Document summary
As China embarks on the final few months of the 12th Five Year Plan, President Xi Jinping’s administration faces some difficult policy choices. The economic slowdown is converging with a multitude of other challenges previously seen as secondary to economic goals. Natural resource scarcity due to overuse and to industrial pollution has become one of the restricting factors on
economic development. Environmental pollution has alarmed the public and precipitated protests in some regions. China suffers from widespread corruption, which hinders China’s social and economic development and reflects systemic weaknesses in corporate governance at Chinese companies, also linked with lower dividend yields in the Chinese capital markets. Aware of all of these challenges, the Chinese government has launched a series of reforms aiming to drive rapid and broad economic transformation in China. By all indications, pursuit of economic transformation in China will enhance the materiality of ESG factors for investors. This summary report provides an overview of the key ESG themes that China is facing.