China demands ‘double materiality’ disclosures in first sustainability standards

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🗞️ Driving the news: China has issued its first climate disclosure standards, incorporating "double materiality," marking a significant step in environmental transparency
• The Chinese Sustainability Disclosure Standards for Business Enterprises No. 1 (CSDS 1) covers governance, strategy, risk management, and metrics/targets
• These standards, initially voluntary, will help companies disclose not only how operations affect finances but also how they impact the environment and China’s national climate targets

🔭 The context: The CSDS 1 (trial) lays the groundwork for a comprehensive national sustainability reporting system
• The standards align with the International Sustainability Standards Board (ISSB) and are expected to become mandatory by 2030, as China pushes toward carbon neutrality by 2060
• While large companies, particularly state-owned enterprises, are progressing, many smaller businesses lack the necessary data and ESG training to meet the new requirements

🌍 Why it matters for the planet: These standards will improve transparency and accountability, helping China meet its climate targets
• By requiring companies to disclose their environmental impact, the standards are expected to drive meaningful progress in reducing emissions and improving sustainability practices in China, the world's largest emitter of greenhouse gases

⏭️ What’s next: China is preparing for the mandatory phase of the CSDS 1, with regulations expected to be finalized over the next few years
• Companies will need to adapt to the evolving standards to remain compliant and competitive in an increasingly sustainability-focused global market

💬 One quote: "The mandatory countdown is official, and we expect to see more specific standards and industry guidelines in the coming years." – Fei Kwok, Managing Partner, Clyde & Co

📈 One stat: 99% of China's financial sector disclosed sustainability information in 2025

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