Beijing issues first local ESG implementation plan

In June, 2024, the Beijing Municipal Government released the first local ESG implementation promotion plan, after the announcement of sustainability report criteria for listed businesses by the Shanghai Stock Exchange (SSE), Shenzhen Stock Exchange (SZSE), and Beijing Stock Exchange (BSE). The policy’s name has been changed from “Implementation plan for promoting high-quality development of the Environment, Social and Governance (ESG) system” to “Implementation plan for promoting high-quality development of the Environment, Social and Governance (ESG) system (2024-2027)” in comparison to the draft that was released in March 2024. Additionally, the implementation period has been made clearer. Measures include bolstering the financial support for businesses with strong ESG performance and encouraging the creation of group and enterprise standards linked to ESG disclosure have been introduced, in addition to the implementation term. Nonetheless, the prerequisites for businesses remain unchanged. 

Targets of the ESG implementation promotion plan

The targets remain the same as in the draft, which are:

• By the end of 2027, the ESG information disclosure rate of listed companies of China A-Shares※1 and Hong Kong H-Shares※2 will be increased to 70%.
  ※1:China A-Shares are shares of incorporated companies based in mainland China and listed on the either the Shanghai or Shenzhen stock exchanges. A-Shares are generally only available to citizens of mainland China.
  ※2: Hong Kong H-Shares are shares of public companies from mainland China that are listed on the Hong Kong Stock Exchange.
• By the end of 2035, the ESG disclosure will be legalized, the company’ ESG information disclosure is sufficient and effective.

According to the explanatory documents of the implementation plan, by the end of 2023, the number of listed companies in Beijing (including A shares and H shares) that have disclosed independent ESG reports has reached to 363, and the disclosure rate has reached 56%. 

Implementation of the plan

At present, the disclosure of ESG information is on a voluntary basis, the following companies will be given priority in implementing the plan.

• China A-Shares and Hong Kong H-Shares listed companies.
• Companies with sales, total assets, and number of employees exceeding a certain size.
• Companies listed on the list of companies required to disclose environmental information.
• Resource-intensive companies, such as key carbon emission companies, key energy consumption companies, key water consumption companies and key plastic consumption companies.

In addition, the Beijing government will also develop a simplified ESG information management system to help small and medium sized companies disclose ESG information.

Summary of policies regarding ESG information disclosure in China

Since the beginning of 2024, China has promulgated a series of policies regarding ESG information disclosure.

• National level

• Ministry of Finance, May 22, 2024, draft of “Corporate sustainability disclosure standards: Basic principles”

• Local government level

• Shanghai Municipal Commerce Commission, February 28, Three-year (2024-2028) action plan to accelerate the improvement of environment, social and government capabilities of foreign-funded enterprises in Shanghai

• Other organizations

• Suzhou Industrial Park, March 27, 20204, Certain measures to promote the ESG development
• Shanghai Stock Exchange, April 12, 2024, Shanghai Stock Exchange listed company self-regulatory guideline No.14— Guideline for sustainability report (Trial)
• Shenzhen Stock Exchange, April 12, 2024, Shenzhen Stock Exchange listed company self-regulatory guideline No.17— Guideline for sustainability report (Trial)
• Beijing Stock Exchange, April 12, 2024, Beijing Stock Exchange listed company self-regulatory guideline No.11— Guideline for sustainability report (Trial)