New Report: ESG, China and Human Rights | Why the time has come for investors to act
A new report by Hong Kong Watch shows that, despite lip-service to the importance of responsible investing and ESG priorities, major international pension funds are heavily invested in Chinese companies with problematic human rights records.
Hong Kong Watch’s new report considers the paradox that investment into China has soared in the era of ethical investment. More money is being invested in China by Western pension funds, sovereign wealth funds and other institutional investors than ever before.
Firms currently argue that there is no conflict between their China portfolios and their ethical commitments to consider ‘Environmental, Social and Governance’ (ESG) factors when investing. But this view cannot be justified.
The report finds that there is considerable investment by pension funds and other institutional investors into Chinese firms which have troubling human rights records.
Johnny Patterson, Policy Director of Hong Kong Watch, says: “There is a clear knowledge gap between financial professionals who know that enormous amounts of the money of ordinary people, institutional investment, pensions and government funding is being invested in China, and the members of the public, media and policy makers who would have serious ethical and practical reservations about what seems to be a reckless and problematic course of action. This information gap has provided cover for financial institutions to pursue profit without regard for the social impacts of their ties with firms that are closely affiliated with egregious rights abuses in Hong Kong or Xinjiang.”
Alongside these areas of concern, some Western investment in recent years runs counter to the stated foreign policy interests of democratic governments and national security. China’s strategy of civil-military fusion is particularly important. This is the government’s strategy to harness civilian enterprises, particularly dual-use technologies, for military ends. Institutional investment in some Chinese firms in key industries may inadvertently fund the upgrading of the Chinese military.
In the foreword to the report, exiled Hong Kong lawmaker Dennis Kwok said: “As authoritarian governments around the world crackdown on democracy and freedom, businesses should not play a complicit role, particularly if they are major beneficiaries from open societies and the rule of law back home. Institutional investors and consumers should demand more transparency and responsible decision making, in the same manner as business decisions affecting climate change.”
We are grateful to the Taiwan Foundation for Democracy for their support funding this research.
新報告︰環境、社會及管治、中國與人權 – 為何現在是投資者採取行動的時候
香港監察發佈的一份新報告指出，主要的國際退休基金雖然強調負責任投資和環境、社會及管治因素的重要性，但他們仍大量投資在人權記錄有問題的中國公司。
在這個倡議負責任投資的時代，在中國的投資大幅增加，香港監察的新報告正研究這個現象。西方的退休基金、主權財富基金和其他機構投資者在中國投資的資金比以往任何時候都多。
企業現時辯解指他們在中國的投資與他們對考慮「環境、社會及管治(ESG)」因素的道德承諾沒有衝突。然而，這樣的觀點站不住腳。
報告發現退休基金和其他機構投資者大量投資在人權記錄有問題的中國企業。
香港監察的政策總監Johnny Patterson指︰「金融界專業人士知悉大量來自普通民眾的資金、機構投資、退休基金和政府的資金投資在中國，而公眾、媒體和決策者對看似是魯莽和有問題的行動方針有嚴重的道德與實際保留，他們之間有明顯的知識鴻溝。這樣的知識鴻溝為金融機構提供了掩飾，讓他們只顧追求利潤，忽視他們與在香港或新疆嚴重侵犯人權的公司的連繫所帶來的社會影響。」
此外，部份西方近年的投資與民主政府的對外政策利益和國家安全有所違背。當中，中國軍民融合的戰略尤為重要。政府利用民用企業，特別是軍民兩用的技術，達致軍事目的。企業投資在關鍵行業的中國公司，可能會在不經意地為中國軍隊升級提供資金。
在報告的序言中，現正流亡的前香港立法會議員郭榮鏗說︰「隨著世界各地的威權政府打壓民主和自由，企業不應該扮演同謀角色，尤其當他們是開放社會和法治的主要受益者。機構投資者和消費者應該要求更高的透明度和負責任的決策，就像影響氣候變化的商業決策一樣。」