How China Became an ESG Haven as US Initiatives are Rolled Back

In 2025, the United States and China represent two global superpowers with wildly different ambitions when it comes to matters surrounding ESG, particularly in terms of clean energy. 

Last year saw China invest around $818 billion into green sectors like renewables, energy storage, EVs, nuclear, and hydrogen, accounting for nearly 40% of total global investment and double that of its nearest competitors. 

China excels when it comes to electric vehicles (EVs), with six out of the world’s top 10 battery makers based in China and the likes of CATL and BYD accounting for more than half the entire EV battery market alone. 

While Tesla remains a global EV leader in terms of market capitalization, four of its biggest rivals are Chinese, with BYD (BYDDY), Li Auto (Li), XPeng (XPEV), and NIO (NIO) all posing a threat to US manufacturers even as competition domestically has seen stock prices fall amid an EV price war. 

Meanwhile, the Trump administration has dialled back ESG initiatives in the United States, withdrawing from the Paris climate agreement in January while also eliminating a series of DEI programs throughout the country. 

Although the skepticism over ESG in the United States is closely linked to the president’s protectionist policies, it comes at a time when investors are becoming increasingly receptive to sustainable investing. 

According to Morgan Stanley’s Sustainable Signals report from May, 88% of global investors are interested in sustainable investing, while 99% of Gen Z and 97% of millennials are among the most intent on embracing sustainable stocks. 

Crucially, the report suggests that 59% of investors plan on increasing their allocations in the next year, with most investors doing so because they’re confident of their returns. Notably, 80% of surveyed investors see the energy transition as a profitable investment opportunity. 

However, these opportunities are less likely to emerge in the United States. On July 4, Trump signed his One Big Beautiful Bill, which focuses on phasing out tax credits for wind and solar projects domestically. 

Instead, more investors may feel inclined to embrace Chinese innovation and an ESG boom that has been encouraged by the government. 

Building an Infrastructure for ESG

Crucially, China is actively building an ESG-friendly infrastructure throughout its markets. In April 2024, guidelines were issued by the Shanghai Stock Exchange and the Shenzhen Stock Exchange that some of its largest listings must issue an ESG report by 2026. 

These guidelines are paving the way for a more conducive regulatory environment in China, and a growing number of companies domestically are beginning to report on their ESG activities. 

Any company that’s listed on Shanghai’s SSE 180 Index or Shenzhen’s 100 Index, or any company dual-listed in Shanghai or Shenzhen overseas, would need to publish a sustainability ESG report. However, these rules don’t apply to the Beijing Stock Exchange, which has only issued guidelines for voluntary ESG disclosures. 

With Beijing listing just 5% of China’s companies, it’s clear that the nation’s sustainability focus has the potential to attract foreign investors who may be feeling alienated by the more hostile attitudes towards ESG investing in the United States. 

According to a recent survey conducted by Robeco, 58% of European investors, 62% of Asia Pacific investors, and even 38% of US investors suggested that they’re likely to look overseas for investment opportunities linked to climate solutions, transitioning companies, and renewable energy. 

This trend could see more investors adopt globally-focused platforms like Just2Trade, which provides access to 20 markets offering 128,000 instruments. With ESG commitments in the United States continuing to dwindle, more brokers with a focus beyond US markets are expected to grow in popularity. 

With competitive fees and commission structure, automated trading tools, and integrations with MetaTrader 5, Just2Trade is an example of a platform that can help more US investors and traders access ESG stocks internationally to suit their strategies and goals. 

Asia Leads the Way

China isn’t alone in its growing ESG initiatives, with India also becoming a trailblazer in the clean energy transition. 

Both nations offer investors the opportunity to embrace overseas sustainability projects that offer different opportunities. 

China’s emphasis on scaling initiatives by improving grid efficiency and integrating renewables can help investors discover new infrastructure projects, while India appears more focused on the buildout of solar and wind, as well as the growth of energy storage. 

These two neighboring nations offer initiatives that can complement each other and investor portfolios alike, opening the door to new approaches in building an ESG portfolio. 

China’s ESG Opportunity

ESG initiatives in China and the United States are diverging at a time when investor appetite, particularly among young investors, is as high as it’s ever been. 

With the Great Wealth Transfer on the horizon, we may see more younger investors look overseas to build an ESG-compliant portfolio by focusing more on Chinese firms at a time when the outlook for sustainability in the United States is as clouded as ever. 

China’s ESG outlook may not be crystal clear, but there are clear initiatives in place that are allowing many sustainability-focused industries to flourish. At a time when the United States is content to sit on the sidelines, China’s green initiatives could be a real opportunity to attract foreign investors.