China's new sustainability guidelines: opportunities for companies!

published on 12 February 2025 | reading time approx. 4 minutes

Sustainability in corporate reporting: new basic guidelines as an opportunity for companies

With the introduction of the Corporate Sustainability Reporting Directive (CSRD) and uniform standards such as the European Sustainability Reporting Standards (ESRS), the European Union (EU) has established a common benchmark for ESG (Environmental, Social, Governance) reporting in Europe.

However, promoting sustainability and transparency is no longer a central issue in the EU alone; it is also a hot topic in China. China and the EU are pursuing similar goals here: companies should report comprehensively on their sustainability strategies and impacts in order to provide investors, regulators and the public with a clear insight into their ESG implementation.

Both are moving in the same direction, albeit with slightly different approaches. While the EU closely aligns its standards with international guidelines such as the GRI or the TCFD, China is working to establish its own coherent ESG strategy that enables global compatibility while also taking national characteristics into account.

In recent years, China has made initial efforts to promote ESG reporting and to hold companies more accountable for sustainable development. The Corporate Sustainability Disclosure Guidelines (Basic Guidelines) published on December 17, 2024 are a central component of this strategy and reflect China's long-term goals of establishing uniform standards for the disclosure of sustainability information by 2030.

China's plans through 2030 in the area of esg reporting »
Core requirements of the framework guidelines »
Required core elements of a report »
Opportunities for companies »
Latest developments »
Conclusions »

China's plans through 2030 in the area of esg reporting

The Basic Guidelines are part of a comprehensive plan by the Chinese government to introduce mandatory ESG reporting standards in order to:

Create uniformity and transparency: To date, ESG disclosures in China have been largely voluntary and inconsistent. The planned standards are intended to define clear requirements to ensure transparency and comparability.
Promote global integration: China is seeking to harmonize its standards more closely with international requirements. This will make it easier for Chinese companies to remain competitive in global markets and to attract international investors, particularly in the capital market.
Support national climate targets: The Basic Guidelines are in line with China's ambitious “2030 / 2060 climate targets”, i.e. to achieve the maximum level of CO₂ emissions by 2030 and carbon neutrality by 2060. Consistent ESG reports should help companies to disclose their progress in these areas and implement improvements.
Promote sustainable investment: Investors, both nationally and internationally, are increasingly demanding reliable ESG data. Standardization offers companies the opportunity to position themselves as attractive and responsible investment targets.

Core requirements of the framework guidelines

There is currently no legal requirement to implement the Basic Guidelines. Initially, the specific guidelines and guidelines for application for certain industries are to be published by 2027. This system shall then become mandatory for companies by 2030, initially for large, listed companies, then step by step for unlisted companies and finally for SMEs. In addition, listed companies should note the reporting requirement from 2026, which arises from the ESG guidelines of various stock markets (e.g. Shanghai Guidelines No. 14).

The sustainability information must take into account risks, opportunities and impacts along the entire value chain.
The materiality of risks, opportunities and impacts is measured on the basis of several criteria. On the one hand, it is measured by how far an average user of the information can be influenced by it in his decision-making. On the other hand, in the case of negative impacts, the probability, extent and scope for remediation should be included in the consideration. Positive impacts should be weighed against each other in the analysis in terms of scope, extent and probability of occurrence.
The reporting structure and period should be aligned with the financial reports to ensure consistency and comparability. Companies must ensure that their data is complete, neutral, accurate, relevant and verifiable. Data from the financial report, the sustainability report and other published data must be consistent and comprehensible without contradictions. The reports should be understandable, transparent and published in a timely manner – at the same time as the financial reports. Cross-references to other reports or the financial report are permitted if the corresponding reports are also disclosed.

Required core elements of a report

The Basic Guidelines identify the required core elements of an ESG report:

Corporate governance: Disclosure of corporate structure and governance bodies, management, control functions and responsibilities
Strategy: Disclosure of the planning, tactics and methods a company uses to manage sustainable risks and opportunities
Risk and opportunity management: Disclosure of the processes and mechanisms a company uses to identify, assess, prioritize and monitor sustainable risks and opportunities.
Company indicators and targets: Disclosure of indicators the company uses to measure and assess the management of risks and opportunities; disclosure of targets defined by the company or by law, and strategies for implementation.

Opportunities for companies

The implementation of the Basic Guidelines offers companies several advantages: investors and creditors are increasingly attaching importance to clear ESG information. Transparent disclosure builds trust and can facilitate capital raising. By systematically analyzing sustainability risks and opportunities, companies can take action earlier and strengthen their resilience.

A credible sustainability report also demonstrates commitment and responsibility – an advantage when communicating with customers, consumers, investors, employees and the public. Sustainability is thus becoming a key differentiator. Companies that present clear reports at an early-stage position themselves as pioneers.

Latest developments

On 17 January 2025, the stock exchanges in Shanghai, Shenzhen and Beijing each issued largely concurrent guidelines for the preparation of ESG reports by listed companies. The example of the Shanghai Guidelines (Guide No. 4 for the Companies Listed on Shanghai Stock Exchange - Preparation of Sustainability Reports) shows a comprehensive catalogue that provides companies with tools for creating an individual ESG report. The guide is divided into two parts,

Part 1: General Requirements and Disclosure Framework and
Part 2: Responding to Climate Change.

The first part contains instructions with numerous examples for determining materiality and content-related indicators, as well as for implementing a governance structure, monitoring processes and the realisation of measures and strategies. The second part on the other hand, specifically addresses climate-related internal and external materiality, and the resulting risks and opportunities for the company. In addition, detailed guidance is provided on how to consider and calculate greenhouse gas emissions along the supply chain.

Conclusions

The Basic Guidelines are not only a regulatory instrument, but also part of China's long-term strategy to promote transparency and sustainable development. Companies in China should use this opportunity to position themselves for the future, meet global standards and strengthen their role in the green transformation. If ESG monitoring and management are strategically organized, the corresponding requirements of European ESG regulations can be met at the same time, which may also have an impact on companies in China. Those who act now will not only secure a competitive advantage but will also become part of a more sustainable future.