In current capital markets, with the development of CSR related issues, social responsibility investment is booming in international financing. When making decisions, investors consider not only traditional financial information, but also non-financial information, such as the environment, society and governance. It is expected that in the long run, investments will not only offer competitive and stable financial returns, but also drive positive social influence. Investors thus encourage a company’s CSR performance to generate win-win outcomes.
By Jenny Guan
Chairman, Executive Council, Macau Institute for Corporate Social Responsibility in Greater China (MICSRGC)
The Dow Jones Indexes and RobecoSAM applied the above concept of social responsibility investment to the composition of indices. In 1999, they jointly developed the world’s first benchmark index series of sustainable investment – Dow Jones sustainable index series, DJSI. This series of indices tracks the performance of companies that meet the economic, environmental and social standards, and is recognized as one of the important reference benchmarks for global social responsibility investment. FTSE International Co., Ltd. (FTSE) also launched the FTSE4Good Index Series in 2001, continuously pursuing social responsibility investment covering environment, social and Governance (ESG) fields.
In Asia, Japan launched its social responsibility investment index as early as 2003. The Korean exchange developed the Korean Social Investment index in 2009. In China, Shanghai Stock Exchange launched the SSE social responsibility index in 2009; the Shenzhen Stock Exchange also published the SZSE CSR price index in the same year; Hang Seng Indexes issued Hang Seng Corporate Sustainability Index series in Hong Kong in 2010. Malaysia launched FTSE4Good Bursa Malaysia index in 2014 in cooperation with FTSE. Singapore launched SGXSustainability Indices in 2016. A lot of countries attach great importance to the CSR issue, actively promote relevant measures and encourage enterprises to fulfill their social responsibilities.
In February 2019, the Central Committee of the Communist Party of China and the State Council released “the Outline Development Plan for the Guangdong-Hong Kong-Macau Greater Bay Area”. In Chapter VI of the Plan, it proposed “to study the establishment of RMB denominated securities market in Macau”. The development of securities market will help enterprises improve the transparency of information through disclosure and enhance their sense of social responsibility. Operators of the securities market need to commit to cooperating with market participants, such as listed companies and securities firms, to fulfill CSR requirements. For example, in terms of economic development, they can promote the listing of sustainable enterprises, guide capital investment in the market, and promote industrial development; in terms of social welfare, the operators can promote financial knowledge, participate in public welfare and care for vulnerable groups, and strengthen the trust between labor and capital; in terms of environmental protection, they can help to implement the concept of energy conservation, carbon reduction, environmental protection and green approaches into daily operations.
According to the central government’s plan, the future positioning of Macau’s financial market stands beside two other major tasks, which in turn will enhance the securities market. The first is to develop three paths from Portuguese speaking countries to Greater China (Brazil from Latin America, Portugal from EU, Angola and Mozambique from Africa), so as to build strong relationships with fulcrum countries to boost the international RMB network. The second is to serve development strategy of the Guangdong, Hong Kong and Macau Bay area, in particular to meet the listing and financing needs of high-tech and fast growing enterprises. Considering these future plans, promoting CSR will be an effective way to build a transparent and credible financial market.
The concept of corporate social responsibility is not limited to general industry, but also gradually becoming relevant to market fund providers. Institutional investors exert their influence on the enterprise through capital investment and by virtue of ownership. They can effectively urge companies to improve governance levels and have a positive impact on the economy, the environment and society. If enterprises strengthen cooperation and communication with responsible investment institutions, it will greatly help to promote sustainable development of Macau’s securities market. Therefore, we suggest that when developing a securities market in Macau, the responsible authority should refer to the practices of other countries and regions, and establish an indicator system for corporate social responsibility. This system can help to standardize CSR performance measures of public companies and can also improve public firms’ CSR awareness, and in turn achieve sustainable development of local and regional economies.