On March 1, 2022, the Shanghai Stock Exchange (SSE)
released the Action Plan for Peak Carbon and Carbon Neutrality during
the 14th Five-Year Plan (hereinafter referred to as “the Action Plan”).
The Action Plan aims at stimulating the green development of public companies
and increasing the quantity and quality of green financial products. With these
goals, it lists a series of measures to be implemented over the next five
years.
The SSE will enhance the environmental information disclosure requirements for public companies, particularly to set rules regarding the information on promoting environmental improvements and higher standards, addressing climate change, and optimizing resource use.
Currently, among environment-related issues, energy consumption is the metric which public companies in China are most willing to share information. The Action Plan intends to ensure companies expand the scope of reporting, paying attention to broader dimensions of sustainability.
The SSE also plans to strengthen ESG (Environmental, Social and Governance)-related training and services for public companies, in order to accelerate their understanding of the importance of ESG and prioritize ESG reporting in their investor relation activities.
The Action Plan also mentions the need to reduce internal energy consumption and carbon emissions of the SSE itself, with a distinct focus on data centers.
It is notable that this Action Plan concentrates on environmental measures and reporting, with little mention of social and governance requirements. In comparison, the SSE had already issued a notice in January to STAR market traded companies, outlining a framework for disclosing information on social and governance metrics, as well as the environment.
The Action Plan shows that ESG-related
compliance and reporting are increasingly becoming mandatory for public
companies in China. This trend requires specific investment both in
technologies and management processes.
In terms of green finance, the SSE intends to enlarge
the number and size of green bonds issued in China and improve the
standardization for green bonds to avoid “greenwashing”. More indexes linked to
green development, decarbonization, and ESG will be created to direct
investment toward these areas.
If you need more information on the topic, or the complete English version of the document, please contact: