On Monday, China’s finance ministry released draft guidelines that lay the groundwork for national corporate sustainability disclosures. Named “Corporate Sustainability Disclosure Standards: Basic Standards”, the draft sets the general principles, with more specific guidelines and application guidance to come.
According to the ministry’s drafting notes, China expects to “introduce basic corporate sustainability disclosure standards and climate-specific disclosure standards” by 2027; it aims to have a “unified national regulatory system” for sustainability disclosures in place by 2030.
Globally, corporate sustainability disclosure has evolved rapidly over the past few decades. However, a multitude of frameworks has resulted in fragmented reporting practices. This has complicated the comparison of sustainability disclosures across companies and sectors.
The International Financial Reporting Standards (IFRS) Foundation, known for its role in financial reporting standards, launched the International Sustainability Standards Board (ISSB) in 2021. The ISSB aims to develop a unified global baseline of sustainability disclosure standards to meet investors’ data needs. The ISSB has since released its sustainability reporting standard, IFRS S1, and its climate reporting standard, IFRS S2. It is currently working on biodiversity standards.
The IFRS says jurisdictions representing more than half of the global economy have announced plans to use or align with the ISSB.
Last year, the ISSB opened a Beijing office and has worked closely with China’s finance ministry on its Basic Standards to ensure alignment. These principles are expected to help Chinese companies engage more effectively in global trade and investment, enhance their international competitiveness, and support the country’s institutional opening-up.
Earlier this year, the Shanghai, Shenzhen and Beijing stock exchanges released sustainable development reporting guidelines for their listed companies, which are also largely aligned with ISSB standards.
According to the ministry, China is planning to gradually expand sustainability disclosure requirements to incorporate non-listed companies, and to shift from voluntary to mandatory disclosures.
Read Dialogue Earth’s recent analysis on how better disclosure rules can help China’s financial markets work for the climate.