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Regulatory update
2024 has been a landmark year for sustainability disclosures in China.
In April 2024, mainland China's three major securities exchanges - Shanghai, Shenzhen and Beijing - issued their guidelines for corporate sustainability reporting (referred to collectively as the Guidelines). These Guidelines took effect from May 2024 and require certain listed companies to prepare and publicly disclose sustainability reports by April 2026. The criteria used to determine which entities need to disclose is managed by the securities exchange the entity is listed on.
On May 27, 2024, the Ministry of Finance of China released the exposure draft of its ISSB-aligned Corporate Sustainability Disclosure Standards – Basic standards (referred to as the Standards), with Climate-related Disclosure Standards to follow by 2027. This marks the beginning of a unified national sustainable disclosure standards system for China.
In contrast to the ISSB standards, which are investor-oriented and focus on financial materiality as a global baseline, China's sustainable disclosure Standards are designed to be applicable to all enterprises. These Standards aim to meet the needs of a broader range of stakeholders by considering both financial materiality and impact materiality principles.
Both Standards are based on the ISSB standards, while also taking into account China's national conditions and thoroughly referencing and incorporating the disclosure requirements related to impact materiality from the GRI standards and the European Sustainability Reporting Standards (ESRS). These differences reflect the unique characteristics of China in the field of sustainable development.
The Standards will apply to enterprises established within the People's Republic of China that are required to disclose sustainability information. This means that China's sustainability disclosure Standards are not only applicable to listed companies that are mandated to disclose or those that choose to voluntarily disclose but also to other enterprises required to conduct sustainability disclosures, including centrally state-owned enterprises, local state-owned enterprises, private enterprises, and foreign-funded enterprises that are not listed domestically.
Given the varied development stages and disclosure capabilities of domestic enterprises, the general Standards will not adopt a ‘one-size-fits-all’ mandatory approach to reporting. Instead, a strategy of differentiated focus, pilot programs, gradual progression, and phased implementation will be employed. This will involve expanding from listed companies to non-listed companies, from large enterprises to small and medium-sized enterprises, from qualitative requirements to quantitative requirements, and from voluntary disclosure to mandatory disclosure.
In the initial phase following the release of the general Standards, enterprises will voluntarily implement the Standards based on their own circumstances. Once the conditions are relatively mature, the Ministry of Finance of China, in conjunction with relevant departments, will make targeted arrangements regarding the scope of implementation, mitigation measures, the applicability of relevant provisions, and specific coordination regulations.
The main content of the exposure draft of China’s Corporate Sustainability Disclosure Standards.
Key market insights:
According to statistics from Anhui University, the number of listed companies disclosing ESG information increased from 18 in 2006 to 1,843 in 2022. The overall disclosure rate in 2022 was 35.86%, with the voluntary disclosure rate sitting at 32.99%.
Since the Shanghai Stock Exchange, Shenzhen Stock Exchange, and Beijing Stock Exchange officially released the guidelines for listed companies' sustainable development reports in April 2024, the number of sustainable information disclosures by A-share listed companies has continued to rise. According to statistics from Syntao, as of June 10 2024, a total of 2,090 listed companies had published ESG or sustainable development reports, an increase of 376 compared to the previous year, accounting for 38.9% of all listed companies, with a growth rate of 6% compared to last year.
ESG Disclosures from 2009 to 2023
China has implemented a series of comprehensive climate policies to achieve its carbon reduction and energy conservation goals:
2024-2025 Energy conservation and carbon reduction plan (May 2024): Targets energy-intensive sectors like energy, industry, construction, transportation, and public institutions. The plan outlines ten actions, including reducing fossil fuel reliance, boosting non-fossil energy, and implementing energy-saving measures across steel, petrochemicals, non-ferrous metals, and construction. The aim is for non-fossil energy to make up 20% of consumption by 2025, aligning with the 14th Five-Year Plan's goals.
Dual-control system for carbon emissions (July 2024): Introduces a shift from energy to carbon emission control. This system integrates carbon reduction targets into national planning and establishes frameworks for carbon assessments, management, and product tracking, linked with China’s carbon trading market to support carbon neutrality targets.
Green transition guidelines (July 2024): Focuses on coordinated carbon reduction, pollution control, and economic growth. Targets for 2030 include substantial adoption of green practices in major sectors, and by 2035, a shift to a green, low-carbon, circular economy, with carbon emissions peaking and then declining. Specific goals include 25% non-fossil energy consumption by 2030 and advancements in energy efficiency and green infrastructure.
- Railway industry (February 2024): Aims to peak railway carbon emissions by 2030, with 12 key low-carbon tasks.
- Building sector (March 2024): Sets targets for 2025 and 2027, including expanding ultra-low energy buildings, enhancing energy standards, and promoting renewable energy use in urban buildings.
- Industrial equipment upgrades (May 2024): Promotes green upgrades in petrochemical, steel, automotive, and shipbuilding, with goals like 80% ultra-low emissions in steel production by 2027.
- Steel industry (May 2024): Aims to cut CO2 emissions by 53 million tons by 2025 and accelerate low-carbon smelting techniques.
- Coal power (June 2024): Plans low-carbon upgrades for coal power, targeting a 50% emissions reduction by 2027.
- Electrolytic aluminium (July 2024): Focuses on carbon reduction and renewable energy use, with a goal of 25%.
Since 2011, China has been developing a carbon trading framework to reduce greenhouse gas emissions. The country began by piloting emissions trading in select provinces and launched its first carbon credits in 2013, though this was later paused. In October 2023, China officially restarted voluntary emissions reduction trading through new measures, establishing clear guidelines, workflows, and roles for participants in the market to support renewable energy projects like offshore wind and solar thermal power.
In early 2024, China’s State Council approved interim regulations for carbon trading, clarifying management responsibilities, legal frameworks, and measures to prevent data fraud, thus enhancing accountability among key emitters. Additional government policies in August 2024 emphasised expanding the carbon market to include more sectors, strengthening market mechanisms for a green transition, and improving the alignment of green certificates with carbon trading. In September 2024, the Ministry of Ecology and Environment began soliciting feedback on including the cement, steel, and electrolytic aluminium industries in the national carbon market, marking 2024 as the first compliance year for these sectors.
Overall, these actions establish a robust carbon trading system aimed at advancing China’s goals for carbon peak and neutrality while fostering green economic development and stricter emissions management across multiple industries.
In 2024, China introduced several key policies to enhance its waste recycling and circular economy framework. In February, the State Council issued guidelines for a comprehensive waste recycling system focused on the efficient management of industrial, agricultural, and societal waste. The guidelines promote recycling models that emphasise reusing bulk solid waste, remanufacturing outdated equipment, energy recovery, and creating a standardised market for second-hand goods and recycled materials. They also prioritise recycling power batteries and low-value materials and fostering innovation in waste management while supporting industrial clusters and leading enterprises to strengthen the sector.
In March, an action plan encouraged upgrading large-scale equipment and consumer goods through trade-ins and recycling, aimed at boosting investment, consumption, and recycling practices.
In October, China launched its first central enterprise dedicated to resource recycling, China Resource Recycling Group Co., Ltd. This organisation is set to drive the circular economy by creating an efficient recycling network of central, satellite, and cooperative bases to enhance the collection and reuse of resources. This development is expected to secure essential resources, strengthen domestic supply chains, and increase the efficiency of resource recovery.
ITG Holding Group, a Fortune Global 500 and World Brand 500 company, operates in five main sectors: supply chain, advanced manufacturing, urban construction, consumption and health, and financial services. With global reach and over 34,000 employees, ITG integrates sustainability into its operations, focusing on environmental protection, education, and healthcare.
The company discloses ESG information through recognised frameworks, including GRI, SASB, and ISSB standards, and aligns with the United Nations (UN) Sustainability Development Goals (SDGs). Its ESG governance is led by the board, with a structured framework to support sustainable policies and initiatives.
ITG was recognised on Fortune China’s ESG Impact List in 2022 and 2024. In response to climate change, ITG adopted the development principles of innovation, coordination, green, openness, and sharing. In 2023, it set carbon peaking and net zero targets, releasing a Net Zero Action whitepaper to outline its strategy. ITG's five key net zero actions, informed by the UN Global Compact’s guidance, promote not only its low-carbon transformation but also encourage sustainability across its supply chain.
Kinsey Xu, Partner - ESG and Climate Services
"ESG and carbon management are becoming essential pillars for businesses in China, especially as the country moves decisively towards its carbon peak and neutrality goals. We see a growing demand from clients to integrate ESG into their core strategies, not just as a compliance exercise but as a competitive differentiator in an increasingly green-conscious market. Mid-sized firms, in particular, are recognising that proactive carbon management and transparent ESG reporting are key to attracting investment and maintaining resilience amidst evolving regulatory pressures and stakeholder expectations."
The information on this page is current as of 30 December 2024