China Introduces Basic Standards for Corporate Sustainability Disclosures

China has unveiled the Basic Standards for corporate sustainability disclosures, setting a framework to standardize ESG reporting nationwide. Announced by the Ministry of Finance (MOF) in collaboration with nine other departments on December 17, 2024, the standards aim to align Chinese corporate practices with global ESG frameworks while addressing local priorities. The initiative represents a major step in China’s push for enhanced transparency and global competitiveness in sustainability reporting.

Starting in 2026, large listed companies will be required to adopt ESG reporting practices, with full compliance across sectors expected by 2030. In the interim, businesses are encouraged to voluntarily adopt the standards, allowing flexibility and time to adapt to the new framework.

The Basic Standards framework is composed of three main components:

• Basic Standards: Outline overarching ESG objectives, principles, and reporting requirements.
• Specific Standards: Address detailed ESG topics, including climate change and corporate governance.
• Application Guidelines: Provide practical tools and case studies to assist companies in meeting disclosure requirements.

Key sections emphasize materiality, reliability, and data quality, ensuring information is accurate, relevant, and timely. The phased compliance measures aim to ease adoption, particularly for smaller enterprises.

The final version incorporates feedback from the draft released in May 2024, focusing on investor and creditor transparency. It introduces greater compliance flexibility, enabling businesses to tailor methodologies to their resources and capacities. The revisions also strengthen accountability measures while integrating with the mandatory ESG reporting requirements set for 2026.

China’s push toward corporate sustainability reporting highlights its commitment to attracting global capital and fostering long-term growth. However, companies face challenges such as ensuring data accuracy and balancing local priorities with international ESG practices. The framework’s alignment with global standards and its phased adoption aim to address these hurdles, supporting a smoother transition.