In a decisive move to modernise its Environmental, Social, and Governance (ESG) landscape, the Chinese government has introduced a new national standard for corporate environmental reporting. Titled the Corporate Sustainable Disclosure Standard No. 1 – Climate (Trial), the framework was jointly issued by the Ministry of Finance, the People’s Bank of China, and several key regulatory bodies.
Employees in a small Chinese company are monitoring sustainability data under new corporate standards. AI generated picture.
The initiative marks a fundamental shift from informal, voluntary reporting to a structured, institutionalised system. By providing a clear methodology for disclosing climate-related risks and opportunities, Beijing aims to harmonise domestic practices with international norms, specifically the IFRS S2 guidelines established by the International Sustainability Standards Board (ISSB).
The ‘Trial’ designation reflects a strategic, phased implementation. Initially, the standards apply to over 5,000 listed companies, with the Ministry of Finance signalling a move towards full mandatory compliance by 2028. The government intends to expand this scope progressively, eventually encompassing non-listed entities and small-to-medium enterprises (SMEs).
The framework is built upon four primary pillars of disclosure:
- Governance: Oversight by leadership regarding climate strategies.
- Strategy: The integration of climate resilience into business models.
- Risk management: Processes for identifying and mitigating environmental threats.
- Metrics and targets: Quantitative goals used to track performance.
Read more: The Australian carbon market in 2026: policy shifts and price dynamics
Notably, China’s requirements extend beyond certain global benchmarks by mandating disclosures on Scopes 1-3 greenhouse gas emissions, internal carbon pricing, and climate-related capital expenditures. This ‘double materiality’ approach—considering both financial risks to the firm and the firm's impact on the environment—is tailored to support China’s ‘dual-carbon’ goals: peaking emissions by 2030 and reaching carbon neutrality by 2060.
For investors and project developers, the new standards promise a significant reduction in ‘greenwashing’ by providing comparable, high-quality data. Currently, data quality remains a challenge; while a 2024 survey found that 84% of top Chinese firms reported Scope 1 and 2 emissions, only 22% provided comprehensive Scope 3 data.
To support high-impact industries, the government is developing sector-specific guidance for the steel, cement, power, and automotive sectors. As these rules take hold, they are expected to facilitate the growth of green finance, with annual sustainable bond issuances projected to reach $1.2 trillion by 2025.
By aligning its reporting landscape with global expectations, China is not only tightening domestic transparency but also positioning its enterprises to integrate more effectively into the international sustainable finance ecosystem.
Read more: CSRD for SME Suppliers: How to turn data requests into a competitive advantage
As the global regulatory environment tightens, the carbon market is where transparency and high-integrity data are the primary benchmarks for success. Across the globe, the distinction between generic reporting and high-value, verified impact has never been more critical for portfolio resilience. At Green Earth, our portfolio is purpose-built for this transition; we provide the verified credits and ecosystem-focused removals that meet the rigorous durability standards now demanded by regulators and investors alike. By aligning with our proven, high-quality projects, you can transform these emerging compliance complexities into a long-term strategic advantage.
