The CSRC warns that ESG reports should not be over-packaged as "advertisements" and marketing tools

"The Guidelines for Sustainability Reporting of Listed Companies (hereinafter referred to as the "Guidelines") are the 'syllabus' for the sustainability information disclosure of listed companies, not extracurricular reading materials. Since it is an 'syllabus', it is necessary to accept 'proctoring' to prevent 'cheating' and 'greenwashing'. On April 29, the relevant person in charge of the Listing Department of the China Securities Regulatory Commission said at the parallel forum of the 2024 Zhongguancun Forum Annual Conference "ESG Collaborative Innovation Helps the Construction of a Beautiful China".

The person in charge said that for most listed companies, the disclosure of sustainability reports is not mandatory, but it does not mean that it can be disclosed at will. Companies should not use announcements as "advertisements" and ESG disclosures as a means of brand marketing, and mislead investors by over-packaging ESG "cloaks" and providing inaccurate information. In the early stage, there have been many cases where the CSRC has been punished or taken regulatory measures due to untrue and inaccurate environmental information disclosure, and the CSRC will continue to improve its regulatory capabilities and continue to strengthen supervision.

At the same time, promote the external verification and assurance of ESG information, continue to improve the accuracy and disclosure quality of ESG data of listed companies, support credit rating agencies to continue to establish and improve the rating methodology system of green enterprises and green bonds, promote increased ESG investment, launch more index and fund products, and promote a virtuous cycle with a more sound ESG ecosystem.

On April 12, the State Council issued the new "National Nine Articles", proposing to improve the sustainability information disclosure system of listed companies. On the same day, the three Shanghai and Shenzhen North Stock Exchange officially issued the Guidelines, which will be implemented from May 1, 2024.

Talking about how to better promote the development of ESG, the above-mentioned person in charge pointed out that it is necessary to promote development in consensus building, promote development in strengthening norms, and promote development in a sound ecosystem.

Due to the wide range of ESG disclosure, the increasing difficulty, and the gradual deepening of understanding in all aspects, there is still a lot of discussion about ESG in the market. For example, whether Scope 3 carbon emissions must be disclosed, whether the four-factor disclosure framework applies to issues that are only significant to impact, boundaries and accounting for value chain impacts, and so on.

The person in charge said that these follow-up studies need to be continued, exploration should be strengthened in practice, and consensus should be further built. The SFC will also continue to assess the suitability of the Guidelines, further improve the rules in light of the actual situation, and study and promote more companies to disclose their sustainability reports.

"The Guidelines are a 'syllabus' for the disclosure of sustainable information by listed companies, not extracurricular reading materials. Since it is an 'syllabus', it is necessary to accept 'proctoring' to prevent 'cheating' and 'greenwashing'. The person in charge said that for most listed companies, sustainability reports are not mandatory to disclose, but it does not mean that they can be disclosed at will. Companies should not use announcements as "advertisements" and ESG disclosures as a means of brand marketing, and mislead investors by over-packaging ESG "cloaks" and providing inaccurate information.

In the early stage, there have been many cases where the CSRC has been punished or taken regulatory measures due to untrue and inaccurate environmental information disclosure, and the CSRC will continue to improve its regulatory capabilities and continue to strengthen supervision.

At the same time, promote the external verification and assurance of ESG information, continue to improve the accuracy and disclosure quality of ESG data of listed companies, support credit rating agencies to continue to establish and improve the rating methodology system of green enterprises and green bonds, promote increased ESG investment, launch more index and fund products, and promote a virtuous cycle with a more sound ESG ecosystem. (CCTV Capital Eye)