Sustainability reporting standards in China

Sustainability reporting standards in China

From a legal standpoint, sustainability reporting essentially remains voluntary in China. Nonetheless, there are several factors driving extra-financial reporting in the country, including general public interest, practices overseas, as well as some degree of government pressure.

Both central and local governments have published a series of documents encouraging some businesses to release sustainability reports. Foreign companies are well-advised to take into account voluntary guidance by the government as this can strengthen key relationships inside the country.

Separately, stock exchanges have taken a leading role in promoting forms of environmental, social and governance (ESG) reporting in China, in some cases going as far as to make certain disclosures mandatory for listed companies.

Finally, the internationally recognized GRI G4 reporting guidelines are also in use in China by both foreign subsidiaries and local companies.

    GB/T 36001-2015 Guidance on social responsibility reporting: GB standards are issued by the national standardization administration. The GB/T 36001-2015 is a voluntary standard that sets general guidelines for organizations wishing to develop and publish a social responsibility report. It presents basic principles of reporting, sets out key aspects of report planning, proposes steps for report compilation, and suggests measures aimed at improving the credibility of a report. This standard is a good introduction to the Central Government’s sustainability-related expectations toward organizations wishing to conduct business in China. More information on the website.

      Shanghai Stock Exchange ESG reporting guidance: From 2008 onward, the Shanghai Stock Exchange has required both Chinese and overseas companies listed on the stock exchange, including financial companies and all companies listed in the SSE Corporate Governance Index 240, to engage in ESG reporting. The release of environmental information in particular has become mandatory for companies in the extractive sector. The guidance on how to report remains very broad in scope. More information on the Sustainable Stock Exchanges Initiative website.

        Shenzhen Stock Exchange ESG reporting guidance: The rules governing ESG reporting at the Shenzhen Stock Exchange are broadly similar to those in Shanghai, although the guidance on reporting content is more specific. Companies should report on the implementation of social responsibility relating to employee protection, impact on environment, product quality and community relations. Companies should further report on how well they have implemented the instructions and reasons for gaps, if any. Finally, companies should report on any measures for improvement taken and the timetable for those. More information on the Shenzhen Stock Exchange website.

          Hong Kong Stock Exchange ESG Reporting Guide: On 1 January 2016, the new HKEx ESG Reporting Guide came into effect. Under the new rules, listed companies must report on “comply or explain” provisions of the ESG reporting guide, which means they either report the information or report why they have chosen not provide the information. In addition, there are recommended disclosures as well. The ESG guide contains an environmental component and a social component; the corporate governance dimension is already addressed separately through the HKEx Corporate Governance Code. The social and environmental subject areas involve both general disclosures and specific KPIs. Until 1 January 2017, environmental disclosures remain “recommended” only, after which they will shift to “comply or explain” mode. More information on the HKEx website.

            CASS-CSR 3.0 reporting guidelines:  The “Guidelines on Corporate Social Responsibility Reporting for Chinese Enterprises,” developed by the Chinese Academy of Social Sciences, are arguably the most popular domestic standard for CSR and sustainability reporting in the corporate sector in China. The objective of these guidelines is very similar to that of the international Global Reporting Initiative and the CASS-CSR guidelines have been increasingly adapted to the GRI’s G4 guidelines as a result. In fact, by some accounts, the GRI G4 guidelines are more popular in China than CASS-CSR 3.0 and foreign companies used to the GRI model will thus generally find it sufficient to use it for their Chinese subsidiaries as well. More information on CASS-CSR 3.0 and GRI G4 on the GRI website.

            For more information, please contact Mr. Tobias Knapp (Managing Director, BSD Consulting China) at