Since its establishment, China Investment Corporation (CIC) has consistently positioned itself as a responsible investor. Based on peers’ approaches and its own practice, CIC has formulated the following Sustainable Investment Policy.

Philosophy

Sustainable investing takes into account environmental, social, & governance (ESG) factors to deliver both investment returns and sustainability performance.

Guided by the new development philosophy, CIC’s commitment to sustainable investment will contribute to the long-term development of the global economy, as well as to the prevention and mitigation of systemic risks.

Principles

As a responsible sovereign wealth fund, CIC has adopted the following principles in its investment process:

• Integrating ESG factors: to utilize sustainable investment considerations throughout the lifecycle of investments;
• Investing sustainably: to identify suitable ESG metrics based on international best practices, as well as developments in both China and recipient countries/regions;
• Promoting employee engagement: to raise employees’ awareness and understanding of ESG factors.

Implementation

To seek common prosperity and enhance value from the global perspective, CIC will implement sustainable investing through the following levers:

• Explore thematic investment opportunities. In the public market, we launched a thematic equity mandate, and invested in ESG indices and active managers. In the private market, we set the future direction for sustainable investment, and will continue to explore related opportunities with a focus on climate change.
• Incorporate ESG factors into investment process. We weave ESG factors into investment activities, from project screening and due diligence, through evaluation and contracting, and on to post-investment portfolio management and deal exit.
• Dynamically optimize the negative list. We review and update the negative list periodically as appropriate, guided by bottom-line thinking.
• Collaborate with various stakeholders. We communicate with peers and relevant organizations to promote sustainable investment in China, and leverage our strengths as a sovereign wealth fund to mobilize mainstream finance to support the transition towards a sustainable global economy.

In 2022, leveraging the strengths of its quantitative platform and starting with public market carbon data, CIC has produced a series of research results around equity carbon metrics, green equity taxonomy, and green and low carbon equity investment strategies.

In terms of thematic investments and strategic allocations in public market equities, CIC has systematically screened investment opportunities in the energy transition in light of secular trends in the global energy transition and the structural opportunities brought about by the European energy crisis. It has titled its sector-themed strategies towards the low-carbon transition and pursued long-term structural growth opportunities more broadly. Additionally, the company has actively engaged with external managers to dive deeper into sustainable investment themes.

In its fixed income and absolute return investments, The company has actively tracked the development of the green bond market and increased its allocation to green bonds that meet risk guidelines, without affecting portfolio liquidity or returns. At the same time, the company has also explored carbon management tools such as carbon emissions futures as a means to reduce its portfolio carbon footprint.

In its private market investments, CIC has piloted a green and low-carbon thematic investment strategy. Following in-depth screening of fund managers in overseas climate improvement themes and multi-dimensional modeling of relevant factors, the company has invested in several climate improvement funds. Additionally, the company completed its first forestry carbon credit deal, enhanced portfolio construction in the broader agricultural ecosystem segment, and expanded its investment footprint in key components of the forestry and carbon sink value chain. The relevant investment teams actively sourced investment opportunities in the clean energy sector, including in solar and wind power, natural gas, and energy storage.