ESG Insights: Trends, Analysis & Our Featured Chart #2

Illustrative landscape of a solar farm at sunrise with rows of panels in shades of teal and dark sea green, reflecting a modern and clean energy concept under a bright sky with subtle film grain texture.
For financial professionals only

This update summarises new company ESG rules in China and the US.  Closer to home, the UK’s net zero economy grew very strongly in 2023, and the Spring Budget included additional funding for wind farms.  We’ve completed our annual review of passive ESG funds and ETFs available for UK retail investors.

Here’s the key takeaways:

  • New ESG disclosures for China’s largest companies - from 2026, 400+ Chinese companies will need to publish their ESG governance and strategy, and carbon emissions across their value chain – including their own operations and their suppliers and customers (scope 1, 2 and 3 emissions).

  • New climate disclosures for US listed companies - new rules will require public US companies to publish material climate-related risks for their business, as well as their scope 1 and 2 emissions (though reporting on scope 3 emissions won’t be mandatory).

  • New funding for UK’s clean energy industry - the Chancellor’s Spring budget included £800m for offshore wind, £73m for electric vehicles and £200m to invest in greening air travel.

  • The UK’s net zero economy outperformed in 2023 - research by the CBI found the UK’s net zero economy grew 9% in 2023, while the broader economy grew only 0.4%.

  • Increasing choice of Passive ESG fund and ETFs - we recently completed our annual review of the passive ESG funds and ETFs available to UK retail investors. There are now 230 funds in the asset classes we look at compared to 200 last year, with combined assets now 33% higher. It’s encouraging to see new providers entering the market and increasing choice for investors. 

Featured chart

China's Solar Surge

Nation added more panels last year than any other country has in total

Bar chart showing the solar capacity of different countries in gigawatts. China tops at 609.5 GW, with 216.9 GW added in 2023 alone. The United States follows with 175.2 gigawatts, then India with 94.1, Japan with 89.9, Germany with 80.9, Brazil with 48.3, and other countries listed with lesser amounts. The note indicates these are BNEF estimates for the end of 2023, with a clarification that China's capacity is in direct current while other countries are in alternating current.

Source: BloombergNEF, China National Energy Administration

Notes: Country totals are BNEF estimates for end of 20203; China capacity is alternating current, while other countries are direct current.

The chart shows solar power capacity, split by country. China dominates this space, with more than 3x the capacity of the US in second place.

Why’s this worth sharing?

Sustainable investors are often rightly cautious about investing in China, given ESG concerns. However, there are selective opportunities to invest in Chinese companies, for example companies leading in renewable energy. 

This article is for financial professionals only. Any information contained within is of a general nature and should not be construed as a form of personal recommendation or financial advice. Nor is the information to be considered an offer or solicitation to deal in any financial instrument or to engage in any investment service or activity. Parmenion accepts no duty of care or liability for loss arising from any person acting, or refraining from acting, as a result of any information contained within this article. All investment carries risk. The value of investments, and the income from them, can go down as well as up and investors may get back less than they put in. Past performance is not a reliable indicator of future returns.  

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