The Shanghai Stock Exchange (SSE) has taken a significant step to enhance ESG reporting with the introduction of two new sustainability disclosure guides. These guides, Guide No.4 for listed companies and Guide No.13 for the STAR Market, aim to support the implementation of ESG Guidelines No.14 by providing detailed disclosure frameworks, sample texts, and technical insights. This initiative aligns with China’s carbon neutral strategy and growing global focus on sustainable finance. 

In 2024, a record 52% of SSE-listed companies disclosed ESG reports, reflecting a 6% year-on-year increase. A total of 1,193 companies participated in ESG reporting, showcasing the rising importance of environmental, social, and governance considerations in the corporate sector. The new guides are designed to help companies address key ESG factors, including climate risks, carbon emissions, and sustainability governance. 

Key features of the updated ESG framework include practical templates that assist companies in structuring their disclosures effectively. The guidance also provides in-depth technical explanations on climate-related financial risks and carbon emissions, ensuring alignment with global best practices. Although the adoption of these guides is voluntary, they are expected to drive improvements in ESG reporting standards across the market. 

The SSE’s efforts have already yielded significant achievements. By the end of 2024, 342 companies had obtained MSCI ESG ratings, with 8 achieving the prestigious AAA rating. Additionally, investment in ESG-related products has grown substantially, with 89 products tracking ESG indexes and green ETFs accounting for 45, totaling over 130 billion yuan in assets under management. 

Looking ahead, the SSE plans to further refine its ESG disclosure framework by gathering market feedback and best practices. This ongoing effort aims to enhance the adaptability and operability of ESG reporting, positioning China as a leader in sustainable finance and reinforcing its commitment to achieving carbon neutrality. 

(Resources: Seneca ESG-https://senecaesg.com/insights/shanghai-stock-exchange-strengthens-esg-reporting/)