Under the guidance of China Securities Regulatory Commission, Shanghai Stock Exchange (SSE) recently formulated three guides on compilation of sustainable development reports, including No. 3: Pollutant Emission, No. 4: Energy Utilization, and No. 5: Water Utilization (the Guides). The SSE hereby solicits public comments on the three documents, which are available in both Chinese and English languages.
In recent years, the SSE has been guiding listed companies in their efforts to build sustainability disclosure capacity. Companies listed on the SSE are encouraged to fulfill social responsibility and improve quality of their sustainability disclosure. Over 1300 SSE-listed companies disclosed separate sustainability-related reports for the fiscal year 2024, accounting for 57% of the SSE market. Additionally, 431 listed companies were graded A or higher in CSI ESG ratings. 30% of SSE-listed companies rated by MSCI ESG achieved an improvement in their latest ratings. Meanwhile, the SSE continues to encourage long-term investment in listed companies that practice sustainable development. As of August this year, 162 products were tracking broad-based indices that apply CSI ESG Ratings, such as SSE 180 Index and "A series" indices including CSI A500 Index, with a combined market capitalization of over 260 billion yuan.
In addition to day-to-day instructions, the SSE has been strengthening rule-making on sustainability disclosure. In April last year, the Guidelines No. 14 of Shanghai Stock Exchange for Self-Regulation of Listed Companies—Sustainability Report (Trial) (the Guidelines) was released, marking the start of standardized reporting on sustainable development. Based on daily communication and feedback, the SSE noticed some practical difficulties faced by listed companies in implementing the Guidelines, and they request more detailed examples and guides to better navigate the reporting.
In this regard, as an addition to the two existing guides—No. 1: General Requirements and Disclosure Framework and No. 2: Response to Climate Change—the SSE formulated three new guides specific to the reporting of pollutant emission, energy utilization, and water utilization. During the drafting process, the following four principles were applied.
First, strengthening overall awareness. Consistent with the existing disclosure framework, the Guides aim to enhance list companies’ awareness of the importance of systematic management and risk management, thereby strengthening their commitment to sustainability disclosure. At the same time, the Guides take into account the costs and efforts of disclosure, and encourage companies to focus on the risks and opportunities specific to each topic, and make assessments, calculations, and disclosures based on corporate realities.
Second, highlighting key disclosure items. The Guides break down the environmental disclosure requirements stipulated in the Guidelines into specific items, outlining disclosure dimensions, analytical methods, and quantitative metrics that could be used for reporting. They create a useful reference framework for standardized disclosure, helping enhance companies’ sustainability awareness and reporting standardization.
Third, providing sample disclosure. To address key and complex issues commonly encountered by listed companies in practice—such as risk assessment, workflows, and common disclosure data calculation processes and methodologies relating to pollutant emission, energy utilization, and water utilization—the Guides provide necessary detailed instructions and illustrative disclosure samples on matters of general concern to companies.
Fourth, aligning with existing disclosure scope. The Guides will serve as a reference for listed companies in their preparation of sustainability reports and do not impose additional disclosure costs and efforts. The content of new Guides falls within the requirements of the Guidelines and does not introduce extra mandatory disclosure obligations on the relevant topics.
Going forward, the SSE will carefully review feedback from listed companies and other market participants, and issue more guides on sustainability reporting in due course that are more concise, practical, and user-friendly, in order to provide listed companies with further support in sustainability information disclosure.
