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Sustainability in Chinese Investment: How Chinese Investors Perceive the Benefit and Liabilities of ESG Rating of New Ventures

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Proceedings of the 2nd International Conference on Business and Policy Studies (CONF-BPS 2023)

Part of the book series: Applied Economics and Policy Studies ((AEPS))

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Abstract

Within the Chinese investment context, the topic of sustainability is increasing in attention, such that investors are considering further reliance on environmental, social, and governance (ESG) ratings as they scrutinize new ventures . Although ESG ratings are typically thought to provide important information about the long-term sustainability risks that companies might face, the reliability of such ratings is also increasingly questioned. This research tried to identify the practical tension about “in what ways does attending to ESG increase and decrease uncertainty within the context of new venture financing in China?” This study used a qualitative approach to collect data from five typical investors and entrepreneur groups. The findings suggest that ESG mainly facilitates investment efficiency by capturing potential market direction, increasing the likelihood of obtaining government support, ensuring compliance, and increasing employee engagement by clarifying the corporate purpose. On the other hand, the current ESG evaluation within Chinese early-state enterprises might also introduce liabilities for investment decision-making, as the existing standards lack contextualization into Chinese markets, demonstrate inconsistent measurement standards, and may force startups to compromise on their survival objectives. In the end, this research also provides recommendations to identify the future ESG investing development orientation in China.

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Author information

Authors and Affiliations

  1. WMG, The University of Warwick, Coventry, CV4 7AL, China

    Ruiying Li

  2. Adam Smith Business School, Glasgow University, Glasgow, G12 8QQ, China

    Yufei Zhao

  3. Business School of Sports, Beijing Sport University, Beijing, 100084, China

    Haozheng Yang

  4. UWC Atlantic College, Llantwit Major, CF611WF, UK

    Chenyi Liu

  5. Wuhan No. 6 High School International Department, Wuhan, 430010, Hubei, China

    Hongyi Liu

Authors
  1. Ruiying Li
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  2. Yufei Zhao
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  3. Haozheng Yang
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  4. Chenyi Liu
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  5. Hongyi Liu
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Correspondence to Ruiying Li .

Editor information

Editors and Affiliations

  1. King's Business School, King's College London, London, UK

    Canh Thien Dang

  2. Department of Financial Economics and Accounting, University of Murcia, Murcia, Spain

    Javier Cifuentes-Faura

  3. Department of Postal Management, Beijing University of Posts and Telecommunications, Beijing, China

    Xiaolong Li

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Li, R., Zhao, Y., Yang, H., Liu, C., Liu, H. (2023). Sustainability in Chinese Investment: How Chinese Investors Perceive the Benefit and Liabilities of ESG Rating of New Ventures. In: Dang, C.T., Cifuentes-Faura, J., Li, X. (eds) Proceedings of the 2nd International Conference on Business and Policy Studies. CONF-BPS 2023. Applied Economics and Policy Studies. Springer, Singapore. https://doi.org/10.1007/978-981-99-6441-3_9

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