontransitionofandsupportclimatechangetospeakoutontheChinesecorporates.internationalplatform.5960AcknowledgementTeamWearegratefultothefollowingorganisationsforWearegratefultothefollowingindividualsfortheirPrincipalAdvisorProjectResearchTeamtheirinvolvementandcontributiontothiswork：involvementandcontributiontothiswork:Dr.MAJunPhoebeZhaoResearcher,TheInstituteofFinanceandSustainabilityAllianzGlobalInvestorZhongminWangFormerViceChairman,Co-Chair,TheUK-ChinaGreenFinanceTaskforceBoseraFundNationalSocialSecurityFundResearcher,TheInstituteofFinanceFidelityInternationalChairman,TheChinaGreenFinanceCommitteeoftheLiYangandSustainabilityFidelityFundManagement(China)HelenHuangManagingDirector,ChinaSocietyforFinanceandBankingXiaoliZhangHwabaoWPFundFidelityFundManagement(China)Researcher(Part-time),TheInstituteChinaAMCPresident,TheInstituteofFinanceandSustainabilityofFinanceandSustainabilityHSBCAssetManagementNinetyOneEdmondTanDirectorofStrategicManagement,Co-Director,TheMacroandGreenFinanceLaboftheResearcher,TheMacroandGreenSchrodersFidelityFundManagement(China)NationalSchoolofDevelopmentatPekingUniversityFinanceLaboftheNationalSchoolofEFundDanqingShaoDevelopmentatPekingUniversityPrudentialPingAnInsuranceNanLuoHeadofChina,UNPRIChinaLifeFranklinAssetManagementChinaLifeInvestmentManagementRongrongHuoExecutiveDirector,NinetyOneProjectManagementTeamJingyiZhangResearcher,TheMacroandGreenChinaReYunZhuFinanceLaboftheNationalSchoolofChinaNuclearInsurancePoolPeiyuanGuoChairman,ChinaSIFTheCityofLondonCorporation:WilliamElliott,DevelopmentatPekingUniversityImpaxAssetManagementChairman,SynTaoGreenFinanceJennyHao,DorisChan,ShudanGui,KatherineZhangResearcher,TheMacroandGreenAngusChoiESGAdvisoryPartner,TheInstituteofFinanceandSustainability:FinanceLaboftheNationalSchoolofKPMGAdvisory(HongKong)PhoebeZhaoDevelopmentatPekingUniversityYingShenHeadofClimateChangeandSus-FloraWangHeadofStewardship,Asia&Portfoliotainability,KPMGAdvisory(China)Manager,FidelityInternationalBinyuZhaoSustainableInvestingAnalyst,FidelityInternationalThisreportisauthoredbytheprojectresearchteamledbytheInstituteofFinanceandSustainability.Thisreportisintendedtobeforinformationpurposesonlyandisnotintendedaspromotionalmaterialinanyrespect.Thematerialisnotintendedasanofferorsolicitationforthepurchaseorsaleofanyfinancialinstrument.Itisnotintendedtoprovideandshouldnotbereliedonforaccounting,legalortaxadvice,orinvestmentrecommendations.Theopinionsorjudgementscontainedinthisreportaresubjecttochange.InformationanddatahereinarebelievedtobereliablebuttheInstituteofFinanceandSustainability,theCityofLondonCorporation,theprojectresearchteam,andtheorganisationsinvolvedinthisreportdonotwarrantitscompletenessoraccuracy.TheInstituteofFinanceandSustainability,theCityofLondonCorporation,theprojectresearchteam,andtheorganisationsinvolvedinthisreportarenotliableforanylossarisingfromthedirectorindirectuseoforrelianceonanysuchdata,forecasts,opinions,orotherinformation.61CatalysingClimateActions:InstitutionalInvestorsEngaginginCorporates’Low-carbonTransitionAbouttheInstituteofFinanceandSustainability关于北京绿色金融与可持续发展研究院TheInstituteofFinanceandSustainability(IFS)isaBeijing-basednon-profitresearchinstitutionspecializedinareassuchasESGinvestment,naturalcapital,greentechnologyinnovation,andlow-carbontransition.ItsmissionistoadvancegreenfinanceandsustainabledevelopmentinChinaandbeyond,throughhigh-qualityresearchonpolicies,marketsandproducts.Itaimstobecomeagloballyrecognizedthinktankandmakesubstantialcontributionstointernationaleffortstoprotecttheenvironment,conservenatureandcombatclimatechange.北京绿色金融与可持续发展研究院（北京绿金院/IFS）是一家注册于北京的非营利研究机构。我们聚焦ESG投融资、低碳与能源转型、自然资本与绿色科技投融资等领域，致力于为中国与全球绿色金融与可持续发展提供政策、市场与产品的研究，并推动绿色金融的国际合作。北京绿金院旨在发展成为具有国际影响力的智库，为改善全球环境与应对气候变化做出实质贡献。www.ifs.net.cnAbouttheCityofLondonCorporation关于伦敦金融城TheCityofLondonCorporationisthegoverningbodyoftheSquareMile,wearededicatedtoavibrantandthrivingCity,supportingadiverseandsustainableLondonwithinaglobally-successfulUK.Weaimto:ContributetoaflourishingsocietySupportathrivingeconomyShapeoutstandingenvironmentsBystrengtheningtheconnections,capacityandcharacteroftheCity,LondonandtheUKforthebenefitofpeoplewholive,workandvisithere.作为“一平方英里(theSquareMile)”的管理机构，伦敦金融城致力于建设一个充满活力、繁荣发展的金融城，在位于全球化前沿的英国，助力打造一个多元化和可持续发展的伦敦。工作主旨包括：促进社会的繁荣增强经济的活力构建卓越的环境通过加强伦敦金融城、伦敦市、和英国的相互连接，能力建设，优势互补，来为在这里生活、工作、旅游的人们提供服务。www.cityoflondon.gov.uk

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