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In this edition of Exchange in Focus, we look at the recently introduced ESG reporting requirements set by the Beijing Stock Exchange, Shanghai Stock Exchange and Shenzhen Stock Exchange.

In April 2024, three stock exchanges in China introduced ESG reporting guides, requiring companies on the Shanghai Stock Exchange 180 and STAR 150 index, and those listed simultaneously in Mainland China and overseas markets to publish sustainability or ESG reports. The requirements cover a broad range of sustainability topics and consider both matters that are financially material to the company, as well as the material impacts of the company. While each exchange published its own guidelines, they are generally aligned in their requirements.

The requirements do not only outline disclosure requirements but also set expectations of companies related to key sustainability issues:

Translated from Shanghai Stock Exchange’s guideline

Each listed company shall incorporate sustainability thinking into its development strategies and business and management activities; strengthen ecological and environmental protection, the fulfillment of social responsibilities, and corporate governance on an ongoing basis; steadily improve its capacity for corporate governance, competitiveness, capacity for innovation, risk resilience, and profitability; promote the sustainable development of itself and the broader economy and society; and progressively increase its positive impact on the economy, the society, and the environment.

Source: “Guidelines No. 14 of Shanghai Stock Exchange for Self-Regulation of Listed Companies—Sustainability Report (Trial)”

Every aspect of sustainability covered by the guidelines begins by setting specific expectations for the company’s behavior in that area and then outlines related disclosure requirements. Their comprehensive remit covers environmental, social, and governance-related sustainability matters. Beyond widely adopted topics, the guidelines cover innovative areas, such as the company’s engagement in the circular economy, ethics of science and technology, and fair competition. Rural revitalization is also featured as a key aspect.

In response to the guidelines, UN SSE Chief Coordinator Anthony Miller said: “We congratulate the Beijing Stock Exchange, Shanghai Stock Exchange and Shenzhen Stock Exchange on implementing such a comprehensive set of sustainability disclosure requirements. To promote consistency across jurisdictions, we encourage issuers covered by the guidelines to make use of international standards, where appropriate and consistent with national rules and recommendations. We equally encourage international standard setting bodies to take note of this development to further inform their future work on alignment and interoperability.”

While specific international sustainability disclosure standards are not directly referenced, the guidelines require the use of national, local, industry, or recognized international standards. Covering Governance, Strategy, Risk, Impact, and Opportunity Management as well as Targets and Indicators, the language of the disclosure requirements also shows alignment with global sustainability reporting standards that cover financial and impact materiality.

Companies covered by the requirements must publish their 2025 reports before April 30, 2026. Early adoption is encouraged. The exchanges also encourage voluntary adoption by companies not covered by the requirements.