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China Drafts Corporate Sustainability Disclosures

China’s Ministry of Finance is gathering comments on draft corporate sustainability disclosures, with a view to establish a nationwide standard by 2030. Currently, disclosures by Chinese companies are largely voluntary and lack consistency, the ministry said. Unified rules would help companies better engage in global trade and investment activities, enhancing their international competitiveness and supporting the country’s institutional “opening-up” strategy. The draft rules, which would apply to companies established in China, set general requirements across six chapters and 33 articles, covering general provisions, disclosure objectives and principles, information quality requirements, disclosure elements, other disclosure requirements, and supplementary provisions. The ministry is accepting comments until 24 June. “Taking into account the development stage and disclosure capabilities of Chinese companies, the implementation of the basic standards will not adopt a one-size-fits-all mandatory approach,” it said. “Instead, it aims to gradually extend from listed companies to non-listed companies and from voluntary to mandatory disclosures.” China expects to have introduced basic corporate sustainability disclosure standards and climate-related disclosure standards by 2027. “Given the lengthy development timeframe for the standards, relevant departments may formulate guidelines and regulatory systems for specific industries or fields as needed, with plans to adjust and improve them over time,” the ministry added. In April, the Shanghai, Shenzhen, and Beijing stock exchanges released guidelines for listed companies’ sustainable development reports, marking the first comprehensive standard for corporate sustainability information disclosures in China. Additionally, the central bank and seven government departments jointly issued guidance that explicitly included ESG in credit assessments for the first time. Between 2019 and 2023, the number of ESG funds in China grew from 16 to 135, while ESG stock indices increased from 66 to 370.

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