China’s three major stock exchanges – the Shanghai Stock Exchange (SSE), Shenzhen Stock Exchange (SZSE), and Beijing Stock Exchange (BSE) – have announced groundbreaking sustainability reporting guidelines for listed companies. These guidelines introduce a new mandate for hundreds of larger cap and dual-listed issuers to commence mandatory disclosure on a comprehensive range of Environmental, Social, and Governance (ESG) topics by 2026.
This move aligns China with other leading global markets in the adoption of sustainability reporting requirements, following the footsteps of initiatives such as the EU’s Corporate Sustainable Reporting Directive (CSRD), the impending climate disclosure rules by the U.S. SEC, and similar endeavors in jurisdictions including Australia, Brazil, Singapore, and the UK.
The new guidelines outlined by the Chinese exchanges emphasize four core content topics: governance, strategy, impact, risk and opportunity management, and indicators and goals. This approach reflects a commitment to the concept of “double materiality,” wherein companies report on both the risks and impacts of sustainability issues on their operations, as well as their contributions to environmental and social well-being.
By including these core content topics, the exchanges aim to provide investors and stakeholders with comprehensive insights into listed companies’ sustainable development efforts and management strategies.
The reporting requirements span various environmental, social, and governance domains, encompassing climate change, ecosystem preservation, circular economy initiatives, energy consumption, supply chain security, rural revitalization, and anti-corruption measures, among others. Notably, the guidelines mandate reporting on Scope 3 value chain greenhouse gas emissions, addressing a contentious issue that has also drawn attention in the context of the SEC’s forthcoming climate disclosure rule.
The mandatory reporting obligations under these guidelines will be applicable to larger companies, including those listed on prominent indices such as the Shenzhen 100, SSE 180, and Shanghai Science and Technology Innovation 50, as well as dual-listed entities with securities traded on both domestic and foreign markets. This requirement encompasses over 450 companies, representing approximately half of the total listed market value. In contrast, the Beijing exchange, which primarily hosts small and medium enterprises, will adopt the guidelines on a voluntary basis.
For companies subject to mandatory reporting, the commencement is slated for 2026, corresponding to the reporting period of 2025. This timeline underscores China’s commitment to fostering greater transparency and accountability among listed entities, positioning the nation as a key player in the global sustainability reporting landscape.
