Nov 7 (Reuters) - Sustainalytics, the environmental, societal and governance (ESG) ratings portion of U.S. fiscal services radical Morningstar, has downgraded Tencent Holdings, Baidu and Weibo Corp implicit their relation successful China’s expanding power of its internet.
The move, which was made successful caller months, prompted astatine slightest 1 U.S. plus manager, WisdomTree Investments, to delete the firms from 2 of its indexes during its latest yearly rebalance, according to a Oct. 24 station by WisdomTree.
Sustainalytics told Reuters connected Saturday it had downgraded the firms from a watchlist to being “non-compliant” with the 2nd of the United Nations Global Compact’s principles, which says businesses should not beryllium complicit successful quality rights abuses.
“Internet censorship successful China is continually increasing. Tencent, Baidu and Weibo are playing a important relation arsenic they are among the largest Chinese net bundle and services companies, fulfilling cardinal functions successful Chinese nine and its accusation services infrastructure,” Sustainalytics said.
“The scope of the allegations against Tencent, Baidu and Weibo person increased, affecting much stakeholder groups. Several instant messaging groups, backstage and nationalist accounts etc connected Tencent and Weibo are banned and severely censored.”
Tencent and Baidu declined to comment. Weibo did not instantly respond to requests for remark connected Monday.
Tencent owns China’s ascendant messaging app WeChat, portion Baidu and Weibo respectively tally China’s starring hunt motor and Twitter-like microblog services.
Content companies successful China are required to comply with the country’s strict censorship regime, which has tightened importantly successful caller years. Platforms swiftly and regularly delete items, from complaints astir COVID lockdowns to cryptic disapproval of politics.
The 3 companies had accounted for a sizable value successful WisdomTree’s ex-State-Owned Enterprises China Index. “As a portfolio manager, we person a systematic process. That’s wherefore we decided to instrumentality those companies disconnected from the portfolio,” which is astir $1 billion, Liqian Ren, who manages the fund’s China investments, said successful an interview.
“If Sustainalytics says this company, according to their criteria, is non-compliant, past we don’t clasp its stock,” Ren added.
Sustainalytics has worked with organization investors connected managing ESG-related risks for 30 years, and serves 18 of the apical 20 plus managers, according to its website.
The downgrades item the divergent ESG standards betwixt occidental countries and China, particularly connected societal and governance issues. China says it embraces ESG, but has its ain quality rights and firm governance standards. (Reporting by Shanghai and Beijing Newsrooms; Editing by Jan Harvey)