CMIG’s Quest for Responsible Return

An interview with CMIG Executive Vice Chairman Kevin E. Lee

  What’s the CMIG strategy?

  In seeking sustainable, long-term returns, CMIG’s investment strategy is guided by two themes: economic transformation areas, such as new energy, infrastructure, and financial services; and consumer areas, such as in-home senior care and healthcare.

  Our unique investment approach involves deep participation in targeted industries. Operations teams at each of our subsidiaries improve efficiency, with financial support.

  CMIG stakeholders share resources, experience, and wisdom with the goal of win-win investing. We’ve promoted an “industrial teaming-up model” to support urban development in China’s Hainan Province, Guangxi Province, and the city of Wuhan.

  What’s your take on ESG?

  Incorporating ESG issues into the investment process reduces risk, drives performance, and identifies investment opportunities. It can have a positive influence on long-term financial performance.

  CMIG New Energy is building the world’s largest contiguous solar farm in Ningxia, which gets more sunlight than any other area in China. When finished, it will cover 46 square kilometers, meet the needs of about 2 million families, and address poverty by creating 2,000 jobs.

  Investment isn’t only about chasing returns; it demands responsibility. Through ESG-based investments, CMIG explores opportunities and incubates businesses so that capital can really benefit society. CMIG will always strive to be a respected, trustworthy investor. That’s why at every board meeting we remind ourselves we should never forget the beginner’s mind.

ESG Leader CMIG Builds Investments on Shared Strength

  China Minsheng Investment Group (CMIG) is blazing at rail for ESG investors in the world’s second-largest economy. In fact, the Shanghai-based firm with more than USD$45 billion in assets under management was the first investment house in China to build an ESG portfolio.

  That was in 2014, when the group was founded by 59 private enterprises with expertise in areas ranging from manufacturing to cold chain logistics, asset management, pharmaceuticals, and e-commerce. Today, CMIG is a parent of a dozen subsidiaries focused on clean energy, green building construction, elder care, insurance, and other sectors.

  Since its inception, no single stakeholder has controlled more than 2 percent of CMIG. The firm is all about bringing together private capital to share resources, reduce risk, and facilitate group development. Its vision is to drive China’s economic upgrading and transformation by injecting private investment’s vitality into traditional industries.

  The firm gets strategic advice from a group of prominent leaders and economists who serve on the CMIG Global Advisory Council, including Angus Deaton, 2015 winner of the Nobel Memorial Prize in Economic Sciences; Dominiquede Villepin, former prime minister of France; and Goh Chok Tong, former prime minister and now emeritus senior minister of Singapore.

  CMIG believes cooperation and sharing leads to strength. Thus, in April, it led a consortium of Asian financial institutions in launching a fund for investment opportunities in ESG areas such as elder care and healthcare, as well as fintech and industries tied to China’s Belt and Road global outreach initiative.

ESG Investing Finds a Big Home in China

  Don’t be surprised if the next driver you hail with a smartphone app in Shanghai pulls up in an electric sedan.

  Financial support is pouring into Chinese electric car manufacturing, ride-hailing apps, bike-sharing, and other zero-emission ways of getting around thanks to booming investor interest in environmentally sustainable transportation. One result is that drivers-for-hire with electric cars are increasingly common in Shanghai.

  Transportation is just one of many sectors now supported by ESG (environmental, social, governance) investors, asset managers, government policymakers, and a wide range of manufacturers and service providers in China. Solar power, elder care, water conservation, and eco-friendly, pre-fabricated buildings are also on the ESG agenda.

  Transportation is just one of many sectors now supported by ESG (environmental, social, governance) investors, asset managers, government policymakers, and a wide range of manufacturers and service providers in China. Solar power, elder care, water conservation, and eco-friendly, pre-fabricated buildings are also on the ESG agenda.

  China's investment community is clearly on board. ESG and “responsible investing” conferences drew large crowds in recent months at a event sponsored by the Asset Management Association of China.

  Meanwhile, the government has been promoting credit instruments called “green bonds” as a right-thing-to-do financing channel for environmentally friendly infrastructure projects, consumer product manufacturing, and power generation.

  Not only are green bonds designed to support the nation’s fight against air, land, and water pollution by, for example, financing solar power stations, but they’re also backing companies whose products and engineering know-how can compete in the global marketplace.

  A policy circular released in late 2016 by the government’s National Development and Reform Commission (NDRC), on behalf of the Central Committee of the Communist Party of China, put the onus on lower level governments in cities, counties, and provinces to support bond financing for infrastructure projects that protect nature and improve environmental conditions.

  “Local governments should actively guide social capital to participate in green project construction” through “investment subsidies, subsidy guarantees, bond discounts, fund injections and other means,” according to the policy. Building projects pegged as “green” can involve water conservation systems and industrial parks with low-emission power sources.

  One example of ESG in action is a solar power and poverty alleviation project in western China’s Ningxia Hui Autonomous Region. Farmers who used to eke out a living in a desert are now raising sheep by taking advantage of pasture grass growing amid solar panels at the Ningxia Solar Farm. A CMIG division that’s building the solar plant also helped farmers finance sheepraising businesses.

  A recent report by Deloitte predicted Chinese government preferential policies will continue supporting green corporate bonds and similar ESG investment initiatives for the long term. Beijing wants “all types of financial institutions, securities investment funds and other investment products, the Social Security Fund, and corporate pension and social funds” to invest in “green companies, enterprises and other institutional investment bonds,” the report said.