This week, the world’s second-largest economy released a mandatory sustainability disclosure regulation for its three largest stock exchanges.

Beginning in 2026, large companies listed on the Shanghai, Shenzhen, and Beijing Stock Exchanges will have to disclose a range of sustainability information across a broad set of environmental, social, and governance categories, including climate change, ecosystem and biodiversity protection, circular economy, energy use, supply chain security, and rural revitalization, as well as anti-corruption and anti-bribery, among others.

Notably, the rules include reporting on Scope 3 value chain greenhouse gas emissions, which has been a key point of controversy for the SEC as it prepares its final climate rule, as companies have raised concerns about the unreliability of and difficulty in collecting value chain emissions data.

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Also, the Chinese adopted the “double materiality” approach used by the EU. This approach determines which sustainability issues a company must disclose based on both financial concerns and the company’s impact on people and the planet. With a combined ~32% of global GDP (compared to 25% for the US), have China and the EU established double materiality as the de facto global approach?

Although the new rule will affect fewer than 500 companies, they represent around half of the listed market value. The Beijing Exchange, which houses primarily small and medium enterprises, is introducing the guidelines on a voluntary basis.

This Smart Read article is contributed by Tim Mohin, Global Sustainability Leader, BCG. Every week ESG News delivers smart commentary from ESG practitioners and experts to unpack issues of the week. Submit your ESG Smart Read to editor@esgnews.com

Tim Mohin

Tim Mohin is weekly smart read contributor to ESG News. Tim is globally recognized sustainable business executive. He is a partner and director for the Boston Consulting Group (BCG) in climate and sustainability.

Prior to BCG, Tim was the EVP and Chief Sustainability Officer with leading carbon accounting software company – Persefoni . He is the former Chief Executive of the Global Reporting Initiative (GRI), the world’s largest sustainability reporting standard.

He brings more than 20 years’ experience leading sustainability functions at three Fortune 500 companies – Intel, Apple and AMD – Tim has deep experience developing strategies to embed sustainability into business. Tim also led the development of environmental policy in the Environmental Protection Agency and the United States Senate, including the Clean Air Act. He is a sustainability advisor to the Financial Conduct Authority of the United Kingdom, the Board of BASF, Workiva and others. Previously, Tim was a founder and Chairman of the Board for the Responsible Business Alliance.

He is the author of Changing Business from the Inside Out and a frequent speaker and writer on sustainability and corporate responsibility. Tim writes a weekly ESG Newsletter, and is one of LinkedIn’s 2022 Top Voices in the Green Economy. He is consistently recognized in the top 20 of Corporate Social Responsibility Influence Leaders.