Core Points - Climate information disclosure is becoming a key focus for corporate sustainability reporting, with the Ministry of Finance recently releasing the "Corporate Sustainability Disclosure Standards No. 1 - Climate (Trial) (Draft for Comments)" [1] - The draft emphasizes the need for companies to disclose greenhouse gas emissions categorized into Scope 1, 2, and 3, and to build a disclosure framework around four pillars: governance, strategy, risk and opportunity management, and metrics and targets [1][3] Group 1: Regulatory Framework - The draft is the first specific standard focusing on climate issues, following the basic sustainability disclosure standards released in November 2024 [1] - The Ministry of Finance plans to establish a unified sustainability disclosure standard system by 2030, with the climate standards expected to be finalized by 2027 [2] - The draft aligns closely with international standards, facilitating the integration of domestic practices with global frameworks [2] Group 2: Disclosure Requirements - Companies are required to disclose governance structures overseeing climate-related risks and opportunities, including how performance metrics are integrated into compensation policies [3] - The strategic dimension requires companies to disclose how climate-related risks and opportunities impact their strategies, financials, and resilience to climate change [3] - In terms of risk and opportunity management, companies must outline their processes for identifying, assessing, and monitoring climate-related risks and how these processes fit into their overall risk management systems [4] Group 3: Emission Accounting - The draft specifies that companies must disclose their total greenhouse gas emissions, with a focus on Scope 3 emissions, which are often the most challenging to quantify [4] - Financial institutions are particularly required to disclose information related to their financed emissions, which typically represent a significant portion of their total emissions [4] - Unlike the international GHG Protocol recommended by IFRS S2, the draft localizes the accounting standards, requiring companies to follow national carbon emission accounting standards [4] Group 4: Implementation Challenges - The climate information disclosure poses challenges for companies in measuring, analyzing, and planning their greenhouse gas emissions [6] - Companies are encouraged to adopt a gradual approach to implementing the standards, starting with qualitative disclosures if quantitative data is not available [7] - The draft suggests that companies with the capacity should actively explore pilot projects and develop feasible disclosure plans [7]

Core Viewpoint - The ESG (Environmental, Social, and Governance) concept is becoming a key force in promoting sustainable development amid global climate crises and social inequality, with a focus on leveraging regional financial advantages and industrial clusters to enhance sustainable information disclosure and achieve high-quality economic development [1] Group 1: Policy and Standards - Regions in China should actively explore the establishment of sustainable information disclosure policies and standards that align with international norms and domestic needs, drawing from global standards like GRI and TCFD [2] - Local financial institutions should integrate these policies into their business processes, ensuring compliance in project approvals and risk assessments to provide scientific decision-making support [2] - The development of policies should consider the characteristics and needs of financial institutions, encouraging their participation in the policy-making process to ensure feasibility and effectiveness [2] Group 2: Information Disclosure Mechanism - Establishing a unified ESG information disclosure standard is essential to enhance the normativity and mandatory nature of disclosures across industries [3] - Financial institutions should incorporate ESG factors into due diligence and risk assessment processes, ensuring that information disclosure is closely integrated with business operations [3] - Collaboration with local governments and regulatory bodies is crucial for building an effective information disclosure mechanism, utilizing fintech to optimize disclosure processes [3] Group 3: Financial Market and Industrial Cluster Advantages - Financial markets in China should leverage their comprehensive elements to direct more capital towards low-carbon emission sectors, strengthening the carbon finance ecosystem [4] - Financial institutions are encouraged to develop green credit businesses and explore green bonds and carbon finance, linking financial services with local industrial upgrades [4] - Collaboration among financial institutions is vital to develop green financial products and services, enhancing credit support for low-carbon sectors [4] Group 4: Innovation in Green Financial Products and Services - Continuous innovation in green financial products and services is necessary, promoting various carbon-related financial instruments to support the green transformation of the economy [5][6] - Financial institutions must ensure comprehensive and accurate disclosure of environmental benefits and risks associated with new products, enhancing transparency for investors [6] - The development of unique green financial products should consider market demands and regional characteristics, improving their attractiveness and credibility [6] Group 5: Talent Development and International Cooperation - Green finance talent should be included in the list of scarce talents, with efforts to attract and cultivate professionals with international perspectives [7] - Strengthening exchanges with international financial centers can introduce advanced concepts and practices, enhancing local financial institutions' capabilities in sustainable information disclosure [7] - Financial institutions should focus on building a skilled workforce knowledgeable in both finance and ESG principles, participating in international exchanges to improve competitiveness [7]

Core Insights - The article emphasizes the growing importance of sustainable development in the global economy, highlighting the increasing demand for sustainability-related disclosures in capital markets [2][4]. - The establishment of the International Sustainability Standards Board (ISSB) and the release of the International Financial Reporting Sustainability Disclosure Standards (ISDS) mark a significant advancement in global sustainability reporting [4][14]. Development History - The ISSB was established in November 2021 during the 26th UN Climate Conference, with the IFRS Foundation announcing its formation [5]. - In March 2022, the ISSB released two exposure drafts for ISDS, seeking public feedback until July 29, 2022, leading to the final issuance of S1 and S2 standards in June 2023, set to take effect on January 1, 2024 [5][6]. Key Features of ISDS - ISDS aims to provide a global baseline for sustainability disclosures, focusing on investor needs, financial materiality, and interoperability with other frameworks like the TCFD [4][14]. - The standards include general requirements for sustainability-related financial disclosures and specific guidelines for climate-related disclosures [4][11]. Application Scope - ISDS is designed for a wide range of entities, including multinational corporations, public companies, large state-owned enterprises, and SMEs, facilitating compliance with various sustainability reporting requirements globally [14]. - The framework aims to enhance transparency for investors and regulators, helping companies manage sustainability risks within their supply and value chains [14]. Future Plans - The ISSB plans to develop industry-specific sustainability disclosure standards covering broader topics such as biodiversity and water resource management, ensuring precise disclosures for different sectors [11][12]. - Ongoing collaboration with global organizations aims to address implementation challenges and enhance the market adaptability of ISDS [12].

Core Viewpoint - The implementation of new ESG disclosure regulations in China's A-share market marks a significant step towards enhancing sustainable information disclosure, with a notable increase in the number of companies participating in ESG reporting [1][2]. Group 1: ESG Disclosure Progress - As of April 20, 2023, 1,131 A-share companies have disclosed their ESG reports, achieving a disclosure rate of 20.9% [1]. - Financial institutions lead the way in ESG disclosures, with 93.55% of financial listed companies in A-shares publishing independent ESG or social responsibility reports [4]. Group 2: Policy and Regulatory Environment - 2024 is anticipated to be a pivotal year for mandatory ESG disclosures in China, driven by multiple policy initiatives aimed at establishing a unified sustainable disclosure system [2]. - The Shanghai region is highlighted as a key player in ESG information disclosure, with 80% of financial institutions recognizing its importance [4]. Group 3: Challenges in ESG Disclosure - Financial institutions face significant challenges in carbon emission accounting, particularly in scope three emissions, which complicates sustainable information disclosure [5]. - Companies are confronted with multiple standards and regulatory requirements, complicating compliance efforts [5]. Group 4: Future Outlook and Opportunities - High-quality ESG information disclosure is expected to unlock more green funding, facilitating the low-carbon transition of the real economy [8]. - Shanghai is positioned as a leading hub for green finance, potentially influencing global standards and practices in sustainable finance [9].