The Standards provide a framework for all Chinese companies’ sustainability disclosures and the applicability extends beyond listed companies.
By Paul A. Davies, Farhana Sharmeen, Michael D. Green, James Bee, and Qingyi Pan
On May 27, 2024, China’s Ministry of Finance published the new Corporate Sustainability Disclosure Standards (Draft for Comment) (the Standards). The Standards set out the general provisions, disclosure objectives, and information quality requirements, which aim to lay the ground for China’s unified national sustainability disclosure standard system, expected to launch by 2030. The goal of the Standards is to promote transparent disclosure throughout the value chain and to enhance the competitiveness of Chinese companies globally.
On June 21, 2022, the key operative provision of the Uyghur Forced Labor Prevention Act (UFLPA) entered into force, introducing a “rebuttable presumption” that any goods mined, produced, or manufactured wholly or in part in the Xinjiang region of China are in violation of Section 307 of the Tariff Act of 1930. Under the rebuttable presumption, any such goods are — unless proven otherwise by importers who comply with specific due diligence guidance and submit “clear and convincing evidence” that the goods were legitimately manufactured — presumed to be produced using forced labor, and therefore cannot be imported into the US and will be detained at the border. For more information on the UFLPA, see this Latham
Nearly four years after China’s national emissions trading scheme (ETS) was announced in late 2017, trading of emissions quotas officially commenced on July 16. The start of trading represents a significant step in China’s adoption of market-based mechanisms for addressing climate change, while also signifying a major opportunity for businesses able to achieve meaningful reductions.
On January 1, 2021, the long-awaited China Emissions Trading Scheme (ETS) commenced operation, with 2,225 coal-fired power plants participating. Under this new ETS, China’s power operators will have to buy emissions permits if their coal plant exceeds carbon intensity benchmarks, giving power operators an incentive to improve efficiency. Since 2011, China has developed pilot emissions trading platforms in nine cities and provinces, paving the way for a national trading scheme that was first announced in 2017, along with an emissions trading market development plan for the power generation sector. After almost four years of development, the first annual compliance cycle officially began on January 1. China’s Ministry of Ecology and Environment (MEE) has published several policy documents on the national ETS that establish regulatory authority and specify general rules for key areas of market operation and design, including the Carbon Emissions Rights Trading Regulations (Trial), which was published in November 2020.
Environmental, social, and governance (ESG) was more prominent than ever in 2019, as issues such as climate change and corporate responsibility regularly appeared in news cycles worldwide. This year, observers can expect even more focus on this area, with public awareness of ESG at an all-time high, and major ESG-related events set to take place.