What Enterprises Need to Know About China’s New Corporate Climate Disclosure Standards

This blog was originally posted on 12th May 2025, and was updated on 15th January 2026. Further regulatory developments may have occurred after publication. To keep up-to-date with the latest compliance news, sign up to our newsletter.

AUTHORED BY LYNN CHIAM, REGULATORY COMPLIANCE SPECIALIST, AND HANNAH JANKNECHT, REGULATORY COMPLIANCE SPECIALIST, COMPLIANCE & RISKS

On 25 December 2025, the Chinese Ministry of Finance and other departments published their first national reporting framework for climate-related risks and opportunities, titled “Sustainability Disclosure Standards for Business Enterprises No. 1 – Climate (Trial)”. 

The Standard is intended to be used alongside the Sustainability Disclosure Standards for Business Enterprises – Basic Standards (Trial), published in December 2024. 

The release of this Climate Standard, along with the accompanying Basic Standard (Trial), is part of a strategic, multi-year effort to modernise corporate reporting. 

This blog examines the implications of the climate standards for businesses operating in this region. 

What Does it Mean for Businesses?

1. Core Framework & International Alignment

The new standard is structurally modelled after the International Sustainability Standards Board (ISSB) IFRS S2 climate reporting standard. The standard asks companies to provide a comprehensive view of their climate-related footprint through these four key pillars that will look familiar to many international organisations:

• Governance: Disclosure of governance structures, control measures, and procedures used to monitor climate-related risks and opportunities.
• Strategy: The impact of climate change on the business model, strategy, and financial planning, including the use of climate scenario analysis to assess resilience.
• Risk & Opportunity Management: The processes used to identify, assess, and prioritise climate-related risks and opportunities.
• Metrics & Targets: Detailed quantitative and qualitative performance data, including Scope 1, 2, and 3 greenhouse gas (GHG) emissions.

2. Distinct “Chinese Characteristics”

While aligned with global frameworks, the standard incorporates unique domestic priorities:

• Double Materiality: Beyond reporting financial risks to the company (financial materiality), firms must also disclose how their operations impact the climate (impact materiality).
• Local Methodology: Companies must calculate their greenhouse gas emissions by using carbon accounting standards set by relevant Chinese authorities and explicitly disclose their specific basis for their calculations; international protocols like the GHG Protocol are only used as a reference if local standards are unavailable. Disclosure must cover scope 1 (direct emissions), scope 2 (indirect emissions from energy) and scope 3  (indirect emissions from value chains). 
• National Strategy Integration: Disclosures must align with China’s “dual carbon” goals (peaking emissions by 2030 and reaching neutrality by 2060) and specific national industry roadmaps.

Default Values

The Ministry of Finance is taking a “phased and steady” approach to implementation:

• Current Status: Application is currently voluntary on a trial basis.
• Phased Expansion: The scope will eventually expand from listed companies to non-listed companies, from large enterprises to SMEs, from qualitative requirements to quantitative requirements, and from voluntary disclosure to mandatory disclosure. 
• Timeline Goals: The government aims to have a full national unified system by 2030. A specific timeline for the mandatory implementation of the standards is, however, yet to be announced. 
• Sectoral Guidance: Industry-specific guidelines are in the process of being developed for high-impact sectors, including power, steel, coal, petroleum, fertiliser, aluminium, hydrogen, cement and automotives.

Why This Is Important for Your Business

Whether you are a domestic Chinese firm or a multinational with operations in the region, this standard signals that climate transparency is no longer merely desirable. The new standard aims to establish a transparent, comparable, and reliable system for disclosing climate-related information. By requiring standardised data, it helps investors, creditors, and government authorities to make better-informed economic and resource allocation decisions. Additionally, the unified reporting rules help reduce the risk of greenwashing by providing consistent and verifiable metrics. 

While application of the standard is currently voluntary, early adoption offers businesses a chance to refine their “climate transition plans” – the systematic strategy to align with a low-carbon economy. Since the standard includes scope 3 reporting, which covers the entire value chain, companies will face increased pressure to provide carbon data to their upstream and downstream partners to maintain their roles in global supply chains. By aligning with the standard before it becomes binding, businesses can establish the necessary data-sharing protocols and internal capabilities early, significantly easing the pressure of meeting these supply chain transparency requirements once they become mandatory.

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