The New Standard: China’s Move to Transparent Corporate Climate Data

China is no longer just a participant in the global ESG conversation—it is now writing the playbook. With the release of the Corporate Sustainable Disclosure Standard No. 1 – Climate (Trial), Beijing has officially launched a high-stakes transition from voluntary good-to-have reporting to a rigorous, institutionalised system.

Small Chinese company staff overseeing compliance with new sustainability standards. AI generated picture.

This new framework, backed by the Ministry of Finance and the central bank, doesn't just suggest transparency; it creates a roadmap for it. By aligning with the international IFRS S2 guidelines, China is ensuring its 5,000+ listed companies speak the same financial language as global investors, removing the guesswork from sustainability data.

While currently in a trial phase, the Ministry of Finance has signalled that the window for voluntary reporting is closing fast. By 2028, full mandatory compliance is expected, and the scope will likely broaden to include non-listed firms and SMEs.

For companies and investors, this means the following four pillars are now the baseline:

• Governance: Detailed disclosure of how leadership manages climate risks.
• Strategy: Proof of how business models are evolving for climate resilience.
• Risk management: Clear processes for mitigating environmental threats.
• Metrics: Hard data on performance targets and progress.

What makes this move particularly impactful is China's double materiality approach. Unlike some Western frameworks that focus only on how climate change affects a company's bottom line, China’s new rules mandate disclosures on how the company affects the planet. This includes:

• Scopes 1, 2, and 3 emissions (covering the entire value chain).
• Internal carbon pricing and dedicated capital expenditures.

With green bond issuances expected to hit $1.2 trillion annually by the end of 2025, these standards are the fuel for a massive surge in green finance. For the 78% of Chinese firms that currently fail to report on Scope 3 emissions, the message is clear: the era of data gaps is over.