Ministry of Finance proposes climate disclosure standard to strengthen corporate governance

On 30 April 2025, following the issuance of the Corporate Sustainability Disclosure Standards – Basic Standards (Trial) in December 2024 (see earlier briefing), the Ministry of Finance (MOF) of China, together with the Ministry of Ecology and Environment (MEE), released the draft version of the Corporate Sustainability Disclosure Standard No.1 – Climate (Trial) (hereinafter referred to as the “Climate Standard”) for public consultation by 31 May 2025.  

This marks the first thematic standard within China’s corporate sustainability disclosure framework, designed to standardise the disclosure of climate-related risks, opportunities, governance, strategies, and impacts by enterprises. This Climate Standard aims to guide enterprises in integrating climate considerations into their core business operations and decision-making processes, representing an intended shift from conceptual awareness to strategic implementation and institutional practice. The overarching objective of these disclosures is to provide critical climate-related information to investors, creditors, government authorities, and other stakeholders, thereby enabling informed decision-making and resource allocations. 

Key provisions 

The Climate Standard consists of six chapters and establishes a full-cycle disclosure framework for the identification, assessment, and management of climate-related issues. In accordance with the Basic Standards (Trial), the Climate Standard adopts a four-pillar approach: 

1. General principles

This chapter articulates the purpose and basis of the Climate Standard, adopting “materiality” and “feasibility” as core guiding principles. This section emphasises that disclosures should be grounded in reasonably obtainable information and shall focus on risks, opportunities, and impacts with significant implications for an enterprise’s long-term prospects. 

2. Governance structure 

This section mandates that enterprises shall disclose the roles and responsibilities of governance bodies and management in addressing climate issues. This includes details on oversight frequency, capability building, and integration with executive compensation. The standard emphasises the importance of incorporating climate-related governance into enterprises’ broader sustainability governance system and encourages the utilization of third-party assurance and internal audit mechanisms to enhance credibility and transparency. 

3. Strategy

Enterprises need to disclose how climate risks and opportunities affect their strategy, business model, and financial performance, both now and in the future. Scenario analysis is mandatory to assess resilience under different climate pathways.  

Key element requirements for enterprises: 

• Risk and opportunity identification: identifying physical and transition climate risks, estimating the timing of impacts and value chain exposure. 

• Strategic response: explaining how to adjust their strategies, including divesting from high-carbon assets, investing in transition opportunities, implementing energy efficiency measures, collaborating with supply chains, and developing transition plans with corresponding resource allocations. 

• Financial impact disclosure: disclosing impacts on their assets, liabilities, profits, and cash flow. If quantitative data is unavailable, relevant reason and qualitative information shall be provided instead. 

• Scenario analysis and resilience assessment: disclosing the models, assumptions, and timeframes used in scenario analysis, assessing their financial resilience, and gradually shifting from qualitative to quantitative analysis. 

4. Risk and opportunity management 

This section focuses on the operationalization of strategy by requiring enterprises to disclose companies’ process for identifying, assessing, prioritizing, and monitoring climate-related risks and opportunities, including whether these are integrated into the overall risk management framework. Disclosure elements include methodologies, key assumptions, data sources, scenario analysis, and any process changes compared to previous reporting periods. 

5. Metrics and targets

This chapter outlines a dual structured framework of climate metrics and targets to ensure measurability, verifiability, and comparability of climate disclosures. 

• Climate metrics (Articles 27–40):  

• Enterprises shall disclose GHG emissions (scopes 1–3), climate risk exposure, climate-related capital expenditure, internal carbon pricing, and whether executive compensation is linked to climate goals. 

• Financial institutions must report financed emissions, climate risk exposure by asset class, and carbon accounting methods.  

• Companies shall disclose calculation methods of GHG accounting methodologies, input data, emission factors, and any methodological changes. 

• Climate targets (Articles 41–46):  

• Enterprises specify targets, including indicators, scopes, baseline years, timeframes, alignment with national or international goals (e.g., the Paris Agreement), and track progress using tools like carbon credits and third-party verification.  

Comparison of China’s Climate Disclosure Standard with IFRS S2 and TCFD 

This table provides a side-by-side comparison between China’s Climate Disclosure Standard and leading international frameworks (IFRS S2 and TCFD). 

III. Looking ahead 

As a key step in the development of China’s corporate sustainability disclosure system, the Climate Standard indicates a transition from fragmented climate reporting to institutionalised, data-driven governance. It lays the groundwork for more detailed sectoral guidance and future mandatory adoption. With the upcoming implementation of this standard, China intends to create a climate disclosure framework that aligns with global standards and reflects its stated national goals for ecological civilization1 and green economic development. 

Reference 

Original policy