Key points

On 12 April 2024, the Shanghai Stock Exchange (SSE), the Shenzhen Stock Exchange (SZSE) and the Beijing Stock Exchange (BSE) issued their respective ‘Guidelines on Self-Regulation of Listed Companies – Sustainability Report (Trial)’ (hereinafter referred to as the ‘Guidelines’). The Guidelines will become effective from 1 May 2024, applying to annual periods ending 31 December 2025. Early adoption for annual periods ending 31 December 2024 is encouraged.
What entities are in scope?
Entities that fall within the scope of mandatory reporting, according to the Guidelines, remain the same as those proposed in the exposure drafts (see Table 1). In total, there will be approximately 450 companies that fall within its scope. Other listed companies that do not fall within the scope are encouraged to disclose on a voluntary basis.
Table 1 – Disclosure scope
Stock Exchange
Disclosure scope
Guidelines No 14 of Shanghai Stock Exchange for Self-Regulation of Listed Companies – Sustainability Report (Trial)
Require mandatory disclosure for any company that is listed on the SSE 180 Index or the STAR 50 Index, or is listed simultaneously in Chinese mainland and overseas markets.
Self-Regulatory Guidelines No 17 for Companies Listed on Shenzhen Stock Exchange – Sustainability Report (For Trial Implementation)
Require mandatory disclosure for any company that is listed on the SZSE 100 Index or the ChiNext Index, or is listed simultaneously in Chinese mainland and overseas markets.
Continuous Supervisory Guidelines No 11 for Companies Listed on Beijing Stock Exchange – Sustainability Report (For Trial Implementation)
Encourage voluntary disclosure for listed companies.
Highlights of the newly released Guidelines
Double materiality
The principle of double materiality has been adopted by the Guidelines. Chapter I (General Provisions) requires entities to determine whether each topic in the Guidelines is expected to have financial materiality and/or impact materiality. The Guidelines clarify that financial materiality focuses on the likelihood of the occurrence and the extent of impact to the entity, while impact materiality should be based on the scale, scope and irremediability of the impact arising from the entity’s decisions. How materiality assessment was conducted should also be disclosed. For any topic specified in the Guidelines that the entity believes to have neither financial materiality nor impact materiality, the entity should also disclose its reason.
For topics that are expected to have financial materiality, information should be disclosed based on the four-aspect disclosure framework (see further discussion below). For topics that only have impact materiality, the entity should disclose in accordance with specific provisions contained in the Guidelines.
Using the four-aspect disclosure framework similar to those used by other international disclosure frameworks or standards
Chapter II of the Guidelines defines the disclosure framework and specifies that entities should analyse and disclose topics that have financial materiality in accordance with the following four aspects: (1) Governance; (2) Strategy; (3) Impacts, Risks and Opportunities Management; and (4) Metrics and Targets. Entities are encouraged to disclose the effects of sustainability-related risks and opportunities on their business models, key suppliers and other stakeholders, as well as the geographical location, facilities or asset types predominantly affected by these risks and opportunities. Forecasts of their future impact should also be disclosed.
Topics cover a wide array of matters that span across different ESG dimensions
The Guidelines cover a total of 21 environmental, social and governance (ESG) topics, including eight on environmental matters, nine on social matters, and four on sustainability-related governance matters (see below).
Annex Table of the Indices of Guidelines Topics
Climate response
Pollutant discharge
Waste disposal
Ecosystem and biodiversity protection
Environmental compliance management
Energy utilisation
Water resources utilisation
Circular economy
Social contributions
Ethics of science and technology
Supply chain security
Equal treatment of small and medium-sized entities
Product and service safety and quality
Data security and customer privacy
Sustainability related governance
Due diligence
Stakeholder engagement
Anti-commercial bribery and anti-corruption
Fair competition
Many social topics contain elements specific to modern China
A number of topics within the social aspect of the Guidelines display key priorities of modern China, including the concepts of ‘Beautiful China’ and ‘Common Prosperity’. Within the different sections in Chapter IV (Social Disclosure), disclosure requirements covering Rural Revitalisation, Innovation-Driven Development, Ethics of Science and Technology, and from Suppliers, Customers to Employees have been specified.
Provisions on third-party auditors or assurance providers
Where an entity engages third-party service providers to audit or assure specific information, these service providers should demonstrate independence and professionalism. Whether they meet the requirements to demonstrate these qualities should be clearly set out in their audit or assurance reports.
Requirements on timing and relief from disclosing comparative information
The Guidelines will first be applied to annual periods ending 31 December 2025. Sustainability reports are required to be published no later than four months after the year end but no sooner than the issuance of annual reports. This means that any listed company within the scope of the Guidelines should publish its 2025 Sustainability Report before 30 April 2026. However, an entity is allowed to early adopt the Guidelines for 2024 year ends, if it so wishes. The reporting period and consolidation scope (reporting boundary) should be consistent with that of the entity’s annual report.
The Guidelines also offer relief from disclosing comparative information for those that cannot disclose year-on-year change in relevant metrics (indicators) during the first year of reporting.
Significant differences between the climate-related disclosure requirements in the Guidelines and in IFRS S2
The climate-related disclosure requirements contained in the Guidelines closely resemble the International Sustainability Standards Board (ISSB)’s IFRS S2, ‘Climate-related Disclosures’, although there are certain differences. In order to observe double materiality, an additional requirement of ‘impact’ analysis is required by the Guidelines. Other differences between the climate-related disclosure requirements in Section 1 of Chapter III of the Guidelines and in IFRS S2 are summarised in the table below:
The Guidelines
Assessment of climate reliance
Included as a voluntary requirement, although encouraging disclosure by those who have the capacity.
Explicitly requires climate resilience to be conducted and entities to use methodologies, including climate scenario analysis, that are commensurate with their circumstances.
Current and anticipated financial effects of those climate related risks and opportunities
Only the effects in the current and the upcoming reporting periods are mandatory requirements. For those who are not even able to disclose qualitative information, they should disclose their action plan for achieving disclosure in the near future.
Disclosure of anticipated effect over short-, medium- and long-term horizons is encouraged.
Mandatory requirements (current and anticipated effect over short, medium and long term), with transitional reliefs (qualitative disclosure) on initial application.
GHG emissions
Disclosure of Scope 1 and Scope 2 emissions is mandatory, while disclosure of Scope 3 emissions is only encouraged.
Disclosure of Scope 1, Scope 2 and Scope 3 emissions is mandatory, with certain transitional reliefs for Scope 3. Disclosure of Category 15 investments within Scope 3 is mandatory for commercial banks, insurance providers and asset management companies.
Include seven types of GHG emissions. The disclosure might be categorised by geographical region, source, etc.
Includes seven types of GHG emissions, with Scope 1 and Scope 2 to be disaggregated for (1) the consolidated accounting group, and (2) other investees.
Measurement method
Do not specify or refer to any specific measurement method.
Requires the use of the ‘Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard (2004)’, unless other standards are required by a jurisdictional authority.
Metrics and targets
  • Any entity that uses carbon credits should disclose the source and amount of carbon credits used.
  • Any entity that participates in carbon emissions trading should disclose whether it has completed settlement and whether it has been ordered to take corrective actions or is formally being investigated by a government agency within the reporting period.
Various climate-related metrics are listed, and users of carbon credits should disclose:
  • the amount and percentage of assets or business activities vulnerable to climate-related transition risks;
  • the amount and percentage of assets or business activities vulnerable to climate-related physical risks;
  • the amount and percentage of assets or business activities aligned with climate-related opportunities;
  • the amount of capital expenditure, financing or investment deployed towards climate-related risks and opportunities; and
  • the entity’s planned use of carbon credits to offset GHG emissions (internal carbon prices) to achieve any net GHG emissions target.
Where do I get more details?
For more information, contact Yvonne Kam, Amy Cai, Qing Ni or Kanus Yue.
i Considering the characteristics of the developmental stage of innovative SMEs.
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