Ministry of Finance Releases Exposure Draft of Chinese Sustainability Disclosure Standards for Businesses: Basic Standard and Drafting Explanation

A Chinese flag is draped beside the European Union flag during a EU-China Summit at European Union Commission headquarters in Brussels

On 27 May 2024, the Ministry of Finance of the People's Republic of China released an exposure draft for the Sustainability Disclosure Standard for Business Enterprises – Basic Standard. This draft represents a significant step towards establishing comprehensive sustainability reporting requirements for Chinese enterprises.

The Chinese Sustainability Disclosure Standards (CSDS) will consist of a basic standard, specific thematic standards, and detailed application guidance. These standards aim to ensure that businesses disclose essential information regarding their environmental, social, and governance (ESG) impacts. Although the draft is structured differently, it is evident that it was developed using the International Sustainability Standards Board (ISSB) Standards as a foundation, ensuring alignment with global best practices.

The Ministry of Finance has outlined a clear timeline for the rollout of these standards. By 2027, China plans to have issued the climate-related disclosure standard along with all related guidance. By 2030, the entire suite of CSDS, including all thematic standards and application guidance, will be fully issued.

A phased approach will be implemented for the adoption of these standards. Eventually, all companies – both listed and non-listed, large corporations, and small and medium-sized enterprises – will be required to comply with the new sustainability disclosure requirements. This gradual implementation will allow businesses to adapt to the new standards and ensure a smooth transition towards comprehensive ESG reporting.