Eight Chinese asset managers, including E Fund, China Merchants Fund Management [600036:CN], GF Fund, Fullgoal Fund, China Universal, and others, have submitted their applications to the CSRC for launching new carbon neutrality-themed exchange-traded funds (ETFs), as reported by Yicai on April 21. The eight ETFs are the first carbon-neutral ETFs to be filed in China. Once granted, the ETFs will be traded on the Shanghai Environment and Energy Exchange.
Since China pledged to peak carbon emissions by 2030 and achieve carbon neutrality by 2060, many domestic asset managers have increased the issuance of carbon neutrality-themed investment products. In March 2022, CICC [3908:HK] established a carbon futures exchange-traded fund (ETF) in Hong Kong, the first of its kind in Hong Kong’s financial market. Indeed, increased investor interests in environmental, social, and governance (ESG) issues have fueled steady growth in Hong Kong-listed ETF assets. The market value of ESG-related products in Hong Kong has increased by 84% to HKD4.5bn (USD570m) in 2021. Other sustainable development-themed investment products, such as carbon-neutral bonds and sustainability-linked bonds, are also gaining popularity. In China, 199 carbon-neutral bonds worth RMB253.1bn (USD39.2bn) were issued in 2021, accounting for 40% of total green bond issuance. As of the end of 2021, the issuance of green bonds in China exceeded RMB600bn (USD93bn), up 180% YoY.