Study Shows Foreign Investment Leads to Substantial Increase in ESG Performance of Chinese Firms
Their research paper, titled "Financial Deregulation and ESG: Impacts and Mechanisms," discovered that Chinese firms with access to foreign capital through the Shanghai-Hong Kong and Shenzhen-Hong Kong Stock Connect Programs, experienced a significant increase in their ESG performance.
- Their research paper, titled "Financial Deregulation and ESG: Impacts and Mechanisms," discovered that Chinese firms with access to foreign capital through the Shanghai-Hong Kong and Shenzhen-Hong Kong Stock Connect Programs, experienced a significant increase in their ESG performance.
- After the launch of the Shanghai Connect program in 2014, companies did not see an immediate increase in their ESG ratings relative to unconnected firms.
- There are two main theories for why firms might respond to foreign investment with improved ESG performance.
- At the same time, greater foreign investment in a stock tends to lead to increases in ESG ratings.