China Corporate Sustainability Disclosure Standards (CSDS)

China's Corporate Sustainability Disclosure Standards represent a landmark development in the country's ESG landscape, establishing a comprehensive framework for sustainability reporting that aligns with international standards while reflecting China's unique economic and environmental context.

In February 2024, the Ministry of Finance released the Basic Standard for Corporate Sustainability Disclosure (CSDS No. 1) and the Climate-Related Disclosure Standard (CSDS No. 2), marking China's first national sustainability reporting standards. These standards draw on the ISSB's IFRS S1 and S2 while incorporating Chinese characteristics, including alignment with China's dual carbon goals and the country's development priorities.

CSDS No. 1: Basic Standard

The Basic Standard establishes the general framework for sustainability disclosure, including reporting principles, materiality assessment, and disclosure requirements. It adopts a double materiality approach, requiring companies to consider both the financial impacts of sustainability issues on the enterprise (financial materiality) and the enterprise's impacts on the economy, society, and environment (impact materiality).

Key requirements include governance of sustainability matters, strategy for managing sustainability risks and opportunities, risk management processes, and metrics and targets. The standard requires disclosure of sustainability-related financial effects, including current and anticipated impacts on financial position, performance, and cash flows.

CSDS No. 2: Climate-Related Disclosures

The Climate-Related Disclosure Standard closely mirrors IFRS S2, requiring disclosure across the four TCFD pillars of governance, strategy, risk management, and metrics and targets. It requires disclosure of Scope 1 and 2 greenhouse gas emissions and encourages Scope 3 disclosure. Scenario analysis is required for companies with significant climate-related risks, with flexibility in the approach used.

Implementation Timeline

The standards are being implemented on a phased basis. Large state-owned enterprises and listed companies on the Shanghai and Shenzhen stock exchanges are expected to be the first adopters, with broader application expanding over time. The China Securities Regulatory Commission (CSRC) is developing complementary listing rules to support implementation.

Relationship to International Standards

While the CSDS draws heavily on ISSB standards, several adaptations reflect China's context. The standards give greater emphasis to the social dimension, including poverty alleviation and rural revitalisation. They incorporate references to China's national policies on carbon peak and carbon neutrality. The double materiality approach goes beyond the ISSB's enterprise value focus, reflecting the influence of both ISSB and ESRS approaches.

Further Reading

• Ministry of Finance (China) — Official standards
• CSRC — Securities regulatory guidance

Key Resources

• China Ministry of Finance — Sustainability Disclosure Standards
• ISSB Standards

Related Topics

• China ESG Regulations
• IFRS S1 & S2
• ESRS\n