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 [email protected]