Last spring, we wrote about China’s upcoming ESG disclosure laws and its Chinese Sustainability Disclosure Standards (CSDS). Now the country has published a “trial” version of it’s first standard on climate titled: “Corporate Sustainable Disclosure Standard No. 1 – Climate.” This new Chinese standard is based on the ISSB’s IFRS S2 Climate-related Disclosures. However, the Chinese standard also contains some significant differences. It includes disclosure requirements that focus on company impacts and are reminiscent of the EU’s approach to double materiality. ESG Today reports that:
“In addition to supporting China’s green development, the ministry also noted the need for deep alignment with international rules, with the new standard designed to “structurally converge” with the IFRS Foundation’s International Sustainability Standards Board’s (ISSB) sustainability reporting standards, but with some China-specific adaptations.
Most notably, the new Chinese standard follows the main structure of the IFRS S2 climate reporting standard, incorporating key pillars including Governance, Strategy, Risk and Opportunity Management, and Metrics and Targets.
Among the key changes from the IFRS standard is the inclusion in the Chinese standard of reporting on climate-related impact information, or the impact of business activities, including value chain activities, on climate change, or potential foreseeable impacts.”
For now, disclosures will remain voluntary, but China’s Ministry of Finance is planning on a mandatory rollout once standards are finalized. Mandatory reporting will phase in, beginning with large companies and at-risk industries, before spreading to the wider economy. The Ministry of Finance is also working on sector-specific disclosure standards and guidelines to be released in the near future.
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