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China’s stock exchanges release for public consultation mandatory sustainability reporting requirements for listed companies

On 8 February 2024, each of China’s three major stock markets - the Shanghai Stock Exchange (SSE), Shenzhen Stock Exchange (SZSE) and Beijing Stock Exchange (BSE) - released their first guidelines on corporate sustainability reporting for public consultation (Guidelines). The Guidelines come after the China Securities Regulatory Commission (CSRC) stated in November 2022 its intention to establish and improve corporate sustainability disclosures as part of a three-year action plan to improve the general quality of listed companies and support the sustainable development of listed companies.

In a nutshell – the SSE and SZSE guidelines would require listed companies with a large market capitalisation, as well as those with dual listings, to disclose a broad range of sustainability topics from 2026. The BSE guidelines encourage listed companies to make voluntary sustainability or ESG disclosures – a different approach was adopted given the BSE was only recently set up in September 2021 as the primary listing platform for SMEs in China. 

The Guidelines aim to standardise the sustainability reports already published by many listed companies in China and to assist them in establishing comprehensive governance mechanisms, all of which is intended to support higher-quality disclosures and to better inform investors of the actions taken by corporates to address and manage the impacts, risks and opportunities related to sustainable development. 

Larger companies listed on the SSE 180, Shanghai Science and Technology Innovation 50 (STAR 50), SZSE 100 indexes and on the tech-focused ChiNext Index, as well as those dually listed on both domestic and overseas markets, fall within the scope of the proposed mandatory reporting requirements. Under the announced draft Guidelines, these companies will be obligated to disclose information across a wide range of environmental, social and governance categories, including information on climate change, biodiversity and ecosystems, the circular economy, energy consumption, supply chain security, rural revitalisation and prevention and detection of corruption and bribery. It is worth noting that the Guidelines also encourage corporates to report on their Scope 3 greenhouse gas emissions.

Meanwhile, companies listed on the BSE (which are generally small and medium-sized innovative enterprises) can issue voluntary disclosures, according to the exchange.

What are the new disclosure requirements being proposed?

The proposed sustainability disclosure requirements set out in the Guidelines are categorised under four core pillars, namely “governance”, “strategy”, “impact, risk and opportunity management” and “indicators and objectives”, as follows:


Disclosure of the company's governance structure and internal systems for managing and overseeing sustainability-related impacts, risks and opportunities, including:

  • the establishment of organisations within the company which are responsible for managing and supervising the impacts, risks and opportunities related to sustainable development;
  • the professional skills and capabilities of the above-mentioned organisations in implementing and monitoring strategies and systems related to the impacts, risks and opportunities of sustainable development;
  • the information reporting mechanism established by the company to ensure that the above-mentioned organisations can obtain information related to sustainable development impacts, risks and opportunities in a timely manner; 
  • the above-mentioned organisations’ supervision and management of the goal setting, strategy implementation, and achievement of goals related to sustainable development-related impacts, risks, and opportunities; and
  • measures and methods for the above-mentioned organisation to incorporate sustainability-related impacts, risks and opportunities into decision-making considerations.


Disclosure of the company’s strategy, tactics and methods to address the impacts, risks and opportunities related to sustainable development, including but not limited to the following:

  • the company’s approach to address sustainability-related impacts, risks and opportunities in the process of strategy formulation and major decision-making;
  • plans formulated to achieve relevant strategic objectives and qualitative and quantitative information to measure the progress of the plans; and
  • the company’s assessment and judgment of the impacts, risks and opportunities related to sustainable development.

Impact, risk and opportunity management

Disclosure of the measures and processes used by the company to identify, assess, monitor and manage sustainability-related impacts, risks and opportunities, including but not limited to the following:

  • the company’s methodology for identifying and assessing sustainability-related impacts, risks and opportunities, and the ways in which the likelihood, magnitude and impact of these impacts, risks and opportunities occur;
  • the company’s prioritisation of sustainability-related impacts, risks and opportunities;
  • the company’s monitoring of sustainability-related impacts, risks and opportunities; and
  • the integration of sustainability-related impacts, risks and opportunities management processes into the company’s internal management processes, as well as adjustments, if any, during the reporting period.

Indicators and objectives

Disclosure of the indicators and objectives used by the company to measure, manage, supervise and evaluate its response to the impacts, risks and opportunities related to sustainable development.

When will the new rules apply from?

For the companies listed on SSE and SZSE, sustainability reports are to be disclosed from 2026, based on 2025 information and are to be submitted alongside their annual company reports. No deadline was set for the BSE listed companies given the voluntary nature of the BSE guidelines. 

Some key points about the new requirements

Company readiness and relief provided

The Guidelines provide some relief for disclosure on certain topics which corporates may find it difficult to disclose against – for example, it is not a mandatory requirement for disclosure of carbon emissions in upstream and downstream industrial chains, carbon emissions of joint ventures, scenario analysis, etc. Instead, the approach taken is to gradually move companies towards increased disclosures.

Double materiality

A “double materiality” principle is adopted, meaning that listed companies will have to identify whether each sustainability topic set out in the Guidelines has a significant impact on company value (financial materiality) and whether the company’s performance will have a significant impact on the economy, society, and the environment (impact materiality).

The adoption of the “double materiality” approach is a key difference between the proposed ISSB standards and the draft Guidelines (for example, the ISSB’s approach is that materiality should be based on “enterprise value” – i.e. how climate and other sustainability issues impact the value of the company – as opposed to “double materiality” proposed by the Guidelines (as well as the approach adopted by the EU’s CSRD and ESRS (listen to our podcast)) which includes the impact a company has on the climate and wider society.

Alignment with the ISSB standards?

The draft Guidelines do not explicitly reference the ISSB global disclosure framework, which the Chinese government has not yet publicly committed to implement, but the Guidelines note that disclosures should be made by referencing measurements and methods recognised by international or domestic standards.

However, the reliance on the principle of double materiality could lead to the question of whether China is considering moving towards the EU approach to ESG disclosures, as opposed to the ISSB's focus on enterprise value.

What’s next?

The guidelines are open for comment until 29 February 2024.


2024 will be a critical year in the implementation of various sustainability disclosure regimes across the globe. With this announcement, China is catching up with other major markets that have already issued regulations regarding sustainability reporting by companies or are about to do so. 

The Hong Kong Stock Exchange proposed in April to mandate that all listed companies make climate-related disclosures in their annual ESG reports - essentially upgrading the current “comply or explain” requirement to a mandatory disclosure requirement aligned with that of the ISSB’s standards (see our blog post). Singapore, similarly, proposed to make climate-related disclosures mandatory for listed and certain non-listed companies (see our blog post). On 15 February 2024, Malaysia published a public consultation paper on the approach and timing for adoption of mandatory sustainability disclosure standards in line with the ISSB (see our blog post).

China’s publication of the proposed Guidelines is therefore in line with the global trend towards greater transparency and mandatory sustainability reporting.

(Special thanks to Philip Brenner for his contribution to this blog)


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