China has established its inaugural national standards for corporate sustainability disclosures, marking a significant step towards harmonized ESG reporting.
According to ESG News, the Ministry of Finance, in collaboration with nine other departments, unveiled the Basic Standards on December 17, 2024. This initiative is set to mandate ESG reporting for large listed companies starting in 2026, with a full implementation envisioned by 2030.
The Basic Standards are designed to integrate China’s corporate practices with global sustainability efforts while addressing local priorities such as climate change and rural development. These standards consist of three main components: Basic Standards that outline the overall ESG disclosure objectives and requirements, Specific Standards that delve into detailed themes like climate change and corporate governance, and Application Guidelines that provide practical tools and case studies to aid companies in compliance.
Key changes from the draft to the final standards include a shifted focus towards market-driven accountability, appealing to investors and creditors. The revised standards offer greater flexibility in compliance, allowing companies to adapt methodologies according to their capabilities, which is particularly beneficial for smaller firms. This approach not only facilitates easier integration into global markets but also caters to domestic sustainability priorities.
The structure and phased implementation of these standards are expected to enhance the quality and reliability of sustainability reporting among Chinese companies. As these companies increasingly adopt ESG practices, they recognize the value of sustainability in attracting international investment and fostering long-term growth.
China’s commitment to transparency and corporate responsibility in ESG reporting is further emphasized by its involvement in international initiatives like the Belt and Road Initiative. This comprehensive framework underpins China’s strategic move towards becoming a leader in global sustainability practices.
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