From May 1, the Shanghai and Shenzhen North Stock Exchanges will officially implement the Sustainability Reporting Guidelines for Listed Companies (the "Guidelines"). As the first unified, standardized, and practical ESG disclosure standard for A-shares, the guidelines will guide and regulate listed companies to publish the Listed Company Sustainability Report or the Listed Company Environmental, Social and Corporate Governance Report (ESG Report). According to the data, the current guidelines cover about 457 A-share listed companies that are required to disclose mandatory sustainability reports, and these companies should disclose their 2025 annual sustainability reports for the first time by 2026 at the latest.
According to industry insiders, the guidelines clearly regulate the disclosure of sustainable information by mainland listed companies, filling the gap in ESG information disclosure standards at the regulatory level of mainland listed companies. With the implementation of the guidelines, information comparability and transparency will gradually increase, and the sustainability reports of listed companies are expected to "improve both quantity and quality", which will not only help enterprises develop with high quality, but also attract more sustainable investment funds into A-shares, and promote the construction of a good development ecosystem.
The three major exchanges standardize ESG disclosure requirements
After fully soliciting opinions and researching in the early stage, the Shanghai and Shenzhen North Stock Exchanges recently issued the "Self-Regulatory Guidelines for Listed Companies on the Shanghai Stock Exchange No. 14 - Sustainability Report (Trial)", "Self-Regulatory Guidelines for Listed Companies on the Shenzhen Stock Exchange No. 17 - Sustainability Report (Trial)", and "Guidelines for the Continuous Supervision of Listed Companies on the Beijing Stock Exchange No. 11 - Sustainability Report (Trial)".
"The standardization, consistency, comparability and authenticity of the disclosures of listed companies are the basic guarantees of ESG ratings, and the issuance of the guidelines will greatly improve the quality of China's ESG ratings. CCXI said that in the guidelines, the disclosure of sustainable development reports of sample companies of important market indices such as the SSE 180, STAR 50, SZSE 100, and ChiNext Index, as well as companies listed at home and abroad, is mandatory. Through the demonstration effect, it will drive the standardized development of sustainable information disclosure of listed companies and even enterprises in the whole market.
China Securities Index Co., Ltd. said that the issuance of the guidelines is an important milestone in the field of sustainable development information disclosure in China, which provides a clear reporting framework and standards for listed companies, based on the dual importance and four-factor framework, and sets up topics that reflect international consensus, such as climate change, ecosystem and biodiversity conservation, circular economy, and energy use, as well as topics that highlight Chinese characteristics and priority concerns such as rural revitalization, innovation-driven, and equal treatment of small and medium-sized enterprises. The guidelines clarify the scope of mandatory disclosure of sustainability reports by listed companies and the quality requirements for sustainability information, and set a reasonable preparation period according to the actual situation of listed companies.
In summary, the guidelines divide the disclosure into three dimensions: environmental, social and governance, and set up 21 specific topics. Among them, environmental information disclosure sets up eight topics, such as climate change, pollutant emissions, ecosystem and biodiversity protection, social information disclosure sets up nine topics, such as rural revitalization, social contribution, and innovation-driven, and sustainable development-related governance information disclosure sets up four topics, such as stakeholder communication and anti-unfair competition.
In terms of the implementation of the rules, the SSE said that the sample companies of the SSE 180 and STAR 50 Index, as well as companies listed at the same time at home and abroad, should disclose the 2025 Sustainability Report for the first time by 2026 at the latest, and encourage other listed companies to do so voluntarily. The Shenzhen Stock Exchange has also clearly set up a transitional period arrangement, under which companies that continue to be included in the SZSE 100 and ChiNext index samples during the reporting period, as well as companies listed both domestically and overseas, can disclose the 2025 Sustainability Report for the first time by 30 April 2026 at the latest, and encourage other listed companies to disclose voluntarily.
Taking into account the characteristics of the development stage of innovative small and medium-sized enterprises, the rules of the Beijing Stock Exchange do not make mandatory disclosure requirements for sustainable development reports, and encourage companies to "do what they can" and gradually promote listed companies to strengthen disclosure. At the same time, the requirements for quantitative disclosure, year-on-year changes in indicators, and financial impact analysis at the time of initial disclosure should be appropriately relaxed. In order to enhance the comparability and consistency of information disclosure, the guidelines should be applied to the voluntary disclosure of sustainability reports by listed companies, and the Beijing Stock Exchange will also guide companies to actively apply the relevant guidelines.
"For companies with mandatory ESG disclosures, we recommend that they start acting as early as possible. According to the guidance, mandatory disclosure will come into effect in the 2026 annual reporting season, so 2024 and 2025 will be a key time window for adaptation. For companies that do not fall under the mandatory ESG disclosure at this stage, considering the possibility of expanding the scope of the guidelines, it is recommended to prepare in advance (at least try to disclose ESG reports) in case of future needs to ensure that they can meet future challenges. Rongzheng Group partner, Rongzheng Yi Siji Mao Juan said.
The multi-dimensional issue framework has been further optimized
Rongzheng Yisiji said that compared with the draft for comments, the officially released guidelines focus on the disclosure time, materiality principle, environmental, social and governance and other aspects of adjustments, more operational and flexible, and fully absorb the feedback from all parties. Specifically, in terms of the disclosure time, compared with the Consultation Paper, the time node for mandatory disclosure of A-shares has not changed, and the deadline is April 30 each year, and the release time of ESG reports should not be earlier than the annual report, and it is no longer required to disclose at the same time as the annual report, and the relaxation of the requirements for disclosure entities is more flexible.
In terms of materiality principles, the guidelines have a clearer definition of "financial materiality", the disclosure entity is more identical, and only issues of impact materiality do not need to be disclosed in accordance with the "four pillars" framework, which reduces the difficulty of disclosure for disclosure entities. According to the Guidelines, the disclosing entity should identify whether each topic is expected to have a significant impact on the company's business model, business operations, development strategy, financial position, operating results, cash flow, financing methods and costs in the short, medium and long term, taking into account the characteristics of its own industry and business.
Focusing on the environmental dimension, the guidelines add "if the disclosing entity participates in carbon emission trading, it shall disclose whether the settlement has been completed during the reporting period and whether it has been required by the relevant departments to rectify or file a case for investigation, support the construction of a beautiful China, the impact of pollutant emissions on employees, local community residents and other groups, waste emission reduction targets and specific measures taken to achieve the goals", the original Article 35 of the circular economy content has been adjusted to Article 37, and the relevant expressions have been improved.
"Add the description of carbon emission trading to further explain the importance that the state attaches to the construction of the carbon market and regard it as a part of the credit performance of enterprises; further increase the content of requiring entities to clarify the impact of pollutant emissions; reflect the response to the national strategy of building a beautiful China, and make the content of the report more local." Rongzheng Yi Siji pointed out.
In terms of social issues, the forthcoming guidelines further optimize the framework of the issues, focusing on the scientific ethics of current hot topics, especially in the development process of industries such as AI and biomedicine, and strengthening the content disclosure of the availability of certain industries, reflecting equality. Specifically, the framework in the guidelines has been adjusted, and the original Section 2 Innovation-driven, Suppliers and Customers has been split into Section 2 Innovation-Driven and Technology Ethics and Section 3 Suppliers and Customers. At the same time, it added "abide by scientific ethics norms in innovative decision-making and practice, give full play to new quality productivity, encourage disclosure entities in finance, healthcare, electricity, communications, public utilities and other industries to disclose information related to the availability of products and services (such as inclusive finance and inclusive medical care) during the reporting period, and optimize the disclosure content of the employee chapter, focusing on flexible employment and employee rights".
In terms of governance issues, the guidelines adjust the disclosure of corporate governance information to the disclosure of sustainability-related governance information, and add new sustainable development due diligence clauses and stakeholder communication to enhance the credibility and multi-party participation of ESG report disclosure. According to the Guidelines, disclosing entities are encouraged to disclose the due diligence status of identifying and responding to sustainability-related negative impacts or risks during the reporting period, including but not limited to the institutions or personnel responsible for due diligence, the scope of due diligence, the procedures for identifying sustainability-related negative impacts or risks, and the specific circumstances of responding to the relevant negative impacts and risks. In addition, the disclosing entity should disclose the specific situation of communication with stakeholders, including investors, during the reporting period.
Nearly 60 listed companies are covered by the guidelines to be disclosed
With the official issuance of the guidelines, industry insiders expect a significant increase in the number of listed companies disclosing sustainability reports in the future. According to incomplete statistics from Wind data, as of press time, more than 760 listed companies have voluntarily disclosed ESG-related reports in 2023 this year, and about 1,840 listed companies have previously disclosed ESG-related reports in 2022. Referring to the requirements of the guidelines to be implemented, Rongzheng Yisiji statistics show that the current guidelines cover about 457 A-share listed companies that are required to disclose mandatory sustainability reports, of which nearly 60 have not published ESG reports.
"We recommend that all listed companies prepare as early as possible, identify ESG risks from both financial and impact perspectives, focus on core indicators such as governance, strategy, impact, risks and opportunities, indicators and goals, and continuously improve ESG management and improve the overall level. For companies that are required to disclose in the guidelines at this stage, it is recommended to start acting from this year, and the guidelines will take effect in 2025 ESG reports, with only a two-year transition period. Rongzheng Yi Siji prompted.
In addition, Rongzheng Yisiji said that domestic enterprises need to consider the differences between domestic and foreign standards when disclosing ESG reports, and how to balance and integrate the disclosure content will become an important topic of discussion in the future, especially for companies listed in two places. For example, the guidelines and the International Sustainability Standards Board (ISSB) standards are similar in terms of framework structure, basic concepts, disclosure principles and disclosure frameworks, but there are differences in the form of regulations, disclosure frameworks, topic settings, climate-related disclosures, disclosure times and effective dates.
In recent years, the global capital market has paid great attention to the impact of ESG ratings or ESG performance on corporate creditworthiness. Since 2017, the three major international rating agencies have gradually begun to integrate ESG factors in credit ratings. With the popularization of ESG concepts in China and the gradual improvement of relevant policies and regulatory systems, more and more institutional investors have begun to incorporate ESG factors into asset allocation and risk management, and the correlation between ESG factors and corporate operations and risk levels has gradually increased.
"Listed companies involving overseas business layout, including new energy and pharmaceuticals, will promote ESG more deeply based on the requirements of the supply chain, and will make more changes at the business and management levels. In order to go far and steadily in the process of 'going global', enterprises must pay attention to and do a good job in their own ESG construction. Good ESG performance can help improve the market competitiveness and profit level of enterprises, help improve business efficiency, and also help enterprises win a good reputation in the international market. Some market participants said that at this stage, the country is more at the information level, and it needs to be further deepened in the future. (Reporter Wei Xiayi reports from Beijing)
Source: Economic Information Daily
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