On January 17, 2025, under the oversight of the China Securities Regulatory Commission (CSRC), the Shenzhen Stock Exchange (SZSE) officially released the “Self-Regulatory Guidance No. 3 for Companies Listed on Shenzhen Stock Exchange—Preparation of Sustainability Report” and the “Self-Regulatory Guidance No. 3 for Companies Listed on the ChiNext Market of Shenzhen Stock Exchange—Preparation of Sustainability Report” (collectively, Guidance), both with immediate effect.

The Guidance are designed to implement the directives of  the Third Plenary Session of the 20th Central Committee of the Communist Party of China, and the Central Economic Work Conference and the Central Financial Work Conference; to encourage SZSE-listed companies to practice sustainability thinking, in order to promote green, low-carbon, and sustainable development of the economy and the society.

The Guidance takes the “Self-Regulatory Guidelines No. 17 for Companies Listed on Shenzhen Stock Exchange—Sustainability Report (For Trial Implementation)” (hereinafter referred to as the Guidelines) as the basic framework. It further prompts the work process and key points of Sustainability Report disclosure, provides reference for listed companies to prepare, which does not add additional mandatory disclosure requirements beyond the Guidelines, and does not increase the disclosure burden of listed companies. The release of the Guidance marks that the Shenzhen Stock Exchange has initially formed a sustainability information disclosure system with the Guidelines as the mandatory and baseline requirements, the Guidance provides referential standards and typical practice recommendations.

The release is preceded by a public comment phase, during which stakeholders widely acknowledged the significance of the documents and offered suggestions on the required name of the report, the index of topics, and the calculation of greenhouse gas emissions, among other aspects. SZSE carefully reviewed each comment and added the name requirement, topic index, and refined examples of emissions calculation in the finalized Guidance. Suggestions that were not adopted will be considered at a later time based on market conditions.

Each of the Guidance presently consists of two chapters. Chapter 1 (“General Requirements and Disclosure Framework”) establishes the overarching principles of sustainability reports and the methods for identifying and analyzing the material topics. It also contains the requirements and examples of disclosure for the four key aspects of governance; strategy; impacts, risks, and opportunities management; and indicators and targets, and offers a general framework for disclosures in sustainability reports. Chapter 2 (“Climate Response”) outlines the methods to assess the materiality (including impact materiality and financial materiality) of a climate response topic. Additionally, it provides the disclosure practices, with examples, for climate adaptation, scenario analysis, calculation of greenhouse gas emissions, and climate-related transition plans, and specifies all the key disclosure items for climate response topics.

SZSE has always been adhering to the concept of sustainable development, actively carried out practices related to sustainable development, guided listed companies to better fulfill their social responsibilities, and is committed to cultivating a group of listed companies that meet the requirements of low-carbon and sustainable development. Throughout 2024, more than 1000 listed companies on the Shenzhen Stock Exchange released their annual social responsibility reports, ESG reports or sustainability reports, with a disclosure rate of 35%. Both the number of disclosures and the disclosure rate reached new highs.

With the release of the Guidance, SZSE will follow the directions of the CSRC and the New Development Concepts, and improve effective supervision and services to help listed companies achieve green, low-carbon, and sustainable growth. In particular, SZSE will develop the reporting Guidance for the other key topics based on current practices, which will further broaden and complete the Guidance. Second, SZSE will enhance its training program to provide specific guidance to listed companies on the disclosure of sustainability information. Lastly, SZSE will support ESG rating and index development activities to build a conducive ecosystem for sustainable investing.