In November 2022, The Value of Impact Investing for China's Dual Carbon Goals (2022) (hereinafter referred to as "the report") was officially released by China Alliance of Social Value Investment (CASVI) with the support of Sequoia China, SDIC Chuangyi, Asian Development Bank, ADM Capital and other institutions. The report aims to explore the value of impact investing for China to achieve its dual carbon goals, attract more people to practice and innovate in the field of impact investing, and thus promote the high-quality development of investment and financing related to dual carbon goals.

Member of UNDP SDG Impact Steering Group and Chairperson of CASVI, Weihua MA, recommended the Report with the Preface: “This report clearly points out the possibility that the promotion and development of impact investing can help us find ways to better balance economic benefits and social values in the process of achieving our dual carbon goals.”

Research Background

Impact investments are investments made with the intention to generate a positive, measurable social and environmental impact alongside a financial return. First proposed by the Rockefeller Foundation of the United States in 2007, this concept has been applied globally. According to incomplete statistics, the global market reached USD 1.164 trillion in assets under management as of 2022.

China announced dual carbon goals at the 75th session of the UN General Assembly on September 22, 2020, aiming to peak CO2 emissions by 2030 and work towards achieving carbon neutrality by 2060.

However, amid the current backdrop in which carbon peaking and carbon neutrality policies are being introduced and investing activities experience skyrocketing growth, there has been very limited discussion on how impact investing can help China achieve dual carbon goals.

This report intends to fill this gap, to promote high-quality development of investment and financing related to dual carbon goals.

Main Content

This report consists of eight chapters.

• The first five chapters discuss the global background, policy planning, industrial prospects, and demand for investment and summarize three key challenges: (I) Achieving carbon reduction requires technology to deliver productivity breakthroughs; (II) Climate change mitigation and adaptation need to be balanced; (III) Industrial transformation requires a large amount of social capital support.

• Chapters 6 and 7 summarize the practices of eight impact investment institutions in the carbon-neutral field, and present interviews with ten investors, entrepreneurs, and third-party service providers in the dual carbon field of China. These two chapters jointly discuss the consensus of impact investment in exploring value depression and seeking solutions, and the controversies in locating the subject of demand and improving evaluation methods.

• Chapter 8 summarizes the value of impact investing for dual carbon goals and the path to realizing value. The essential feature of impact investing is that investors pursue both impact and financial objectives, and thus develop a series of methodologies to ensure the balance and achievement of the dual objectives (including impact measurement tools, investment tools for different asset classes, etc.). For dual carbon goals, impact investing works and addresses challenges through two main paths: value creation and ecosystem building.

  

Summary and Future Prospects

Through the Value Creation pathway, impact investing can directly contribute to solving the first two of the three challenges: (I) Achieving carbon reduction requires technology to deliver productivity breakthroughs; (II) Climate change mitigation and adaptation need to be balanced. Through the Ecosystem Building pathway to influence and identify more investors who pursue the “dual objectives,” impact investing can bring more social capital into the carbon peaking and carbon neutrality fields, supporting the efforts to solve the third challenge: (III) Industrial transformation requires a large amount of social capital support.

The foreword by Mr. Ma provides an outlook on the future development of impact investing: “In times of crisis, a community of shared future for mankind can only be united in order to overcome the difficulties together. Throughout history, we have had many pioneers who have been calling for and pushing us toward a more sustainable development path. In the face of the climate change crisis, we need more practitioners to move beyond the one-dimensional model of economic growth and consider the economic, social and environmental impacts of each activity in order to promote sustainable development. Helping practitioners make this shift is the value of impact investing, and it is the future we all look forward to.”

Download the report here.