MSCI Boosts China Index ESG Ratings

DU QINGQING

(Yicai Global) Oct. 11 — Firms in the MSCI China Index have improved their Environmental, Social, and Governance performance, making them more attractive for foreign investors, according to the global benchmark provider.

Some 11 percent of the index constituents have been upgraded over the past year and 7 percent downgraded, the New York-headquartered firm said in its report. When capitalization-weighted, some one-fifth boosted their performance and 2 percent lowered it.

The ratings could still be better. The MSCI China Index has no AAA level firms, and only 1 percent of the companies have an AA score, including Robam Appliances, Geely Automobile Holdings, and Legend Holdings.

Authorities have strengthened supervision over information disclosure, international investors consider sustainability increasingly important, and MSCI has been actively communicating with listed companies, said Wang Xiaoshu, vice president of MSCI ESG Research China, giving reasons for the improvements.

However, Chinese firms still lag behind international peers in terms of product quality and safety, Wang added.

The biggest changes over the year were among the ranks of CCC and BB. The proportion of BBs increased to 26 percent from 21 percent. That of the lowest class, CCC, dropped by 2 percentage points to 20 percent.

Editor: Dou Shicong, Emmi Laine