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Responsible Investment: Understanding and Improving ESG Engagement with Chinese Investee Companies

Sin, Kei Yau LU (2013) In IIIEE Master thesis IMEN56 20131
The International Institute for Industrial Environmental Economics
Abstract
Responsible investment is a movement to integrate environmental, social and governance (ESG) considerations in institutional investors’ investing activities. Despite the rapid growth of responsible investment in worldwide markets including China, there exists a prominent knowledge gap in how investors or their professional engagement service providers engage with Chinese investee companies to monitor and improve the companies’ ESG risk management and preparedness. In particular, little is known about how Chinese investees perceive ESG engagement. This thesis investigates how ESG engagement with Chinese investees is conducted, taking into account the investees’ perspectives on ESG issues. It has been observed that how engagement activities... (More)
Responsible investment is a movement to integrate environmental, social and governance (ESG) considerations in institutional investors’ investing activities. Despite the rapid growth of responsible investment in worldwide markets including China, there exists a prominent knowledge gap in how investors or their professional engagement service providers engage with Chinese investee companies to monitor and improve the companies’ ESG risk management and preparedness. In particular, little is known about how Chinese investees perceive ESG engagement. This thesis investigates how ESG engagement with Chinese investees is conducted, taking into account the investees’ perspectives on ESG issues. It has been observed that how engagement activities contribute to the level of collective sense-making of ESG issues shared by engagement practitioners and Chinese investee companies is not as linear as literature has described. Moreover, Chinese investees in general display a relatively low awareness and limited understanding of ESG-related concepts, lack top-management support in addressing ESG matters strategically, are mostly motivated by client demand and regulations to address ESG issues, and are financially backed by the state or wealthy family shareholders. The thesis suggests an alternative model to conceptualise ESG engagement and the generated collective sense-making. The model encompasses engagement practitioners’ underlying approach or aim of engagement, the alignment of engagement activities with the underlying aim, the consideration of the Chinese investees’ characteristics during the engagement process, and lastly Chinese investee companies’ proactiveness towards addressing ESG matters. Specific recommendations to engagement practitioners and other stakeholders to further improve ESG engagement are proposed, which will help increase the chance of successfully motivating Chinese investees to enhance their ESG performance and thus strengthen the overall business case for responsible investment. (Less)
Please use this url to cite or link to this publication:
author
Sin, Kei Yau LU
supervisor
organization
course
IMEN56 20131
year
type
H2 - Master's Degree (Two Years)
subject
keywords
Responsible investment, ESG engagement, investor relations, Chinese investee companies
publication/series
IIIEE Master thesis
report number
2013:05
ISSN
1401-9191
language
English
id
4196260
date added to LUP
2013-12-17 14:52:17
date last changed
2013-12-17 14:52:17
@misc{4196260,
  abstract     = {Responsible investment is a movement to integrate environmental, social and governance (ESG) considerations in institutional investors’ investing activities. Despite the rapid growth of responsible investment in worldwide markets including China, there exists a prominent knowledge gap in how investors or their professional engagement service providers engage with Chinese investee companies to monitor and improve the companies’ ESG risk management and preparedness. In particular, little is known about how Chinese investees perceive ESG engagement. This thesis investigates how ESG engagement with Chinese investees is conducted, taking into account the investees’ perspectives on ESG issues. It has been observed that how engagement activities contribute to the level of collective sense-making of ESG issues shared by engagement practitioners and Chinese investee companies is not as linear as literature has described. Moreover, Chinese investees in general display a relatively low awareness and limited understanding of ESG-related concepts, lack top-management support in addressing ESG matters strategically, are mostly motivated by client demand and regulations to address ESG issues, and are financially backed by the state or wealthy family shareholders. The thesis suggests an alternative model to conceptualise ESG engagement and the generated collective sense-making. The model encompasses engagement practitioners’ underlying approach or aim of engagement, the alignment of engagement activities with the underlying aim, the consideration of the Chinese investees’ characteristics during the engagement process, and lastly Chinese investee companies’ proactiveness towards addressing ESG matters. Specific recommendations to engagement practitioners and other stakeholders to further improve ESG engagement are proposed, which will help increase the chance of successfully motivating Chinese investees to enhance their ESG performance and thus strengthen the overall business case for responsible investment.},
  author       = {Sin, Kei Yau},
  issn         = {1401-9191},
  keyword      = {Responsible investment,ESG engagement,investor relations,Chinese investee companies},
  language     = {eng},
  note         = {Student Paper},
  series       = {IIIEE Master thesis},
  title        = {Responsible Investment: Understanding and Improving ESG Engagement with Chinese Investee Companies},
  year         = {2013},
}