China Plans Adoption of ISSB Standards

The CSRC is asking A-share companies to disclose their ESG information on a voluntary basis before formally adopting the international standards.

The China Securities Regulatory Commission (CSRC) Vice Chairman Fang Xinghai has said the new disclosure rules from the International Sustainability Standards Board (ISSB) are likely to have a significant impact on the future development of Chinese companies.

Late last month, the ISSB published its first proposals for investor-focused sustainability reporting standards, marking a key step in fulfilling its formal mandate. The general sustainability and climate disclosure standards are open to feedback until 29 July and will be finalised by the end of this year.

Speaking at the Boao Asia Forum Annual Conference last week, Fang said he believes international reporting standards will make it more convenient for investors to measure the ESG achievements of listed companies.

Fang encourages listed companies to actively disclose more ESG information, saying that such information will help investors accurately determine the sustainability of a company’s future development and make them “more willing to invest”.

He also noted that if the standards are accepted and implemented by most countries, it will have a significant impact on Chinese companies that are already listed overseas or seeking to gain such status.

Launched in November 2021 at COP26, the ISSB is endorsed by the International Organisation of Securities Commission (IOSCO), whose membership spans more than 130 jurisdictions, including China.

Fang said that the CSRC will report its current situation and the needs of Chinese companies to IOSCO, with a view to further discussing the new reporting standards and adopting the ISSB standards in China. “Chinese companies need to gradually adapt to international ESG standards, which will also provide a basis for the formulation of environmental protection policies,” he said.

The CSRC has also recently issued new guidelines to help listed companies strengthen their management of investor relations. For the first time, the rules incorporate ESG information disclosure in communications with investors.

Fang said the CSRC is currently requesting A-share companies to disclose ESG information on a voluntary basis, but that it has not yet achieved the level of synchronisation with international ESG standards or mandatory disclosure. “This is the next thing to consider,” he added.

Separately, China’s Ministry of Finance (MOF) is calling on Chinese companies to provide feedback on the ISSB proposals by 15 June 2022, based on their domestic needs. The MOF said it will consolidate the feedback for submission to the ISSB.

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