Chinese listed companies adhere to ESG information disclosure

ESG (Environmental, Social and Governance) information disclosure by Chinese listed companies is becoming increasingly widespread backed by tightened stock market regulations, which is also growing to be an important factor in investor decision-making, said an executive recently.

"A growing number of investors are focusing on and utilizing the ESG information disclosed by Chinese listed companies, which will gradually highlight the investment attributes of ESG reports," said Hoffman Cheong, EY China north managing partner, at the third CSO forum and Sustainability Excellence Awards presentation ceremony hosted by EY China in Beijing.

In May this year, the ESG disclosure guidelines for the three major stock markets in Chinese mainland were officially implemented. Embracing ESG principles amid daily production and business activities has become an essential task for an increasing number of listed companies.

Cheong highlighted that the guidelines provide detailed and specific regulations on various topics, including mandatory disclosure requirements for negative information such as environmental penalties, overdue payments to small and medium-sized enterprises, customer privacy breaches and corruption incidents.

"With the issuance of the guidelines as a starting point, we believe that ESG information disclosure by Chinese listed companies will become increasingly standardized and widespread," he said.

"Companies now face greater pressure and more substantial motivation to improve their ESG performance… Financial institutions have already begun incorporating ESG into their credit evaluation processes. Good ESG performance can help reduce a company's financing costs, such as obtaining lower interest rates for issuing green bonds, receiving interest rate discounts for green loans, among many others," he added.