As part of its commitment to tackling climate change, China set the targets to peak its CO2 emissions by 2030 and achieve carbon neutrality by 2060. This will not only help the country sustain its own development, but also boost its image a responsible big power. Seeing these targets as a call to action, Southern Asset Management launches its Carbon Neutrality Action Plan, the first of its kind among Chinese Mutual Funds. The Action Plan covers corporate operation, information disclosure, risk management, R&D and ESG, five essential ingredients to Southern Asset Management’s carbon ambitions. Assisted by SinoCarbon Innovation & Investment Co.,Ltd.(SinoCarbon), Southern Asset Management will measure its own carbon emission and achieve carbon neutrality within Scope 1 & 2.
“Our vision is to be a trusted global leader in asset management. We have an unwavering commitment to corporate social responsibility,” said Yang Xiaosong, CEO and head of ESG commitment of Southern Asset Management. In the face of both challenges and opportunities brought by carbon neutrality, Southern Asset Management is working with like-minded partners to create climate risk assessment and information disclosure systems that are best suited to Chinese mutual funds. It will launch ESG products to galvanize investment into low carbon and innovation sectors. With the following actions, Southern Asset Management endeavors to accelerate China’s progress toward carbon neutrality goal.
First, Southern Asset Management is reinforcing emissions management to neutralize its carbon footprint. A group-wide system will be established to manage and calculate emissions from its operations in accordance with international standards. Starting from 2021, all Southern Asset Management operations will become carbon neutral (This includes Scope 1: all direct GHG emissions; Scope 2: indirect emissions from purchased sources, such as consumed electricity, heating, or cooling). In so doing, Southern Asset Management is on track to be the first mutual fund in China that brings emissions from its own activities down to net zero. As the carbon management system improves, the target will be expanded to Scope 3 in the future which is all the other indirect emissions both upstream and downstream that are not included in Scope 2, from sources that are not owned or controlled by the company.
Second, an effective information disclosure system is taking shape. Following the advice of Task Force on Climate-related Financial Disclosures, Southern Asset Management will improve its disclosure framework in keeping with regulatory requirements. A multiple-metrics disclosure approach will be introduced to include, among others, governance, strategy and risk management. Environmental disclosure of Southern Asset Management and its portfolios will also be phased into encourage sustainable and responsible investment.
Third, the climate factor will be incorporated into risk management. Fully aware of the risks that China’s carbon ambitions will bring to its portfolios, Southern Asset Management is getting its act together to put in place a climate risk assessment mechanism that factors climate change in investment research. The purpose is to manage climate risks in quantitative and systemic ways. As this is expected to part of its daily decision-making process on investment and operation, Southern Asset Management will update and flesh out its internal risk control rules and procedures to manage climate risks more effectively.
Fourth, a multi-layered ESG and climate investment and financing product system will be built on the back of stronger innovative research capacity. Over the years, Southern Asset Management has made useful attempts to adapt international ESG standards into the unique Chinese context. Going forward, it will do more in-depth research into emission reduction in ESG investment, such as China Southern ESG Theme Equity Fund, China Southern CSI New Energy ETF, China Southern CSI Yangtze River Protection ETF, etc.
Fifth, Southern Asset Management will continue to be a confirmed champion of ESG to make a bigger impact on China’s financial landscape. It is keen to promote experience sharing among more stakeholders on low carbon transition through platforms such as PRI and Climate Action 100+.
As a leading mutual fund in China, Southern Asset Management honors its social responsibilities. Apart from taking an active part in environmental protection and public welfare programs, it fully integrates ESG into its operation and investment. Southern Asset Management is a signatory of UN Principles for Responsible Investment and a member of the China ESG Leaders Association and the Climate Action 100+. It was among the first to launch an ESG Equity Fund in China to encourage ESG investment across the country. Its ESG efforts have been widely recognized, as evidenced by the honors it has received over the years, including the China ESG Golden Awards by Sina.com, the Evergreen Award by Caijing and the China Green Finance Award by Asiamoney.