Government Pension Fund Global, Oslo, welcomed proposals from Chinese regulators to enhance transparency and strengthen shareholder protection in China.
China Securities Regulatory Commission proposed that Chinese companies publish in annual and semi-annual reports more detailed information on how the board and its committees perform their duties as well as details of board members, meeting dates and agendas, and any major proposals made during these meetings.
Norges Bank Investment Management, the manager of the 11.37 trillion Norwegian kroner ($1.36 trillion) sovereign wealth fund, also welcomed the CSRC's proposal that companies disclose changes made to the structure of issued shares, such as the introduction of dual-class shares and changes in share class, over the reporting period. Companies would also be asked to give specific reasons for significant changes in financial statements and publish specific information on transactions that involve large shareholders.
GPFG, which invests $5 billion in equities and $1.8 billion in fixed income in China, said in a letter responding to the proposals, dated June 7, that it is important for investors that company boards address and report on material sustainability issues.
Boards should fulfill the objective of creating value for shareholders, while observing the principles for responsible business conduct, according to the letter from Carine Smith Ihenacho, chief governance and compliance officer, and Severine Neervoort, senior analyst – corporate governance, at Norges Bank IM.
They should understand the broader social and environmental consequences of business operations and value chains, set their own priorities to address these and account for associated outcomes, the letter added.
There also could be benefits for listed companies to publish complete English versions of all reports and disclosures alongside those in the local language, the letter said.
Norges Bank also said it welcomed efforts from the Chinese regulator to enhance companies' disclosures on environmental and social matters but would be keen to see the regulator's guidance refer to recognized international frameworks, such as standards under the Task Force on Climate-related Financial Disclosures and the Sustainability Accounting Standards Board, so that investors can compare company policies.
