According to Bloomberg, a Dutch investment firm has developed a screening tool that blacklists several assets from China.
With 118 billion dollars under management, Van Lanschot Kempen NV said that the tool would filter environmental, social, and governance (ESG) risks.
Nikesh Patel, the firm’s senior executive at the company, said that this tool has a national corruption score. If government bonds and state-backed assets do not pass the test, they will be excluded.
According to Bloomberg, the ESG industry has about 40 trillion dollars this year. However, this fast growth includes questionable markets from autocratic regimes like Russia and China.
But according to Patel, for an ESG fund manager, such investments are no longer eligible.
He said, “We are trying to identify and avoid controversial countries,” he said. “Countries where controversial actions are more likely to happen because of their approach to the environment or the way they govern their people—the Russia-Ukraine war is an extreme example of this.”
China’s economy also faces multiple challenges as the communist regime struggles with its zero Covid policy and slow growth.
Fitch Ratings last week revised its forecast for China’s 2022 Gross Domestic Product growth from 4.8% to 4.3%.
In April, several economists at major investment banks cut expectations for China’s economic outlook. Nomura had the lowest forecast of 3.9%, while UBS Group AG cut its estimates the most (0.8 percentage points).
In the first quarter of 2022, foreign investors sold a net of 38.4 billion yuan (6.04 billion dollars) of Chinese stocks and bonds, one of the highest quarterly sums on record.