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In a great example of public-private collaboration, CERDS (or the China Enterprise Reform and Development Society – a think-tank under mainland China’s State-owned Assets Supervision and Administration Commission) and a pantheon of China’s biggest business players have recently combined to publish the country’s first ESG disclosure standards: the “Guidance for Enterprise ESG Disclosure” (“企业 ESG 披露指南”, the “ESG Disclosure Standards”). Although having the status of “association standards”, such that the ESG Disclosure Standards are not mandatory, their release is an extremely positive development for a market which size naturally put China at the forefront of many ESG issues on the global stage.

The ESG Disclosure Standards have been widely touted as the first set of environmental, social, and governance (ESG) disclosure guidelines issued by China. Experts are reported to say that adherence to the new ESG Disclosure Standards will raise the standard of reporting by local companies and promote sustainable investments in the country.

In this blog we explain what these new ESG Disclosure Standards are and set out some of the implications of the ESG Disclosure Standards for both Chinese businesses and international businesses associated with the world’s second largest economy;

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To sum up, any initiative to standardise disclosures in China’s fragmented ESG arena must be seen as positive. However, whether any of the above concerns and uncertainties materialise will likely only be known some time after the ESG Disclosure Standards become effective from 1 June 2022.

The ESG Disclosure Standards are a voluntary standard, therefore, the extent of adoption by Chinese enterprises, and the level of active pursuit of that adaption by their stakeholders, will be a good “indicator” in itself. Watch this space!