"How Chinese climate disclosures can drive emission cuts" 18 July 2024

On 1 May, new guidelines came into effect for firms listed on any of mainland China’s big three stock exchanges in Beijing, Shanghai and Shenzhen...What this means is...457 Chinese companies will have to publish 2025 sustainability reports by April 2026... they were responsible for two-thirds of national emissions in 2023...

These companies are usually bigger firms that play leading roles in their sectors...In terms of sectors, IT and industrial firms are well-represented, followed by “materials”, healthcare and finance. (The materials sector includes chemicals, construction materials, glass, metals, and mining.) Though only 14 energy firms are covered, their scope 1, 2 and 3 emissions total 4.91 billion tonnes...

Of the 457 firms, 57% are already disclosing scope 1 or scope 2 emissions in either their annual, sustainability or ESG reports, or elsewhere. Less than 14%, however, are making scope 3 disclosures. Of the 14 energy firms, nine are disclosing scope 1 and 2 emissions, but none are disclosing scope 3 emissions...

Dialogue Earth spoke to a number of experts who suggested the guidelines are important in three ways. Firstly, they set a new precedent... the significance of the guidelines lies more in their publication than their content – they are another milestone for corporate climate governance in China...Secondly, the guidelines will increase the overall rate of disclosures within China...Finally, the guidelines provide a single, standardised disclosure framework, which will improve data quality...

The government has already made its stance clear: climate disclosures will start with listed firms, but not end there. On 27 May, the Ministry of Finance published a consultation draft of rules for sustainability disclosures. It included notes explaining that disclosure requirements will be expanded from listed to unlisted firms, and from large to small- and medium-sized firms. They will also shift from being qualitative and voluntary to quantitative and mandatory...