Recently, under the unified deployment of the China Securities Regulatory Commission (CSRC), the Shanghai Stock Exchange (SSE) has devised and finalized Guidelines No. 14 of Shanghai Stock Exchange for Self-Regulation of Listed Companies—Sustainability Report (Trial) (Draft for Comments) (hereinafter referred to as the Guidelines). The document has then been made public for market consultation. The formulation of the Guidelines is a crucial institutional measure aimed at facilitating the SSE's thorough implementation of the directives in the 20th CPC National Congress regarding economic and social development transition, along with the strategic promotion of low-carbon development. Additionally, it directly responds to the comprehensive mandates of the five major objectives of the Central Financial Work Conference for achieving significant advancements in green finance. Moreover, it serves as a tangible initiative to fulfill the objectives outlined in the CSRC's Three-Year Action Plan on Enhancing the Quality of Listed Companies (2022-2025). The objective of the Guidelines is to leverage the capital market's pivotal position, amplifying the information disclosure of sustainable development to drive improvements in listed-company quality, investment value, and investor returns. They aim to steer various resources towards alignment within the sphere of sustainable development, thereby facilitating the realization of carbon peaking and carbon neutrality and sustainable development of the economy, society, and the environment.
In recent years, with active engagement and significant support from all market participants, the SSE has consistently guided listed companies to disclose sustainability reports, continuously seeking ways to integrate the principles of sustainable development into both investment and financing aspects. In 2023, 1,023 listed companies on the SSE published their 2022 social responsibility reports, ESG reports, or sustainability reports. This represents 47% of the total, a record number and share in disclosure practices. The disclosure rate of the constituent companies of the SSE 50 Index and the STAR 50 Index and of companies concurrently listed domestically and abroad is nearly 100%, while the disclosure rate of the companies of the SSE 180 Index exceeds 90%. In terms of financing, over the past three years, the SSE has supported 68 enterprises in the new energy and energy conservation and environmental protection sectors to go public, raising a total of RMB 116.9 billion, supported the refinancing of RMB 97 billion for companies within the low-carbon and sustainable emerging industry, and assisted the issuance of RMB 473.6 billion in various types of green bonds including green corporate bonds, asset-backed securities, low-carbon transition bonds, and sustainability bonds. In terms of investment, the SSE and CSI indices have collectively published 138 ESG and sustainability indices, encompassing 104 stock indices, 31 for bonds, and three multi-asset indices. A total of 86 fund products track these indices, with assets exceeding RMB 100 billion. ETFs oriented to sustainability such as ESG and listed on the SSE have reached 43, their capitalization exceeding RMB 60 billion. The CSI ESG rating has now been employed in the investment portfolio management of over one hundred entities, including pension funds, public funds, bank wealth management, insurance asset management, and securities asset management, providing substantial support for guiding sustainable, long-term, value-oriented, and rational investment strategies. These endeavors have fostered a healthy market ecosystem for sustainable development, amassing valuable experience in establishing a standardized system for sustainability reporting.
During the drafting of the Guidelines, the SSE adhered to the following principles. First, showcasing Chinese characteristics. Founding on the realities of China and the market, as well as the actual state of China's capital market, the SSE draws upon domestic and international disclosure systems and the experience and best practices of listed companies in reporting, establishing pivotal tasks like rural revitalization, innovation-driven development, and equal treatment for small and medium-sized enterprises. These topics embody Chinese characteristics and comprehensively showcase China's values and priorities in advancing sustainable development. Second, adhering to the realistic approach. The listed companies' development stage and disclosure capacity are thoroughly taken into account in the approach. This is achieved by the synergistic integration of mandatory and voluntary reporting, qualitative and quantitative disclosures, and the establishment of transitional periods and extension measures. This ensures that costs and benefits are harmonized. Third, adhering to the systematic approach. The SSE has assisted listed companies in building a sound governance mechanism related to sustainable development, clarified the disclosure framework with "governance - strategy - impact, risk and opportunity management - indicators and targets" as the core elements, and promoted high-quality information disclosure through better internal governance and concrete actions.
In addition to existing regulations, the Guidelines proactively draw on useful domestic and foreign practices and broad consensus, further refining and augmenting the requirements for information disclosure of sustainability development. The Guidelines encompass 58 articles under six chapters, including 20 specific topics.
In terms of the content of the regulations, the Guidelines first establish a framework for information disclosure of sustainability development. The listed companies shall encapsulate the quartet of pivotal elements (namely governance; strategy; impact, risk and opportunity management; and indicators and targets) to analyze and disclose these issues, so that investors and stakeholders can fully understand the actions taken by listed companies to cope with and manage the impacts, risks and opportunities of sustainable development. Second, the Guidelines clarify the disclosure issues of environmental, social, and corporate governance. The environmental information disclosure chapter has been set up to address pivotal issues such as response to climate change, the conservation of ecosystems and biodiversity, a circular economy, and energy utilization. The social information disclosure chapter delineates pivotal issues such as rural revitalization, innovation-driven development, technological ethics, supply chain security, and equal treatment for small and medium-sized enterprises. The corporate governance information disclosure chapter delves into issues such as anti-corruption and anti-bribery, as well as repression of unfair competition. It directs listed companies to establish systems of risk management, training, and supervision designed to combat corruption and bribery, and use disclosure as a means to prevent commercial bribery risks in conjunction with governance. Third, the Guidelines moderately lower the disclosure standards according to actual conditions. Considering the relatively weak foundation of climate disclosure among Chinese-listed enterprises, the Guidelines judiciously eased the requirements for disclosing certain issues, such as the carbon emissions along the upstream and downstream industrial chains, the carbon emissions from joint ventures and consortium enterprises, and scenario analysis. This approach prioritizes behavioral transformation over the pursuit of perfect disclosure, ensuring a steady start and a gradual evolution in corporate disclosure.
Concerning the implementation of the rules, the Guidelines first integrate mandatory disclosure with voluntary disclosure. In the realm of the disclosing entities, within the reporting period, enterprises that have been persistently a constituent of the SSE 180 Index or the STAR 50 index, as well as companies listed concurrently on both domestic and overseas markets should disclose the Sustainability Report, while other listed companies are encouraged to proactively disclose. In terms of topics, differential disclosure requirements are formulated for various topics based on the level of mandatory disclosure, guided disclosure, and encouraged disclosure. Second, the Guidelines combine qualitative disclosure with quantitative disclosure. The disclosing entities must provide both qualitative and quantitative disclosure on certain pivotal issues, facilitating easy vertical and horizontal comparisons for investors and stakeholders. At the same time, the regulations establish extension measures for quantitative disclosure. In the inaugural reporting period, companies facing challenges with quantitatively disclosing certain metrics may opt for qualitative disclosure and elucidate the rationales. Third, the Guidelines have made arrangements for providing transitional periods and other extension measures. To afford listed companies ample time to gear up for capacity building and execution, those that are mandated to disclose the Sustainability Report can inaugurate the disclosure of 2025 Sustainability Report in 2026. In the realm of financial analysis, disclosing entities may, during the reporting periods of 2025 and 2026, provide only qualitative disclosure concerning the impact of sustainability-related risks and opportunities on their current financial standing, without necessitating quantitative disclosure.
During the public opinions solicitation period, the SSE will listen to the opinions and suggestions of market entities in a variety of ways, and based on these opinions, further improve the guidelines under the guidance of CSRC. In the next step, the SSE will continue to implement the spirit of the 20th CPC National Congress and the Central Financial Work Conference, elevate the listed companies' investment value and the returns for investors, enrich and refine the sustainable development system, product spectrum, and service offerings, thereby promoting the high-quality development of the capital market.
