The development model of ESG (Environmental, Social and Governance) in China is unique, presenting a "top-down" promotion trend led by regulatory authorities. In this context, policy factors have played a crucial role in promoting the development of ESG in China. Today, let's review the evolution of ESG policies in China and gain a deeper understanding of the current state of ESG regulation in the country.
Tracing back to early 2002, the emergence of ESG policies in China can be attributed to the disclosure requirements of governance information for listed companies. In January of that year, the China Securities Regulatory Commission issued the "Guidelines for Corporate Governance of Listed Companies", which clarified the scope of disclosure of governance information of listed companies and marked the starting point of China's ESG policy.
Since then, regulatory agencies, exchanges, and other relevant departments have successively introduced ESG related policies and rules, continuously promoting the in-depth development of ESG practices in China. As the macro regulatory agency of the capital market, the China Securities Regulatory Commission (CSRC) regulates the securities market in accordance with laws and regulations, and has introduced a series of ESG related policies, providing norms and basis for ESG practices in the capital market.
As early as 2012, the China Securities Regulatory Commission required listed companies to disclose their social responsibility reports separately; In 2017, companies were encouraged to proactively disclose social responsibility and environmental information. In September 2018, the China Securities Regulatory Commission revised and released the "Code of Corporate Governance for Listed Companies", which specifically emphasizes the importance of stakeholders, environmental protection, and social responsibility in Chapter 8. It requires listed companies to integrate ecological and environmental protection requirements into their development strategies and corporate governance processes, and actively fulfill social responsibilities in areas such as community welfare, disaster relief and assistance, and public welfare undertakings.
In recent years, the China Securities Regulatory Commission has continued to deepen ESG supervision and issued a series of new regulatory rules and guidelines. In April 2022, the China Securities Regulatory Commission revised and released the "Guidelines for Investor Relations Management of Listed Companies", which listed ESG information as one of the important contents of communication with investors. In August 2023, the China Securities Regulatory Commission issued the "Management Measures for Independent Directors of Listed Companies", which put forward new requirements for corporate governance and further improved the level of corporate governance. In March 2024, the China Securities Regulatory Commission issued the "Opinions on Strengthening the Supervision of Listed Companies (Trial)", requiring the establishment and improvement of a sustainable development information disclosure system to promote high-quality development of listed companies.
At first, the exchange encouraged listed companies to voluntarily disclose their social responsibility reports. In recent years, with the deepening of ESG concepts, exchanges have gradually strengthened their disclosure requirements for ESG information. In February 2024, the Shanghai, Shenzhen, and Beijing stock exchanges, under the unified deployment of the China Securities Regulatory Commission, issued the "Guidelines for Self discipline Supervision of Listed Companies - Sustainable Development Report (Trial) (Draft for Comments)", which systematically regulates the disclosure of ESG report information by listed companies. In April of the same year, the three major exchanges officially released guidelines for sustainable development reports of listed companies, which will be implemented from May 1, 2024, marking a new stage in the disclosure of ESG information in A-shares.
In addition, environmental regulatory authorities are actively promoting ESG information disclosure. In 2021, the Ministry of Ecology and Environment released the "Reform Plan for the Legal Disclosure System of Environmental Information", proposing the goal of establishing a mandatory environmental information disclosure system by 2025. In 2022, the Ministry of Ecology and Environment formulated the "Guidelines for the lawful disclosure format of corporate environmental information", further refining the content and format of corporate environmental information disclosure. In the same year, the Ministry of Ecology and Environment also jointly issued the "National Adaptation Strategy to Climate Change 2035" with multiple departments, emphasizing the importance of climate change monitoring, early warning, and risk management.
As the regulatory agency for central enterprises, the State owned Assets Supervision and Administration Commission is also actively promoting the development of ESG in central enterprises. In March 2022, the State owned Assets Supervision and Administration Commission established the Social Responsibility Bureau and released the "Work Plan for Improving the Quality of Listed Companies Controlled by Central Enterprises". In July of the same year, the State owned Assets Supervision and Administration Commission launched the "Research on the Preparation of ESG Special Reports for Listed Companies Controlled by Central Enterprises" project, and released the project results in July 2023, including the ESG Special Report Reference Index System and Reference Template, providing guidance and reference for listed companies controlled by central enterprises to prepare ESG reports.
The People's Bank of China and other financial regulatory agencies also attach great importance to ESG information disclosure. In recent years, regulatory agencies such as the People's Bank of China, China Banking Regulatory Commission, and China Banking and Insurance Regulatory Commission have successively issued a series of ESG related policies, requiring financial institutions to strengthen environmental and social risk management, and incorporate ESG requirements into management processes and comprehensive risk management systems. At the same time, the China Insurance Industry Association has also released the "Green Insurance Classification Guidelines (2023 Edition)", which regulates green insurance products, green investment of insurance funds, and green operation of insurance companies.
In summary, with the rapid growth of ESG investment, China's ESG regulatory system is constantly improving and deepening. More and more regulatory agencies are demanding that companies and financial institutions improve their ESG performance and strengthen regulatory policies on ESG information disclosure and risk management. Although the infrastructure for ESG regulation still needs further improvement, it is believed that with the government's attention and promotion, relevant policies will become more comprehensive and clear, providing strong guarantees for the healthy development of ESG.