China Introduces First ESG Disclosure Standards for Voluntary Adoption

In December 2024, China introduced its first ESG disclosure standards aimed at improving corporate transparency and aligning reporting with international practices. These voluntary standards will be adopted by companies until 2026, after which ESG reporting will become mandatory for listed firms. Full implementation is expected by 2030, with the standards focusing on transparency for investors, flexibility for businesses, and enhancing sustainability practices.

On 17 December 2024, China introduced its first corporate sustainability (ESG) disclosure standards, marking a significant step towards enhancing corporate transparency and sustainability. These standards aim to align corporate reporting with international practices and provide a necessary foundation for the development of sustainable business practices in the country. The adoption of these standards will be voluntary until 2026, after which ESG reporting will become mandatory for listed companies. Full implementation of these standards is expected by 2030.

Key Aspects of China’s ESG Disclosure Standards

The newly introduced ESG disclosure standards are based on the principles of transparency and flexibility for businesses, allowing companies to adapt to the new requirements and subsequently ensure alignment with international standards.

One of the main features is the voluntary adoption phase, where companies can voluntarily integrate the new standards into their practices until 2026. This provides them with time to adapt and improve internal reporting in line with the new requirements.

Furthermore, particular attention is given to the focus on investors and creditors, emphasising the importance of data transparency to build trust and enhance financial accuracy. The final standards, which will take effect in 2026, will specifically aim to improve conditions for investors and creditors, with an emphasis on data precision.

The ESG disclosure framework includes three key components:

  • Core Standards: These standards set goals, principles, and general requirements for ESG disclosure, ensuring consistency and comparability of reporting across the country and internationally;
  • Thematic Standards: These standards detail key issues such as climate change, waste management, and corporate governance. They enable companies to disclose data accurately and comprehensively on the most critical sustainability topics;
  • Application Guidance: Special materials that help companies integrate the requirements into their practices, providing step-by-step recommendations and examples to facilitate the implementation of the new standards.

Changes to reporting obligations will be gradual. From 2026, large listed companies will be required to disclose ESG data, marking an important step towards the mandatory implementation of the full framework of standards by 2030.

Distinctive Features of the Final Standards

The final standards, planned for adoption in 2026, will focus on accountability to investors and creditors, which will enhance market transparency and trust in corporate reporting. The standards will offer greater flexibility for companies, allowing them to adapt data disclosure methodologies according to their resources and needs. This will ease the burden on smaller companies and help minimise unnecessary administrative costs.

Navigating ESG Reporting in China

Chinese companies are actively adopting ESG practices, recognising their importance in attracting global investment and ensuring sustainable long-term growth. However, certain challenges remain, such as the need to balance local priorities with international standards and ensure data accuracy.

China’s commitment to improving transparency and corporate responsibility, as well as strengthening its international competitiveness in ESG reporting, highlights the country’s dedication to sustainable development. These new disclosure standards represent an important step in advancing China’s implementation of corporate sustainability and responsibility practices.