Mainland China Publishes Draft Guidelines for Mandatory Sustainability Reporting
Stock Exchange
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Type of Disclosure
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Applicability
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Timeline
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Disclosure Requirements
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Core Pillars
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Shanghai Stock Exchange (SSE)
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Combination of mandatory and voluntary disclosure
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Mandatory: SSE 180 Index, STAR 50 Index, and dual-listed companies
Voluntary: Other listed companies |
Publication of 2025 Sustainability Report before April 30, 2026
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Environmental
1. Climate change 2. Pollution prevention and ecosystem protection 3. Resource utilization and circular economy Social 1. Rural revitalization and social contribution 2. Innovation drive, suppliers, and customers 3. Employee management Governance 1. Sustainable development-related governance mechanisms 2. Anti-bribery and unfair competition |
The guidelines are centered around four pillars:
1. Governance 2. Strategy 3. Risk management 4. Metrics and targets |
Shenzhen Stock Exchange (SZSE)
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Mandatory: SZSE 100 Index, GEM Index, and dual-listed companies
Voluntary: Other listed companies |
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Beijing Stock Exchange (BSE)
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Voluntary disclosure
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Voluntary: Listed companies
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Effective from the guideline issuance date
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The ESG report disclosure rate of A-share listed companies has been increasing year by year. According to the Economic Daily, by the end of 2023, the 2022 ESG report disclosure rate of SSE-listed companies had reached 47%. However, despite the high disclosure rate, the lack of unified ESG disclosure standards resulted in disclosure incomparability across companies.
On February 8, 2024, in a landmark move, the three major stock markets in China – SSE, SZSE, and BSE – successively issued guidelines for sustainability reporting. With this announcement, it is expected that the overall quality and comparability of ESG information disclosure by A-share listed companies will improve significantly.
According to the new guidelines, information disclosure will include a combination of mandatory and voluntary disclosures. As of now, around 450 listed companies, accounting for 51% of the total market value of A-shares, will be included in the scope of mandatory reporting.
The companies subjected to mandatory disclosure will need to publish their FY2025 ESG report before April 30, 2026.
Notably, the guidelines require companies to adopt a double materiality approach to sustainability reporting, which includes reporting on both the financial impact of sustainability issues on the company, and the company’s impact on the environment and society. The requirement is distinctively aligned with the EU’s latest regulation (Corporate Sustainability Reporting Directive).
The overall disclosure framework of the guidelines is centered around the four core contents of ‘governance, strategy, risk management, and metrics and targets,’ which are consistent with the TCFD (Task Force on Climate-related Financial Disclosures) framework as well as ISSB (International Sustainability Standards Board) standards. Although the guidelines do not clearly state whether they are based on these international frameworks or others, we expect to see a certain level of alignment of the local ESG Disclosure requirements with the International Frameworks & Guidance.
Despite the high level of ESG disclosure by the listed companies, we expect these requirements to put a lot of pressure on them, with different levels of financial implications for companies that have not established effective sustainability management practices.
Contributors
Yulia Khisamova
Senior Consultant
Rachel Tang
Consultant
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