The China Securities Regulatory Commission (CSRC) has uniformly deployed the three exchanges in Shanghai, Shenzhen and North China to release them simultaneously

On April 12, the Shanghai and Shenzhen North Stock Exchange officially issued the "Guidelines for Sustainability Reporting of Listed Companies" (hereinafter referred to as the "Guidelines"), which will be implemented from May 1, 2024.

The official release draft of the Guidelines consists of 6 chapters and 63 articles. In terms of the implementation of the rules, it is clarified that companies that continue to be included in the sample indices of SSE 180, STAR 50, SZSE 100 and ChiNext during the reporting period, as well as companies listed at the same time at home and abroad, should disclose the 2025 Sustainability Report for the first time by 2026 at the latest, and encourage other companies to do so voluntarily.

In terms of the disclosure framework, for financially important issues, companies should analyze and disclose them around the four core contents of "governance, strategy, impact, risk and opportunity management, and indicators and objectives". In terms of specific topics, the Guidelines set up 21 topics such as climate change, pollutant emissions, ecosystem and biodiversity conservation, rural revitalization, innovation-driven, and employees, and set differentiated disclosure requirements for different topics through a combination of qualitative and quantitative, mandatory and encouraged.

All parties in the market believe that the Guidelines are an important milestone in the field of sustainable development by making extensive reference to international beneficial experience and establishing and improving the sustainable development index system of listed companies that is more in line with China's national conditions, which will help improve the quality of sustainable development information disclosure of listed companies, highlight the investment value of high-quality companies, attract domestic and foreign medium and long-term funds, and enhance the international influence of A-shares.

More than 80 feedback opinions were received, and a number of important revisions were fully adopted

In recent years, listed companies have actively disclosed social responsibility reports, ESG reports and sustainable development reports, the quantity and quality of reports have been continuously improved, the scale of the investment market related to sustainable, green and low-carbon development has continued to grow, and a good market ecology in which sustainable information disclosure and sustainable investment promote each other is accelerating.

In order to improve the quality of sustainability-related information disclosure, the Shanghai and Shenzhen North 3rd Stock Exchange issued a draft of the Guidelines on February 8, 2024, to collect opinions and suggestions from all parties in the market through various channels, and received more than 80 pieces of feedback during the consultation period.

In response to the suggestions collected in the process of soliciting public opinions, the China Securities Regulatory Commission and the three exchanges of Shanghai, Shenzhen and North China attach great importance to and carefully study them, and most of them have been fully absorbed and adopted. Some of the key revisions include the following.

The first is to clarify the disclosure requirements for different material topics.

The amendments clarify that financially material issues need to be disclosed in accordance with a four-element framework, namely "governance", "strategy", "impact, risk and opportunity management", and "metrics and targets", in order to maintain the convergence with international sustainability information disclosure standards. For issues that are only of impact importance, disclosure is sufficient according to the relevant indicators of the specific issue.

The second is to increase the details of topics.

The list of issues included in the Guideline is directly set out in the annex to the Guidelines, which is convenient for companies to implement.

The third is to make a bridging arrangement for the disclosure of social responsibility reports.

The amendment clarifies that listed companies that are required to disclose their social responsibility reports are not required to disclose their social responsibility reports if they disclose or voluntarily disclose their sustainability reports in accordance with the Guidelines.

Fourth, some disclosure requirements should be appropriately relaxed.

On the one hand, the disclosure time of the sustainability report is only required to be disclosed before April 30, but it is not required to be disclosed at the same time as the annual report, so as to alleviate the pressure on listed companies to disclose the annual report and sustainability report in a centralized manner.

On the other hand, for some difficult quantitative disclosures, the requirement to add qualitative alternative to disclosure mitigation measures, and for the expected financial impact, the adaptability assessment of issues other than climate change has been revised from mandatory disclosure to encouraged disclosure, so as to appropriately alleviate the pressure on corporate disclosure.

Fifth, improve the specific disclosure requirements and wording.

On the one hand, it integrates and optimizes some topic chapters, such as a separate section on innovation-driven and scientific ethics, a separate section for suppliers and customers, and further clarifies the corporate governance part as corporate governance related to sustainable development, so as to facilitate the connection with the corporate governance chapter of the annual report.

On the other hand, new disclosure requirements for stakeholder management, due diligence, flexible employment, financial inclusion, and carbon emission trading have been added, allowing for the integrated disclosure of governance-related information, and increasing exemptions for retrospective adjustment of data.

At the same time, the exchange issued the English version of the guidelines, the rating agencies responded positively, and the China Shanghai Association released a series of supporting reports

CNG Capital has learned that the Shanghai and Shenzhen North Stock Exchanges will simultaneously distribute the English version of the Guidelines to fully meet the needs of international investors.

Index and ESG rating agencies such as China Securities Corporation, CNI, Wind, SynTao, and China Chengxin International closely follow the requirements of the Exchange's sustainability reporting guidelines, actively incorporate the guidelines into the ESG rating system, and continue to strengthen the construction of the domestic ESG rating system.

At the same time, in accordance with the work deployment of the China Securities Regulatory Commission (CSRC) and the demands and opinions of listed companies, the China Association of Listed Companies (CAC) has issued a series of comparative analysis reports on the Guidelines and the Overseas Sustainable Information Disclosure Standards to help listed companies, especially those listed in multiple places, reduce the cost of information disclosure, and at the same time strengthen the awareness and understanding of the Guidelines by domestic and foreign investors and relevant entities, so as to provide reference between listed companies and market parties.

The China Association of Public Companies (CACTO) has organized a comparative analysis of the Guidelines with relevant overseas information disclosure standards and rules such as the International Sustainability Standards Board (ISSB), the Global Reporting Initiative (GRI), and the U.S. Securities and Exchange Commission (SEC), forming a series of reports to help listed companies, especially those listed in multiple places, reduce the cost of information disclosure, and strengthen the awareness and understanding of the Guidelines by domestic and foreign investors and relevant entities.

In the next step, under the unified deployment of the China Securities Regulatory Commission, the three exchanges in Shanghai, Shenzhen and North China will do a good job in market training and other services, formulate more detailed disclosure guidelines in a timely manner, provide specific guidance for listed companies to implement the provisions of the Guidelines, and support relevant departments to do a good job in ESG rating, index development and investment, etc., to further enhance positive incentives and promote the construction of a good sustainable ecosystem.

In addition, the three exchanges will also expand the scope of mandatory disclosure entities in a timely manner according to the implementation of the Guidelines, promote more listed companies to disclose high-quality sustainable development information, and promote the high-quality development of listed companies.