China Commits to New ESG Disclosure Requirements for Listed Companies

  • Market Insight 28 June 2024 28 June 2024
  • Environmental, Social and Governance (ESG)

As environmental, social, and governance (“ESG”) considerations continue to climb up the corporate agenda globally, China has been focused on increasing ESG transparency and accountability. Mainland China’s three main stock markets have released guidelines for listed companies to disclose their sustainability-related information, while the Hong Kong Stock Exchange (“HKEX”) has introduced stringent new mandatory disclosure requirements for listed companies.

Mainland China

On 12 April 2024, the Shanghai Stock Exchange (SSE), the Shenzhen Stock Exchange (SZSE) and the Beijing Stock Exchange (BSE) respectively announced the issue of Self-Regulatory Guidelines - Sustainability Report (Trial) (“Guidelines”), which became effective on 1 May 2024. The Guidelines require companies to disclose sustainability-related information in reports covering various topics, including climate change, pollution control and ecosystem protection, circular economy practices, and rural revitalisation and contribution to China’s national development strategy, among others.

The disclosure requirements vary depending on the stock exchange. Currently, mandatory ESG disclosure is required for the following companies:

  • SSE: SSE 180 Index companies, Kechuang 50 Index companies, and companies dual-listed in Shanghai and overseas.
  • SZSE: Shenzhen 100 Index companies, ChiNext Index companies, and companies dual-listed in Shanghai and overseas.

For companies which are required to carry out mandatory disclosure, the first disclosure must be made no later than 30 April 2026 (for the year 2025).

For BSE listed companies, all companies are encouraged to make voluntary disclosure.

The Guidelines focus on addressing environmental concerns, fulfilling social responsibilities, and improving corporate governance. Similarly to the EU Green Deal's new Corporate Sustainability Reporting Directive (CSRD), the Guidelines take a double materiality approach on sustainability disclosure topics, i.e. a company shall identify whether each topic is expected to have a major impact on its financial performance (financial materiality), and whether a company’s performance in that area will have a material impact on the economy, society, and environment (impact materiality).

Hong Kong

Under the current framework, listed companies in Hong Kong are subject to the ESG Reporting Guide, which comprises two levels of disclosure obligations:

  1. mandatory disclosure requirements

This comprises a statement from the board which contains the following elements:

(a) a disclosure of the board’s oversight of ESG issues,

(b) the board’s ESG management approach and strategy, including the process used to evaluate, prioritise, and manage material ESG-related issues (including risks to the issuer’s businesses); and

(c) how the board reviews progress made against ESG-related goals and targets with an explanation of how they relate to the issuer’s businesses.  

  1. “comply or explain” provisions

Generally speaking, these provisions extend to (but are not limited to) an issuer’s emissions, use of resources, the environment and natural resources, climate change, employment, health and safety, labour standards, supply chain management, etc. If an issuer does not report on any of these aspects, it must provide considered reasons for the omission in its ESG report.  

On 19 April 2024, HKEX published its consultation conclusions for introducing new climate-related disclosure requirements for listed companies in Hong Kong (HKEX New Requirements). These new disclosure requirements are largely in line with the IFRS S2[1]  climate-related disclosures published by the International Sustainability Standards Board (ISSB) and are expected to serve as a significant milestone for requiring listed companies in Hong Kong to comply with renowned international reporting standards. These new disclosure requirements include four distinct elements:

  • Governance

Issuers will need to disclose the management’s role in the governance process, and specific individual(s) or body(ies) that are responsible for the oversight of climate-related risks and opportunities.

  • Strategy

Issuers will need to identify and disclose material climate-related risks and opportunities, analysing their short, medium, and long-term impact on its core business.

  • Risk Management

Issuers will need to disclose their internal risk management processes applicable to identifying, assessing, monitoring, and managing climate related risks and opportunities.

  • Metrics and Target

Issuers will need to disclose key climate metrics and KPIs[2], including direct emissions (scope 1), emissions associated with purchased electricity (scope 2), and for some, emissions from a company’s value chain (scope 3).


The Guidelines and HKEX New Requirements are substantially aligned with international standards (such as ISSB’s IFRS Sustainability Disclosure Standards and GRI[3] Standards), which helps avoid the burden of duplicate climate-related disclosures and reduces the preparation cost for companies that are subject to various disclosure regimes. Issuers with multinational operations should seek to integrate their internal governance procedures and reporting mechanisms and be prepared to secure additional resources to meet the integrated reporting requirements.

[1] International Financial Reporting Standards Foundation Standards 2

[2] Key Performance Indicators

[3] Global Reporting Initiative


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