A-shares ESG Mandatory Disclosure "First Examination" Underway; Data Quality Becomes a Key "Scoring Point"

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The year 2026 is the first year for mandatory ESG disclosures for A-share listed companies. As of March 29, when this report was released by the China Securities Journal, at least 257 A-share listed companies had disclosed their 2025 ESG reports (or sustainability reports), with the pharmaceutical and electronics industries leading in the number of disclosures.

From the disclosed reports, data quality has become an important scoring point for this “first exam.” Experts believe that more and more listed companies have significantly improved in terms of the completeness, standardization, and depth of data in their information disclosures. At the same time, while many reports have rich indicators, there are issues with inconsistent statistical standards, and the comparability of information still needs to be strengthened. Listed companies should not view the disclosure of ESG reports as merely completing the requirements set by regulatory authorities but should examine the disclosed content from the perspective of investors. It is recommended to establish a cross-departmental data governance mechanism to unify statistical boundaries and accounting methods, introduce third-party verification, and consider early layout for special disclosures on climate and biodiversity, among others.

● Reporter: Zhao Baizhi Nan

New changes in disclosures

According to the requirements of the “Guidelines for Sustainability Reports of Listed Companies,” the sample companies of the Shanghai Stock Exchange 180, the Science and Technology Innovation Board 50, the Shenzhen 100, and the ChiNext Index, as well as companies listed both domestically and internationally, must disclose their first sustainability report for the 2025 fiscal year by April 30, 2026.

As of March 29, when this report was released, according to the Shenwan first-level industry classification, the aforementioned 257 listed companies have pharmaceutical and electronics industries temporarily leading in the number of disclosures.

It is encouraging that the disclosed 2025 ESG reports show many highlights, reflected in the completeness, standardization, and depth of information disclosures. More and more companies are beginning to disclose comparable data for several consecutive years, incorporating ESG performance into executive assessment systems, beginning to disclose special topics such as biodiversity and climate transition, and revealing third-party verification situations.

For example, CATL stated that it has included ESG performance in the annual performance assessment system for the group and relevant business departments, setting quantifiable and traceable key indicators, and linking the evaluation results to compensation incentives, establishing an effective accountability mechanism. WuXi AppTec stated that during the reporting period, the company additionally established absolute greenhouse gas reduction targets covering Scope 1, Scope 2, and Scope 3 based on the Science Based Targets initiative (SBTi) “Corporate Near-term Target Standards (Version 5.2)” and has been validated by SBTi. ZTE Corporation disclosed the third-party verification report.

From the perspective of listed companies, a high-quality ESG report has multidimensional positive impacts. A related person from the Board Office of Citic Group told reporters that many subsidiaries of the group are listed on the A-share market, and the company views the ESG report as an important window for communication with stakeholders: enhancing ESG information disclosure helps the company meet domestic and international regulatory disclosure requirements and avoid compliance risks; it helps to showcase a responsible company’s good image, enhance market position, and build trust among customers, employees, and society at large; it helps the company conduct peer benchmarking analysis, promoting continuous optimization and improvement.

From the perspective of investors, ESG reports can provide verifiable, comparable, and traceable non-financial information to assist in investment decision-making and risk management. As more listed companies disclose ESG reports, relevant questions on investor relations interactive platforms are becoming increasingly frequent, reflecting investors’ high attention to the performance of listed companies in the ESG field: “Has your company formulated reduction targets and plans? Have you done a baseline assessment of carbon emissions?” “Does the company have welfare policies for employees?” “What substantial measures has the company taken to practice ESG principles, and what positive impact does it have on the competitiveness of the supply chain?”…

“We have noticed that investors are generally concerned about the following indicators: in terms of the environment, primarily focusing on performance indicators such as greenhouse gas emissions, resource usage, and waste discharge; in social aspects, mainly focusing on the relationship with community residents, consumer rights protection, talent introduction and training, etc.; in corporate governance, mainly focusing on board diversity, the role of independent directors, anti-corruption, and business ethics,” said the aforementioned Citic Group Board Office personnel.

How to swiftly extract effective information from reports that are often dozens to hundreds of pages long? Xue Dongyang, President of China Chengxin Green Finance, suggested in an interview that investors should focus on three aspects when reading ESG reports: the completeness and continuity of quantitative data, the coverage and credibility of third-party verification, and the degree of internalization of governance mechanisms.

Specifically, Xue Dongyang explained that investors can focus on whether key indicators have comparable data for three or more consecutive years, whether the statistical boundaries are clear, and whether the accounting methods are clearly disclosed. Regarding third-party verification, attention should be paid to whether the verification covers core quantitative indicators and whether the verification agency has professional qualifications. At the same time, investors should not only focus on whether an ESG committee is established as a formal requirement but should pay more attention to whether ESG performance is included in executive assessments, whether the board substantially participates in the deliberation of major issues, and whether a closed-loop rectification mechanism is established after negative events occur.

Certain shortcomings still exist

Overall, the ESG reports currently disclosed by listed companies have a certain level of reference, but there are also some shortcomings. As of now, among the disclosed reports, some have provided three years of data from 2023 to 2025, while others only disclose one year of data; some companies have not disclosed core quantitative indicators or third-party verification situations; and different companies within the same industry have inconsistent disclosure standards, making horizontal comparisons difficult.

For example, in terms of disclosure standards, Beidahuang’s ESG report shows that the statistical scope for greenhouse gas emissions data is limited to the greenhouse gas emissions from office areas, and the relevant data from its subsidiaries is not included in the statistics. Many indicators from Kaichuang International, such as pollutant emissions, total environmental investment, employee turnover rate, and risk management systems, are all “planned for future disclosure.”

It is worth noting that there is generally less disclosure of Scope 3 emissions by current listed companies. Scope 3 emissions refer to indirect emissions from the value chain closely related to the company’s operations that the company does not directly own or control. These emissions typically far exceed the company’s direct emissions (Scope 1) and indirect energy emissions (Scope 2). Although Scope 3 emissions are currently not included in the mandatory disclosure category by regulatory authorities, accurately accounting for and effectively managing Scope 3 emissions not only helps companies fully understand their carbon emission profile but also enhances their international competitiveness and market recognition, making it an important indicator for assessing the “value” of ESG reports.

Xue Dongyang believes that the slow progress in disclosing Scope 3 emissions is primarily due to the challenges of data availability and supply chain coordination. Scope 3 encompasses fifteen categories across the upstream and downstream value chains, involving procurement, logistics, product use, and disposal, making it difficult for companies to penetrate and obtain carbon emission data from external entities such as suppliers and customers, while most small and medium-sized suppliers lack carbon accounting capabilities, leading to a broken data chain. Additionally, different industries have significant disparities in the substantive definition of Scope 3, and companies generally face dilemmas regarding “which categories should be included, how to allocate emissions, and what emission factors to use,” with high accounting costs and reliability of results difficult to guarantee.

Regarding the current shortcomings in information disclosure, experts believe the main reason lies in the lack of an established cross-departmental data governance system, with ESG data dispersed across departments such as safety and environmental protection, human resources, and finance, resulting in inadequate internal coordination and data aggregation mechanisms; there is insufficient quantitative management capability, especially in measuring environmental and climate-related indicators lacking professional support.

“It is recommended that companies establish a cross-departmental data governance mechanism to unify statistical boundaries and accounting methods, and prioritize introducing third-party limited verification for key quantitative indicators such as carbon emissions and injury rates, especially for high-environment-sensitive industries. Companies should proactively disclose special reports on important topics such as climate transition, biodiversity conservation, and water resource management, referencing frameworks like TCFD and TNFD,” said Xue Dongyang.

Mandatory disclosure subjects will be expanded timely

On January 30, the Shanghai and Shenzhen Stock Exchanges released a revised version of the “Guidelines for Compiling Sustainability Reports,” marking further improvement in the sustainability information disclosure system for listed companies in China. Looking ahead, experts believe that the scope of mandatory disclosure subjects will be expanded timely, and third-party verification is also expected to transition from a “voluntary” model to a “mandatory” model, with more listed companies disclosing high-quality sustainable development information for investors’ reference.

On one hand, the expansion of mandatory disclosure subjects has become a clear regulatory direction. Xue Dongyang believes that in the future, the expansion of mandatory disclosure will exhibit a “horizontal and vertical dual-direction” characteristic: horizontally, high environmental impact industries, such as chemicals, building materials, non-ferrous metals, and aviation, due to their high carbon emission intensity and significant environmental risks, are likely to be prioritized for inclusion; vertically, mandatory requirements are expected to extend to all listed companies and even large non-listed companies to enhance the transparency of sustainable information and the uniformity of capital market access thresholds.

“Driven by the ‘dual carbon’ goals, China’s sustainable information disclosure benchmark framework has taken shape, and the disclosure of foundational quantitative information related to the environment is being improved in support. In the future, disclosures and accounting tools related to biodiversity, water footprints, and other areas are expected to receive more attention,” said Deng Jielin, a researcher at the International Research Institute of Green Finance at Central University of Finance and Economics.

On the other hand, third-party verification is receiving increasing attention. In January 2026, the Ministry of Finance issued “Sustainability Information Verification Business Standards No. 6101 - Basic Standards (Trial).” The introduction of verification standards marks that the information verification for sustainable development in China is entering the right track.

The “Top Ten Trends in Responsible Investment 2026” report jointly released by the Green Finance Alliance and the China Responsible Investment Forum shows that with the rapid growth in the number of sustainability reports, independent third-party verification aimed at enhancing report reliability and credibility has become the direction encouraged and guided by regulatory authorities.

In Xue Dongyang’s view, third-party verification is likely to transition from a “voluntary” model to a “mandatory” model. He noted that as regulatory authorities continue to raise the quality requirements for ESG information, especially when carbon emissions and other data are linked to mechanisms such as transition finance, green bonds, and carbon quota compliance, the authenticity, reliability, and verifiability of data will become baseline requirements.

“It is expected that in the future, key quantitative indicators such as carbon emissions for major pollutant control enterprises and mandatory disclosure subjects will first be subject to ‘limited verification mandatory implementation,’ and based on this, gradually transition to more substantive issues and higher levels of reasonable verification,” said Xue Dongyang.

Regarding the issue of enterprises’ ESG information disclosure being “reporting good news but not bad news,” Huang Shizhong, vice president of the China Accounting Society, believes that verification agencies can fully utilize natural language processing (NLP) technology, leveraging artificial intelligence systems to efficiently collect text information and assess the authenticity of corporate sustainability information disclosures. For instance, verifying whether the sustainable information disclosed by companies contradicts external information such as regulatory penalties and online public opinion; cross-comparing carbon emissions information from companies within the same industry to identify whether “greenwashing” behaviors exist; and analyzing factors such as companies’ resource allocation situations, the proportion of Scope 3 emissions, and their disclosure situations to comprehensively assess the credibility of corporate sustainability information disclosures.

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Editor: Shi Xiuzhen SF183