China is a place of extremes. From crazy-busy megacities to rural isolation, it is home to almost a fifth of the world’s population.1 China’s economy is booming, second only in size to the US, and showing first-quarter growth of over 6%2 – more than double the UN predictions for the rest of the world.3

Growth like this doesn’t come without costs. China’s economy is based on technology and manufacturing, both of which have resulted in the high emissions that give China its reputation as a polluting country. It is in fact the largest emitter of carbon dioxide, exceeding US and EU emissions combined.4

China – the context

To understand sustainability in China, it’s vital to switch off our comfortable, western perspective. Economic growth has been vital to lift much of the population out of extreme poverty. Whilst a prosperous middle class has emerged, China is still defined by many who don’t have enough to eat.

The environment simply hasn’t been the priority; hence unsustainable agricultural practices and the over-exploitation of natural resources have become the norm.5

We must also recognise our part in China’s pollution record, due to western ‘outsourcing’. We have passed on much of the ‘dirty work’ in terms of manufacturing as well as sending our waste that way, before China stopped accepting our recycling in 2018.6

China has reached a pivot point. As environmental crises affect more people, with floods, droughts, water pollution and famines,7 the environment has increasingly become the next problem to solve.

China continues to be about the extremes. Yes, there are areas of pollution so bad they are known as cancer villages, and cities choked with smog, but that must be balanced against the green tech and innovative projects reaching far ahead of the UK, both in terms of scale and ambition.

We’ll explore how China is tackling environmental degradation in the key themes of regulation and policy, renewables, ecology and technology, as well as addressing the issue of social and human rights.

Regulation and policy

China’s first environmental protection law was passed in 1989, and wasn’t upgraded until 2014. In fact, the country’s regulations are of a typical standard globally, but critics say that the issue is the gap between legislation and actual implementation.8

The hope is that zones of best practice can improve the overall picture. In 2018, China approved the creation of three sustainable development zones in Shenzhen, Guilin and Taiyuan9 which will implement the United Nations 2030 Sustainable Development Goals.

They will be demonstration sites, focused on different targets – from clean energy and ecological protection to urban development, but with the shared goal of eradicating poverty and ending hunger.10 Currently, seven more sites are planned, all with far reaching ambitions.


China is responsible for the most emissions globally, but it is also a world leader for renewable energy. Last year, the solar and wind capacity built by China exceeded any other nation,11 and China has recently switched on the largest floating solar plant in the world.12 China is, according to the Global Commission on the Geopolitics of Energy Transformation, well placed “to become the world’s renewable energy superpower.”13

Nevertheless, China remains dependent on coal, and the demand for electricity continues to grow as wealth increases.14 There are plans to increase the number of coal-fired power stations until 2030.15


It’s time for superlatives again with biodiversity, because China is home to nearly 10% of all plant species and 14% of animals in the world.16 Approximately half of its species, such as the giant panda and ginkgoes, are found nowhere else,17 making it vital for biodiversity on Earth. Until recently, China had a poor record on protecting its nature,18 but there are signs of change.

Tree planting programmes, such as the Shandong Ecological Afforestation Project19, mean that China is responsible for a quarter of human-caused greening since 2000. The goal has been to conserve and expand forests to mitigate land degradation, air pollution and climate change.20

Nevertheless, ‘planting trees’ is far from a fix and there have been negative consequences from planting in places that were never forests, such as the drying up of water resources.21 It’s worth noting that mitigation for climate change is not a valid substitute for sensitive environmental management.

China’s network of nature reserves play a vital role in preserving biodiversity, yet despite an increase in the number of reserves, the total area has declined by 3% from 2007 to 2014 – often in areas where economic development has collided with nature reserve boundaries.22


China’s expertise in technology can help with sustainability. Indeed, experts predict that the electric vehicles (EVs) revolution has started in China, with subsidies to produce EVs and batteries as well as obligations for car manufacturers to produce a certain percentage of EVs. China already produces over half of the world’s EV batteries23 and 60% of all new electric cars in the world.24

China has always shown an interest in artificial intelligence, with some stating that it is leading the way.25 Many also believe that AI can help solve global environmental crises, from improving energy efficiency to tracking endangered animals.26 However, cost, as ever, proves the major barrier to this becoming a reality in the short-term.

Social and human rights risk

It’s hard to talk about China without acknowledging the country’s incredibly poor human rights record. The human rights charity Freedom House have scored China 11/100, 27 meaning it is classified as one of the least free countries in the world. The tight control of all aspects of Chinese society by the Communist Party means that dissenting voices are often supressed.

The state of human rights in China was brought into sharp focus just before Christmas when the story of a secret message smuggled out of a Chinese prison in a Christmas card hit headlines. 28 The totalitarian nature of state control which exists in China has facilitated rapid economic growth. In turn, the strangle hold exerted by the Communist Party has been key to achieving recent shifts towards tackling the environmental degradation of industrialisation.

It is difficult to square the circle of investing in China in order to aid the transition to a lower carbon economy whilst simultaneously ignoring the human rights record of the country. However, somewhat paradoxically, in order to bring meaningful change to the current global position on climate change, the world is relying on China to make rapid progress in this area.

Investing in China

Chinese stock exchanges combined are the largest in Asia by market capitalisation, and the second largest in the world. Though unlike other large exchanges, they are not entirely open to foreign investment, due to tight capital account controls exercised by Chinese authorities. Over the past decade, China has realised the need for foreign investment, liberalising financial markets which have previously been dominated by domestic investors. This is driving higher standards of ESG integration and reporting, with large foreign asset owners seeking investments with strong ESG credentials. This is reflected in the new mandatory ruling for listed companies to disclose environmental information, building on China’s rapid progression in green finance while helping address remaining barriers.

The question regarding social risks of investment in China is difficult and is likely to be personal. Some will likely see the movement of China away from coal and the increased focus on renewables and other environmental factors as necessary in order to combat the problems of climate change and ecological destruction. However, some might view the suppression of the Chinese population by the ruling Chinese Communist Party as too much of a hurdle.

The FP WHEB Sustainability Fund is widely used in the Holden & Partners EST portfolios, carefully considering the balance of these sustainability arguments from both an environmental and social perspective. This fund includes China Everbright International Ltd,29 which operates in mainland China and offers environmental protection services. The efforts of the company to manage natural resources mean that the fund managers at WHEB concluded that the environmental benefits of the stock outweigh the social risks posed by their country of operation.


Of course, it is hard to discuss economics in China currently without mentioning Coronavirus. It is worth noting that an authoritarian state can organise its citizens very effectively in order to stop the spread and mass infection of a virus such as this. Such control may be more difficult to exert in western democracies where people are more used to individual freedom and liberty. Please see our recent article on this topic30 for more information.































Content of the articles featured in this publication is for your general information and use only and is not intended to address your particular requirements. They should not be relied upon in their entirety and shall not be deemed to be, or constitute, advice. Although endeavours have been made to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No individual or company should act upon such information without receiving appropriate professional advice after a thorough examination of their particular situation. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of any articles. Thresholds, percentage rates and tax legislation may change in subsequent finance acts.

My wife and I really value the advice and support we’ve received over many years. Our key contact is Tim Cosway, whose friendly and calm manner is a real plus. He also involves team members who are equally committed. We particularly value that their approach is that no question is stupid – we always receive a clear and helpful explanation. We have full confidence in the team’s management of our finances and definitely recommend them.


We have consulted Holden and Partners for 10 years.  Having been in financial disarray because of poor advice from our previous financial advisor, we have Tim Cosway to thank for digging us out of a deep financial hole.  As a result of his painstaking tenacity pursuing a claim against our former financial advisor through the Financial Ombudsman Service, which resulted in substantial compensation, we can anticipate a comfortable retirement.  We continue to take Tim’s advice on all financial matters.  He is a pleasure to deal with, and we whole heartedly recommend Holden and Partners, and Tim in particular.

Mike & Jacque

I have been a customer of Holden & Partners since its inception. During this time, no matter what the state of the financial climate, I have always found that their advice has been balanced and fair. They have a good understanding of everyone’s individual circumstances and produced tailored strategies to match these needs and expectations.

Duncan B, NHS consultant

I’ve always received high quality, personable advice at a time of my convenience. My adviser has often travelled to my home in order to provide very personal service. The advice given is clear and unambiguous. The risks of different types of investment have been clearly discussed to allow me to make an appropriate decision on the nature of my investment portfolio. This has been of great importance when considering the available investment options for my forthcoming retirement. I have always considered that Holden & Partners is very client centred and they have my best interests at heart. I have been with Holden & Partners since 1996 and have recommended them to friends and colleagues on many occasions.

Michael, Surgeon

Holden & Partners manage our company pension scheme with a totally professional and dedicated approach. They have worked with us over a number of years, and are able to explain the potential ‘minefield’ that is pensions, to make it perfectly accessible for the staff.

Jeremy, Print Management Partner

On retirement after 40 years of salaried employment, I interviewed several financial advisers, amongst whom Mark Dodd of Holden & Partners was the nicest and seemingly the most understanding of my investment needs and priorities. Since then my wife and I have had regular (c.6-monthly) meetings with him in order to check and, when necessary, adjust the holdings in our portfolio. This has been very helpful and provided a comforting sense of confidence and security. I have recommended Holden & Partners to others and will certainly continue to do so.

Patrick, retired university professor

It’s easy to feel powerless in the face of global trends such as climate change and environmental destruction. But I feel I regain power as a consumer and a citizen by thinking about where I spend my money and to whom I entrust my savings. I chose Holden and Partners because they were recommended to me and because of their strong track record in ethical investments. It has proven to be a wise choice. Their advisors listened carefully to my needs and created an investment strategy and portfolio that has met and indeed continues to exceed my expectations. The culture of a company also matters to me, I have found their advisors to be well informed and financially shrewd but also easy to speak to and engage with. Many of us find it difficult to trust institutions and organisations these days, but I do trust Holden and Partners to make the right decisions on my behalf.
I would have no hesitation in recommending them to others.

Patrick, Advertising and Marketing Consultant

Read all our testimonials

Contact us

Whether it’s a question about your personal finances or how you can invest your wealth more ethically, we are here to help. Call us on 020 7812 1460, email or complete the form: