This is part 10 of a series of educational posts from the IFoA’s Climate Change Disclosures Working Party about climate reporting topics. Here we focus on China: current practices and a brief overview of things to come.
China is the largest emitter of greenhouse gases, accounting for about 26% of global emissions in 20191. China is a major global economic powerhouse and one of the world’s fastest growing economies. In 2022, around 28% of its GDP came from manufacturing.
Despite China’s proposal to achieve carbon neutrality by 2060, Climate Action Tracker gave China an overall rating as ‘highly insufficient’2. China continues to focus on coal, with continued approval for new coal power in 2022 and 20233.
On saying this, China is looking at greener solutions. For example, it led the world in terms of solar power production in 20204 and has published a 5-year plan to look at ‘modern energy system planning’. Similarly, recent news is more positive on China’s future actions5.
In 2016, China issued the Guidelines for Establishing the Green Financial System6, which include the gradual introduction of disclosure for listed companies.
In 2021, there were new regulations to standardise the ESG disclosures.
The China Securities Regulatory Commission (CSRC) proposed in May 2022 revised disclosure rules (which are yet to be finalised, at the time of writing) for listed companies. The rules also provide a voluntary framework for disclosure since 1 June 2022. Currently, regulators in China are considering mandatory ESG disclosures, which may initially be on a ‘comply or explain’ basis.
China’s general ‘top-down’ influence7 of how legislation filters centrally to institutions and cities has resulted in disclosure requirements from CSRC filtering down to the stock exchange in Shanghai and Shenzen.
The Hong Kong Stock Exchange is considering making climate disclosures mandatory for listed companies. This would come in force from 2024. The proposed requirements will align with ISSB’s disclosure framework and also cover TCFD’s 4 pillars.
In 2020, the Green and Sustainable Finance Cross-Agency Steering Group was established in Hong Kong.
Currently there are no further material impacts for actuaries to consider besides those already mentioned earlier.
Awaiting finalisation of proposals mentioned earlier.
Below is a list of websites we hope you find useful:
A brief introduction to climate disclosure in China - CDP (cdsb.net)
ESG disclosure in China - Market readiness and PRI investor survey - PRI (unpri.org)
What are your thoughts on the points raised in this article?
We would love to hear your views in the comments on the IFoA's Sustainability Finance Community LinkedIn page.
To find out more, visit: Sustainability: research working parties
[1] China's climate change policies - European Parliament (europarl.europa.eu)
[2] Climate Action Tracker - China
[3] China ramps up coal power despite carbon neutral pledges - A. Hawkins (theguardian.com)
[4] Why China's climate policy matters to us all - D. Brown (bbc.com)
[5] China's response on joint climate action was positive - EU climate chief - P. Lombardi (nasdaq.com)
The views expressed in this post are those of the individual authors, and not necessarily those of the Institute and Faculty of Actuaries or those of their employers. Information within this post is correct as at the date of writing (i.e. end of July 2023). Hence, there may be subsequent updates which are not reflected. Any reader should still reference the underlying legislation and standard, and should there be any conflict, the underlying information in the relevant standard or legislation supersedes any information presented in this post.