China Releases First ESG Disclosure Standards
The guidelines are voluntary for the time being until the Chinese government sets specific rules surrounding them.
This reflects China's ESG priorities, such as climate change, environmental pollution, rural development, etc.
To usher in sustainability activities and firm up environmental, social, and governance (ESG) commitments in China, the Chinese Ministry of Finance (MOF), in collaboration with nine other departments, has announced a new set of Corporate Sustainability Disclosure Standards—Basic Standards.
These standards are the first-of-its-kind guidelines for corporate sustainability reporting in the country. They help Chinese businesses report their ESG practices and align them with global expectations.
This is important for the Chinese economy because ESG reporting helps businesses operate with transparency and a sense of commitment towards society and the environment. It upholds corporate accountability, attracts global investors, and aligns with the United Nations' Sustainable Development Goals. The Chinese government plans to prop up these efforts through regional action plans and national ESG mandates for large companies by 2026.
READ MORE: What is Sustainable Report? Meaning, Types, and Benefits
Initially, the guidelines are voluntary, allowing companies time to familiarise themselves before the government specifies mandatory rules. The full adoption of the ESG reporting system is expected by 2030, providing Chinese authorities with ample time for detailed discussions on the topic.
In the meanwhile, cities like Beijing, Shanghai, and Suzhou have implemented their own ESG plans. For example, in Shanghai, the export-focused state-owned companies must publish their ESG reports by 2027.
The ESG reporting and disclosure guidelines are expected to make Chinese businesses more competitive globally and align with domestic environmental and economic goals. They could also well position the Asian giant as a frontrunner in ESG adoption within the Asia-Pacific region.
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Source: China Briefing
