Mainland China

Yes.

In the mainland of China, general ESG disclosure requirements are primarily aimed at listed companies:

1. Self-regulatory Guidelines of the Shenzhen Stock Exchange for Listed Companies No. 1 - Standardized Operation of Main Board-Listed Companies: (i) require listed companies included in the Shenzhen Stock Exchange 100 Index to disclose their Social Responsibility (SR) reports separately in accordance with the relevant provisions of the Guidelines for Standardized Operation of Listed Companies of the Exchange; and (ii) encourage other companies listed on the Shenzhen Stock Exchange to disclose their SR reports.
2. Self-regulatory Guidelines of the Shanghai Stock Exchange for Listed Companies No. 1 - Standardized Operation require (i) companies listed on the Shanghai Stock Exchange Corporate Governance Sector, (ii) companies simultaneously listed on both the Shanghai Stock Exchange and other jurisdictions outside the mainland of China, and (iii) financial companies, to disclose their SR reports at the same time as their annual reports. Other companies listed on the Shanghai Stock Exchange are encouraged to disclose their SR reports at the same time as their annual reports.
3. Notice on Conducting Disclosure of 2021 Annual Reports of Listed Companies on the Shanghai Stock Exchange's Sci-Tech Innovation Board (SSE STAR Market) requires SSE STAR Market-listed companies to disclose ESG-related information in their annual reports, and to separately prepare and disclose ESG reports, SR reports, sustainable development reports, environmental responsibility reports, and other documents as appropriate. The companies included in the SSE STAR Market 50 Index should disclose their SR report at the same time as their annual reports; however, those which have already disclosed ESG reports are exempted from separate disclosure of SR reports. Other companies listed on the SSE STAR Market are encouraged to disclose ESG reports or SR reports at the same time as their annual reports. When preparing their ESG reports or SR reports, companies should, as a key focus, disclose actions taken to support the “carbon peak and carbon neutrality” goals and to promote sustainable development.
4. Self-regulatory Guidelines of the Shenzhen Stock Exchange for Listed Companies No. 17 - Sustainable Development Report (Trial) require listed companies included in the Shenzhen Stock Exchange 100 Index, Growth Enterprise Index, and enterprises simultaneously listed on the Exchanges in China and abroad to disclose sustainability reports that cover typical and more innovative ESG topics.
5. Self-regulatory Guidelines of the Shanghai Stock Exchange for Listed Companies No. 14 - Sustainable Development Report (Trial) require listed companies included in the Shanghai Stock Exchange 180 Index, STAR 50 Index, and enterprises simultaneously listed on the Exchanges in China and abroad to disclose sustainability reports that cover typical and more innovative ESG topics.
6. Self-regulatory Guidelines of the Beijing Stock Exchange for Listed Companies No. 11 - Sustainable Development Report (Trial) stipulate similar rules as items (d) and (e) above for Beijing Stock Exchange-listed companies, but they are proposed to be non-mandatory at this stage.
   
   The new guidelines mentioned in paragraphs (d) and (e) above are termed the “Sustainable Development Report Guidelines” in this chapter.
7. Measures for Administration of Law-based Disclosure of Environmental Information by Enterprises (the MEE Measures) issued by the Ministry of Ecology and Environment (MEE) stipulate that certain enterprises are subject to mandatory environmental disclosure requirements. These include:
   
   (i) key pollutant-discharging entities;
   
   (ii) enterprises subject to compulsory cleaner production audit;
   
   (iii) listed companies and their subsidiaries at all levels (to the extent consolidated) that are subject to the provisions of Article 8(1) of the MEE Measures (e.g. companies that have breached environmental laws);
   
   (iv) enterprises issuing enterprise bonds and corporate bonds, and non-financial enterprises issuing debt financing instruments that are subject to the provisions of Article 8 of the MEE Measures; and
   
   (v) other enterprises that shall disclose environmental information as prescribed by laws and regulations.
8. Basic Standard for Enterprise Sustainability Disclosure (Trial) (the Basic Standard) issued by the Ministry of Finance sets out general requirements for the disclosure of corporate sustainability information. The Basic Standard was issued in 2024 and is currently voluntary. It stipulates that it will apply to listed companies, other enterprises as required by regulations (which have not yet been issued) and entities that choose to disclose sustainability information voluntarily. The Basic Standard lays the foundation for a national unified sustainability disclosure system which is intended to apply in phases, from listed companies to non-listed companies, and from large enterprises to SMEs.
   

The disclosure requirements of the Shenzhen Stock Exchange and Shanghai Stock Exchange discussed in section A.2(a), (b) and (c) are mandatory for (i) listed companies included in the Shenzhen Stock Exchange 100 Index, (ii) representative companies listed on the Shanghai Stock Exchange Corporate Governance Sector, (iii) Shanghai Stock Exchange-listed financial companies, (iv) companies listed on both the Shanghai Stock Exchange and other jurisdictions outside the mainland of China, and (v) SSE STAR Market-listed companies. They are otherwise voluntary for other listed companies on the Shenzhen Stock Exchange or Shanghai Stock Exchange.

The disclosure requirements under the Sustainable Development Report Guidelines of the Shenzhen Stock Exchange and Shanghai Stock Exchange (as discussed in section A.2(d) and (e) above) are mandatory from 2025 for (i) listed companies included in the Shenzhen Stock Exchange 100 Index, (ii) companies listed on the Growth Enterprise Index, (iii) listed companies included in the Shanghai Stock Exchange 180 Index, (iv) companies listed on the STAR 50 Index, and (v) companies listed on the Shenzhen Stock Exchange or Shanghai Stock Exchange and other jurisdiction outside the mainland of China. 

The Sustainable Development Report Guidelines stipulate similar rules for companies listed on the Beijing Stock Exchange, but they are proposed to be non-mandatory. There is no indication of when they may become mandatory.

The requirements under the MEE Measures on environmental disclosure are mandatory for certain enterprises as discussed in section A.2.

The Basic Standard is currently implemented by enterprises on a voluntary basis and will gradually shift from voluntary to mandatory disclosure. The timing for mandatory application has not yet been specified.

Based on the requirements of the Shenzhen Stock Exchange and Shanghai Stock Exchange as discussed in section A.2(a) to (c), various ESG aspects are covered. Specifically for companies listed on the SSE STAR Market, the key focus is on their actions to support the “carbon peak and carbon neutrality” goals and promote sustainable development.

For companies subject to the Sustainable Development Report Guidelines of the Shenzhen Stock Exchange and Shanghai Stock Exchange, various typical and more innovative ESG aspects are covered. The environmental aspect mainly includes climate change (including GHG emissions), pollution, biodiversity and ecosystem, resource use, and circular economy. The social aspect mainly includes rural revitalization and social contribution, innovation and scientific ethics, supply chain and customers, and workers’ rights. The governance aspect mainly includes corporate sustainable development management systems, anti-bribery and anti-unfair competition.

For companies subject to the MEE Measures, the key environmental disclosure aspects include:

1. basic information of the enterprise (production and environmental protection information);
2. information on the environmental management of the enterprise;
3. information on the generation, control and discharge of pollutants;
4. carbon emission information;
5. ecological and environmental emergency response information;
6. information on violation of ecological and environmental laws;
7. law-based annual disclosure of temporary environmental information; and
8. other environmental information as prescribed by laws and regulations.

The Basic Standard, which is based on IFRS S1, sets out general requirements for the disclosure of corporate sustainability information and does not cover specific ESG topics. In due course, specific standards will be issued to provide detailed requirements for disclosures on ESG topics. Furthermore, application guidelines will be developed to interpret and refine the Basic Standard and its related specific standards. So far, the Ministry of Finance has issued the Exposure Draft of the Corporate Sustainability Disclosure Standards No. 1 – Climate (Trial) (Draft Climate Standard), which is based on IFRS S2 and covers climate-related disclosures.

The Basic Standard is highly consistent with IFRS S1 in terms of disclosure structure, (i.e., the four pillars of governance, strategy, risk and opportunity management, and metrics and targets), as well as information quality requirements, including reliability, relevance, comparability, verifiability, understandability, and timeliness. At the same time, it incorporates localised adjustments to reflect China’s national context, including modifications in disclosure objectives and topics, and certain expressions.

China has also released its Draft Climate Standard, which is highly consistent with IFRS S2. It also adopts the four-pillar disclosure framework of IFRS S2 and sets similar requirements for the disclosure of GHG emissions, covering Scopes 1, 2, and 3 GHG. It also requires enterprises to conduct climate scenario analysis, disclose climate-related targets, and disclose their progress towards achieving those targets. 

The other regulatory disclosure requirements do not make any specific reference to international standards. However, based on a recent analysis by China Association for Public Companies, they share some commonalities with IFRS S1 and IFRS S2 in terms of framework structure, basic concepts, disclosure principles, disclosure framework, and disclosure of climate change issues. This is particularly the case for the Sustainable Development Report Guidelines. 

In practice, many companies listed on the Shanghai Stock Exchange or Shenzhen Stock Exchange prepare their ESG/SR reports with reference to international standards/frameworks, such as the GRI standards, ISO 26000 and TCFD Recommendations.

The disclosure requirements of the Shenzhen Stock Exchange and Shanghai Stock Exchange adopt double materiality.

The Basic Standard and Draft Climate Standard also adopt double materiality.

Based on the Sustainable Development Report Guidelines of the Shanghai Stock Exchange and Shenzhen Stock Exchange:

1. The disclosing entity should account for and disclose the total GHG emissions during the reporting period and convert the emissions of different GHGs into MTCO₂e. The entity should disclose the emissions categorised into Scope 1 and Scope 2 emissions, and it is encouraged to disclose Scope 3 emissions for those entities that have the conditions to do so.
2. The disclosing entity should disclose the standards, methods, assumptions, or calculation tools used to account for GHG emissions, and explain the consolidation methods of the emissions (such as equity proportion, financial control, operational control, etc.). If there are changes in the accounting standards, methods and assumptions etc. during the reporting period, the reasons should be explained and the specific impacts should be disclosed.

On 18 October 2023, the MEE issued the Notice on the Reporting and Verification of Greenhouse Gas Emissions of Enterprises in Certain Key Industries in 2023-2025, which stipulates that key emission enterprises, including those with annual carbon emissions of or above 26,000 tCO₂ in key industries, such as petrochemicals, chemicals, building materials, steel, non-ferrous metals, paper, and civil aviation, are required to report their GHG emissions onto the National Carbon Market Information Network. This notice focuses on designated emission factors relating to manufacturing and operation, encompassing only Scope 1 and Scope 2 emissions. The notice outlines the reporting verification methods prescribed by the MEE in the Guidance for Verification of Enterprise Greenhouse Gas Emissions Reporting (Trial).

In addition, the Draft Climate Standard, as currently proposed, will require enterprises to disclose GHG emissions, including Scope 1, Scope 2, and Scope 3 emissions. It will apply to enterprises that are required by law or voluntarily choose to disclose sustainability information. Enterprises must calculate their emissions in accordance with the mainland’s national carbon accounting standards, categorise and disclose their absolute GHG emissions during the reporting period, and convert different types of GHG emissions into metric tons of CO₂ equivalent (tCO₂e). In general (with limited exception for Scope 3 emissions), enterprises must disclose the methodologies, activity data, emission factors, input values, and assumptions used in their calculation, as well as explain any changes and their impacts if such elements are revised.

There are currently no mandatory requirements to obtain independent assurance of any ESG disclosures, and we are not aware of any plans to introduce such requirements. However, the Sustainable Development Report Guidelines and the Basic Standard encourage disclosing entities to engage third-party institutions to provide assurance/audit for their GHG emissions and other disclosed data.

The Sustainable Development Report Guidelines stipulate that disclosed information should include the independence of the third-party institution, its relationship with the disclosing entity, its experience and qualifications, and the assurance or audit report. The content of the report should include, but is not limited to, the scope of assurance or audit, the standards used, main procedures, methods and limitations, opinions or conclusions, etc.

Many listed companies make reference to international standards (such as the GRI standards and ISO 26000) and/or local standards (such as the Guidelines on Sustainability Reporting for Chinese Enterprises (CASS-ESG 6.0), Guidance for Enterprise ESG Disclosure (T/CERDS 2-2022), and Reference ESG Indicator Framework for Listed Companies Controlled by Central State-owned Enterprises) in their ESG reports, even though they are not mandatory.

The International Platform on Sustainable Finance, which was jointly launched by economies including China and the EU, released the Common Ground Taxonomy (CGT). The CGT has been adopted by some financial institutions in China and the EU as reference for determining whether projects satisfy the purpose of sustainable finance when issuing financial products, but it is not mandatory.

On 14 November 2024, China, the EU, and Singapore jointly released the Multi-jurisdiction Common Ground Taxonomy. Building on the original CGT, this new taxonomy aims to enhance the interoperability and alignment of sustainable finance standards across these jurisdictions.

The guidance on “green investment” and the Green Bond Endorsed Projects Catalogue mentioned in section C.2 below apply in the sustainable finance context.

Currently, China has incorporated IFRS S1 and IFRS S2 into its domestic disclosure framework through the Basic Standard and the Draft Climate Standard, but has not yet adopted the TNFD framework.

As mentioned above, the national unified sustainability disclosure standards system will consist of the basic standards, specific standards, and application guidelines, and will be implemented in stages. They will initially apply to listed companies, with a gradual extension to non-listed companies and small and medium-sized enterprises.

According to the regulatory roadmap, a series of standards, including the Basic Standard, Draft Climate Standard, and related implementation guidelines will be progressively issued by 2027. A nationally unified sustainability disclosure standards system is expected to be in place by 2030. A timeline for mandatory application has not yet been specified.

Given the long development cycle of the standards system, relevant authorities may, based on practical needs, initially formulate disclosure guidelines and regulatory rules for specific industries or sectors, to be gradually refined and improved in the future.

As of now, China has not enacted mandatory human rights and/or environmental due diligence laws nor has it officially proposed such legislation.