Quick Guide: Key Sustainability Disclosure Regimes: PRC sustainability disclosure standards

The Ministry of Finance (“MoF”), together with other eight ministries, established a cross-agency working group in China. This group formulated the unified national sustainability disclosure standards system that is based on the ISSB standards (IFRS S1 and IFRS S2).

The unified national sustainability disclosure standards system is intended to consist of: 

• the Sustainability Disclosure Standards for Business Enterprises - Basic Standard (Trial) (the “Basic Standards”),
• specific standards - the draft Sustainability Disclosure Standards for Business Enterprises No.1 - Climate (Trial) was issued on 27 April 2025 for consultation (the “Draft Climate Standards”); and 
• application guidance - the Application Guidelines for Sustainability Disclosure Standards for Business Entreprises - Basic Standards (Trial) was issued on 3 September 2025 (the “Application Guidelines”). 

The Basic Standards set out the general requirements for disclosures of sustainability-related information by enterprises and provide a foundation for further disclosure requirements to be developed of which the Draft Climate Standards are the first to be issued. 

Voluntary

Currently, enterprises can voluntarily apply the Basic Standards (including the Application Guidelines). However, according to the MoF, the Basic Standards are intended to apply in due course as a mandatory disclosure requirement.  

To be determined

As above, the adoption of the Basic Standards by enterprises in China is voluntary. However, according to the MoF, the Basic Standards are intended to apply in due course in a phased approach to listed companies and gradually expand to non-listed companies, from large companies to small and medium-sized enterprises, from qualitative requirements to quantitative requirements, and from voluntary disclosure to mandatory disclosure.

The Basic Standards entered into effect on 20 November 2024. 

The Draft Climate Standards were issued on 27 April 2025 for consultation. The consultation closed on 31 May 2025. 

The Application Guidelines were issued on 3 September 2025.

See “Next steps” below.  

Basic Standards 

• They set out overarching requirements for an enterprise to disclose information about sustainability-related risks, opportunities and impacts, including sustainability information that enterprises are required to disclose under national laws and regulations. 
• They are designed to underpin all specific standards in terms of setting scope, objective, core content, and presentation requirements.
• They adopt the four pillars similar to those used by the Task Force on Climate-related Financial Disclosures (“TCFD”) and the ISSB in requiring entities to make disclosures about governance, strategy, risk and opportunity management policies (in the TCFD and ISSB, these are referred to as risk management), metrics and targets.

Draft Climate Standards

• The Draft Climate Standards set out requirements that relate to climate-related risks and opportunities and are based on the ISSB’s climate-related disclosures (IFRS S2) but contain requirements and terminology tailored to the Chinese regulatory, legal, and economic context.  It also requires disclosure of significant climate-related impacts. 
• The Draft Climate Standards require disclosure of (among other things): physical risks resulting from climate change; transition risks associated with the transition to a lower-carbon economy (which could include policy, legal, technological, market, and reputational risks); and climate-related opportunities available to the entity.
• It requires disclosure of Scope 1, Scope 2 and Scope 3 greenhouse gas (“GHG”) emissions.  However, if estimating Scope 3 emissions is impractical, enterprises shall disclose how they manage these emissions. 

Application Guidelines

• The Application Guidelines provide further clarifications and operational guidance, by explaining key concepts in the Basic Standards (such as value chains, information linkage and primary users of sustainability information) and setting out a framework for materiality assessment aligned with international standards.
• The principle of proportionality is also introduced by the Application Guidelines to ease reporting burdens, while further guidance is provided on the financial impacts of sustainability risks, resilience assessment, and disclosure of sustainability-related information. 
• The MoF has already begun drafting application guidelines for nine key sectors (i.e. power, steel, coal, petroleum, fertilizers, aluminium, hydrogen, cement and automotive), which are planned to be released in due course after the final climate standards are officially issued.

The Basic Standards adopt the concept of what is typically referred to as “double materiality” when determining sustainability information for disclosure. The concept covers both financial materiality and impact materiality, which is in essence different from the focus on financial materiality as set out in the ISSB standards .

Under the Basic Standards, “sustainability information to be disclosed by enterprises” refers to information on sustainability risks, opportunities and impacts in areas such as environment, society, and governance, including sustainability information required to be disclosed by national laws and regulations. 

“Sustainability risks and opportunities” refer to the risks and opportunities that could reasonably be expected to affect an enterprise‘s prospects (e.g., its cash flow over the short, medium or long term, its access to finance, and costs of capital) arising from the interactions between the enterprise and its stakeholders throughout its entire value chain, the economy, the society and the environment on a particular sustainability topic. 

“Sustainability impacts” refer to the impacts, either actual or foreseeably potential, positive or negative, on the economy, the society and the environment caused by an enterprise’s activities (including related value chain activities) with regard to a particular sustainability topic. 

The Basic Standard set out that the material sustainability information disclosed by the enterprise should be clearly distinguishable and not obscured by additional non-material disclosures.

The three major stock exchanges in China issued their respective Guidelines on Corporate Sustainability Reporting on 12 April 2024 and the Guide for the Compilation of Sustainability Reports on 17 January 2025 (together, the “PRC Sustainability Reporting Guidelines for Listed Companies”). 

The PRC Sustainability Reporting Guidelines for Listed Companies share many principles with the Basic Standards, such as the four-pillar framework and the adoption of the double materiality principle. However, unlike the Basic Standards, these guidelines apply to listed companies only and require disclosure across a broader range of topics and information.

For more details, please see our Quick Guide on the PRC Sustainability Reporting Guidelines for Listed Companies 

The Basic Standards incorporate fundamental principles and the main framework of the ISSB’s IFRS S1 while tailored to account for the PRC market. The Draft Climate Standards are based on the ISSB’s IFRS S2.

Under the ISSB standards, the primary users are investors, lenders, and other creditors. Whereas, the users of sustainability information under the Basic Standards are intended to include investors, creditors, as well as government bodies and other stakeholders. 

According to the MoF, the Basic Standards represent the first step of establishing a national unified sustainability disclosure standards system. 

It is anticipated that the basic standards for sustainability disclosure, climate-related disclosure standards and application guidelines will be developed by 2027. 

A national unified disclosure system is expected to be established by 2030.

• Notice on the issuance of the Sustainability Disclosure Standards for Business Enterprises—Basic Standards (Trial) (in Chinese) 
• Letter Soliciting Comments on the Sustainability Disclosure Standards for Business Enterprises No.1—Climate (Trial) (Exposure Draft) (in Chinese)
• Application Guidelines for Sustainability Disclosure Standards for Business Entreprises - Basic Standards (Trial) (in Chinese)

• Quick Guide on the PRC Sustainability Reporting Guidelines for Listed Companies
• Quick Guide on the ISSB standards