China’s major stock exchanges issue ESG report guidelines

On April 12, 2024, the Shanghai Stock Exchange (SSE), Shenzhen Stock Exchange (SZSE) and Beijing Stock Exchange (BSE) published guidelines for sustainability reports by listed companies. These set out requirements for environmental, social and governance (ESG) information disclosure by listed companies. The guidelines of the three stock exchanges have the same content except for the criteria for companies required to publish ESG reports. Companies publishing ESG reports as required by the guidelines or on a voluntary basis are not required to publish social responsibility reports in addition.

Implementation schedule

All the guidelines came into effect May 1, 2024, but they provide a one-year preparation period: listed companies subject to the reporting requirement are not required to publish ESG reports for fiscal year 2024, but they must publish ESG reports for FY 2025 by April 30, 2026.

Companies required to publish ESG reports

Shanghai Stock Exchange

• SSE 180 Index companies — top 180 A-share companies listed on the SSE with the largest market capitalization and high liquidity
• STAR 50 Index companies — top 50 companies listed on the SSE STAR Market with the largest market capitalization and high liquidity
• Companies listed on both domestic and foreign stock exchanges

Shenzhen Stock Exchange

• SZSE 100 Index companies — top 100 A-share companies listed on the SZSE with the largest market capitalization and high liquidity
• ChiNext Index companies — A-share companies listed on the SZSE ChiNext Market that are selected based on criteria such as having been listed for at least three months
• Companies listed on both domestic and foreign stock exchanges

At present, publication of ESG reports is a non-binding recommendation for companies listed on the BSE and companies that are listed on the SSE or SZSE but do not fall under the above criteria.

ESG report details

An ESG report must include an analysis of whether the company has a substantial impact on the economy, society and environment (“impact materiality”) in the “topics” listed in the table below.

In addition to the specified topics, companies must also disclose information on other areas that have impact materiality or impose them a financial impact (“financial materiality”) based on the nature of the industry, nature of their businesses, etc.