CSRC revised several disclosure rules of listed companies’ annual and semiannual reports for public consultation, from May 7 to June 7, as reported by Securities Daily on May 7. Notably, the authority integrated disclosure requirements on environmental protection and social responsibility into a new, separate section called environmental and social responsibility in periodic reporting. For references, the current regulations mix environmental and social responsibility disclosures in the important matter section, along with cash dividend distribution policy, external audit information, substantive connected transactions, and else. Maintaining mandatory environmental disclosure requirements for key pollutant discharging firms and its units, the new rules also asked other companies to report administrative punishments for their environmental problems. Furthermore, CSRC encouraged all listed companies to disclose their carbon emission reduction measures, ecological protection actions, poverty alleviation achievements, rural revitalization works, and others.

Apart from the newly added environmental and social information reporting section, CSRC also improved rules on corporate governance, management discussion and analysis, important matters, and corporate bond-related sections. In general, the purpose of the amendments this time is to implement the new Securities Law that took into force on March 1, 2020, further standardizing the preparation and information disclosures of listed companies, and protecting the legitimate rights and interests of investors. Meanwhile, the revisions on the environmental and social responsibility part also followed the long-term plan for environmental protection in the 2021 Government Work Report, including the 2030 carbon emission peaking and 2060 carbon neutrality targets.

Currently, environmental and social information disclosures of Chinese listed companies are at a low level. A joint report released by China Forum of Environmental Journalists (CFEJ) and Beijing University of Chemical Technology (BUCT) last November showed that in 2019, 1,006 of 3,939 A-share listed firms published their ESG, CSR, or sustainability reports, 78 more than 2018 while still below 30%. Besides, according to Shanghai Securities News, only 58 A-share listed companies published information about punishments they received for environmental problems between 2019 and 2020. At present, China’s Bloomberg ESG disclosure score is 21.6, less than half of France’s top-ranking score of 46.9. Nevertheless, the Bloomberg ESG score for China is showing an upward trend, owing mostly to the shifts from voluntary to mandatory ESG disclosure requirements for listed firms in CSRC.

Sources:

http://www.csrc.gov.cn/pub/zjhpublic/zjh/202105/t20210507_397138.htm

https://gjia.georgetown.edu/2020/10/26/new-esg-practices-in-china-and-its-implications-for-foreign-actors/

https://www.bloomberg.com/news/articles/2020-06-14/why-china-s-missing-out-on-trillions-in-sustainable-investment

http://www.gov.cn/zhuanti/2021lhzfgzbg/index.htm

https://www.bloomberg.com/professional/blog/global-sustainable-investments-rise-34-30-7-trillion/

http://epaper.zqrb.cn/html/2021-05/08/content_728505.htm?div=-1

http://finance.eastmoney.com/a/202011181705980681.html

https://www.senecaesg.com/blog/cfej-buct-publish-listed-chinese-companies-2019-esg-performance/