China’s Ministry of Finance, in collaboration with several other ministries, the central bank, and regulators, has unveiled the “Corporate Sustainable Disclosure Standard No. 1 – Climate (Trial).” This new standard, aligned with the International Financial Reporting Standards (IFRS) Foundation’s climate reporting framework, is designed to enable companies to report on climate-related risks, opportunities, and impacts. It supports China’s objectives for green development.
Although the standard is currently positioned as a trial and applied voluntarily, the Ministry of Finance has indicated plans to gradually extend its application to more companies, leading to mandatory climate-related disclosures in the future.
The ministry emphasised that this trial climate reporting standard is part of China’s broader efforts to combat climate change and accelerate green economic and social development. It aims to facilitate green and low-carbon development, address greenwashing through standardized information disclosure, and direct capital flows towards low-carbon projects.
The guidelines are intended to establish a transparent, comparable, and reliable system for disclosing climate information. They are designed to strengthen standard support for green and low-carbon development, guide market expectations, regulate corporate behavior, scientifically assess transformation progress, and provide essential policy tools and institutional infrastructure to translate the national “dual carbon” strategy into corporate-level actions.
In addition to supporting domestic green development, the ministry highlighted the importance of aligning with international regulations. The new standard is designed to structurally converge with the IFRS Foundation’s International Sustainability Standards Board’s sustainability reporting standards, while incorporating specific adaptations for China.
The Chinese standard notably follows the IFRS S2 climate reporting structure, encompassing key pillars such as Governance, Strategy, Risk and Opportunity Management, and Metrics and Targets. A significant difference from the IFRS standard is the inclusion of climate-related impact reporting, addressing the effects of business activities, including value chain activities, on climate change or foreseeable impacts.
The initial standard provides guidelines on common climate-related disclosure requirements across various industries. The ministry has begun developing application guidelines for specific sectors, such as power, steel, coal, petroleum, fertilizer, aluminium, hydrogen, cement, and automobiles. These will be released over time to form a comprehensive industry application system, comprising basic guidelines, specific guidelines, and industry application guidelines.
Initially, the new standard will be voluntary for enterprises. However, as the scope and requirements for implementation are defined, the ministry plans to prioritize key areas and expand implementation. This expansion will progress from listed companies to non-listed companies, from large enterprises to small and medium-sized enterprises (SMEs), from qualitative requirements to quantitative requirements, and from voluntary to mandatory disclosure.
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