China’s stock exchanges mandate ESG Reporting: what you need to know

Posted on February 23, 2024 by Editor

China’s major stock markets, including the Shanghai Stock Exchange (SSE), Shenzhen Stock Exchange (SZSE), and the smaller SME-oriented Beijing Stock Exchange (BJSE), have recently unveiled new sustainability reporting guidelines for listed companies. This move marks a significant step in aligning with global trends toward ESG (Environmental, Social, and Governance) disclosure standards. Notably, these guidelines introduce a mandatory requirement for larger cap and dual-listed issuers to disclose a wide array of ESG topics starting in 2026.

While, unfortunately for data comparability, these guidelines don’t yet specify the use of a particular reporting standard, they emphasise the need for comprehensive reporting across four core content areas: governance, strategy, impact, and indicators and goals.

The reporting guidelines have been written with Chinese characteristics in mind. The guidelines include reporting requirements on initiatives to mitigate climate risks and transition to low-carbon operations, efforts to conserve biodiversity and protect ecosystems, strategies to reduce waste and promote resource efficiency in the circular economy, energy usage patterns and efficiency measures, measures to ensure the integrity and resilience of supply chains, initiatives supporting rural development and economic revitalisation, as well as anti-corruption policies and measures to prevent bribery.

While it’s encouraging to see the spread of sustainability data, we hope in future the Chinese stock exchange looks to adopting a digital, international reporting standard such as those created by the ISSB and/or GRI. This would provide enhanced international comparability and ease of analysis.

The draft guidelines are open for comment until 29 February – though currently they are only available in Chinese.

To learn more about these sustainability reporting requirements and their implications for listed companies and investors, visit the original announcement from the Shanghai Stock Exchange here (in Chinese, translators at the ready!).

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