MSCI [MSCI:US] recently published the newest ESG scores of 35 Chinese securities companies listed in A-share and H-share markets, as reported by People.cn on November 4. In comparison with 2019, 12 brokers received upgraded ratings and 22 firms remained the same this year, with only one company, Sealand Securities [000750:CH], downgraded from BB to B. Nevertheless, the highest ESG rating of these Chinese securities firms for 2020 is still BBB. The eight companies that hold this score include China International Capital Corporation (CICC) [3908:HK], Everbright Securities [6178:HK], Orient Securities [3958:HK], Founder Securities [601901:CH], and four new brokers, Huatai Securities [6886:HK], Haitong Securities [6837:HK], China Galaxy Securities [6881:HK], and Tianfeng Securities [601162:CH].

MSCI conducts ESG ratings on all listed companies included in its indexes by utilizing related information from listed companies’ public disclosures, and divides the results into seven grades from AAA to CCC with AAA and AA rated firms regarded as industry leaders. From June 2018, the US company officially included A-share firms into its MSCI Emerging Markets Index and MSCI ACWI Index. Since ESG indicators have become increasingly important in investment decision making processes, the rating results have played a key role when major asset management companies worldwide make investment decisions. Correspondingly, more Chinese listed companies are actively improving their ESG management and performances to receive higher ratings. Up to now, MSCI has granted ESG ratings to a total of 54 firms in the global investment banking and brokerage industry. Among them, 64.8% are Chinese brokers, however, none of the 35 companies holds a rating over A. Summarized from MSCI’s official data, Chinese securities firms mainly fall behind industry peers in three out of its five evaluating issues, including responsible investment, financing environmental impact, and human capital development, while showing better performance for MSCI’s financial system instability indicator.

Sources:

https://www.msci.com/esg-ratings/issuer/

http://finance.people.com.cn/n1/2020/1104/c1004-31917850.html

https://finance.sina.com.cn/esg/investment/2020-10-28/doc-iiznctkc8068641.shtml