Record $7.7 billion inflows into China ESG funds in Q3 2021

11 November 2021- China’s ESG assets amount to USD47.5 billion after recording a strong growth of 33% in the third quarter, according to Morningstar’s latest data on Asia ex-Japan sustainable funds*. The data set is attached for your reference. The revised full report can also be found here.

Verna Chen, Associate Analyst of Manager Research, Morningstar, based in Shenzhen, remarked: “In 2021, investors in China have shown growing interest in ESG funds, particularly in renewable energy and low carbon products, as the Chinese government continues its efforts to meet the commitments to hit peak emissions by 2030 and achieve carbon neutrality by 2060. Many local fund companies see carbon neutrality as one of the long-term growth themes and therefore, have launched or are planning to launch climate-aware funds to meet the growing demand.”

Feel free to contact us if you would like to talk to Verna to get more insights on China ESG funds.

Asia ex Japan (including China)

• Flows: Asia ex-Japan posted a strong third quarter net inflow of USD8.1 billion propelled by the USD7.6 billion net inflow from China. New launches in China provided net inflow of USD1.2 billion, while two existing Chinese allocation funds (Orient Secs Green Energy Car Allocation and UBS SDIC New Energy Mix) attracted over USD1 billion in flows each in the third quarter.
• Assets: Asia ex Japan’s ESG assets grew by 25% over the second quarter, reaching USD61.1 billion in the third quarter of 2021. China’s ESG assets amount to USD47.5 billion after recording a strong growth of 33% in the third quarter.
• Launches: There were 34 new launches in the third quarter with 20 from China. Nine out of the 20 new ESG launches from China were Equity ETFs which reflects the rapid development of passive investing in China. The majority of sustainable fund launches in China focuses on climate-related themes; this is in line with the government’s efforts to meet its carbon emission reduction targets, which included the initiation of a national carbon trading market in July 2021. This resulted in strong investor interest in new energy and low carbon products in China. 

*We have updated the Asia ex-Japan Sustainable Fund data by adding the Q3 data for China, and revised a fund flow data error for a Taiwan ESG fund in the previous report.

The Global Sustainable Fund Universe

The global sustainable fund universe encompasses open-end funds and exchange-traded funds globally that, by prospectus, factsheet, or other available resources, claim to have a sustainability objective and/or use binding ESG criteria for their investment selection. The sustainable funds group does not contain funds that employ only limited exclusionary screens such as controversial weapons, tobacco, and thermal coal, nor does it contain the growing number of funds that now formally integrate ESG considerations in a nondeterminative way for their investment selection. Money market funds, feeder funds, and funds of funds are excluded.