The Financial Supervisory Commission recently announced that, in response to climate change and policies such as the EU's Carbon Border Adjustment Mechanism, it will soon release a "Sustainable Development Roadmap for Listed Companies." This plan will be implemented in phases, with the steel and cement industries prioritized in the first wave. They will be required to disclose greenhouse gas emissions by 2023. All listed companies will complete greenhouse gas inventories by 2027, and verification of these inventories by 2029. The goal is to connect supply chains through listed companies to achieve sustainable corporate development.
On January 13, 2022, the Financial Supervisory Commission announced that it will soon release a "Sustainable Development Roadmap for Listed Companies," setting a timeline for disclosure of greenhouse gas inventory information by listed companies, with steel and cement prioritized for disclosure starting in 2023. The plan aims to implement the board's sustainability responsibilities and promote an ESG assessment system for listed companies, aiming to achieve corporate sustainability by connecting the supply chain through listed companies.
Zhang Zhenshan, Director of the Securities and Futures Bureau, stated that to address the impact of climate change, relevant policies are being actively promoted internationally. For example, the European Union proposed a "Carbon Border Adjustment Mechanism" in July 2021, which plans to impose carbon tariffs on high-carbon-emitting products exported to the EU. Furthermore, to accelerate carbon reduction and strengthen climate change adaptation efforts, the Environmental Protection Administration has announced plans to amend the "Greenhouse Gas Reduction and Management Act" to the "Climate Change Response Act." To help companies set their carbon reduction targets early, greenhouse gas inventories have become a top priority for companies. Therefore, the Financial Supervisory Commission is planning a phased schedule for listed companies to disclose greenhouse gas inventories.
Zhang Zhenshan pointed out that the "Sustainable Development Roadmap for Listed Companies" will be implemented in phases, with plans to complete greenhouse gas inventories for all listed companies by 2027 and verification of greenhouse gas inventories for all listed companies by 2029.
Zhang Zhenshan stated that the disclosure of carbon inventory information will be implemented in phases based on paid-in capital starting in 2023, with the steel and cement industries being prioritized starting in 2023. Disclosures must include direct greenhouse gas emissions (Scope 1) and indirect energy emissions (Scope 2), and will be phased in until they reach the same scope as the company's consolidated financial statements.
In the first phase, which will begin in 2023, all listed companies with a capitalization of more than 10 billion yuan, as well as companies in the steel and cement industries, will be subject to an inventory. In the second phase, which will begin in 2025, all listed companies with a capitalization of more than 10 billion yuan and consolidated subsidiaries in the steel and cement industries will be subject to an inventory, while listed companies with a capitalization of 5-10 billion yuan will be subject to an inventory of individual companies.
The third phase will be in 2026, during which the consolidated subsidiaries of listed companies with capitalization of 5 billion to 10 billion yuan will be reviewed, and listed companies with capitalization below 5 billion yuan will review their individual subsidiaries. The fourth phase will be in 2027, during which the consolidated subsidiaries of listed companies with capitalization below 5 billion yuan will be reviewed.
The Financial Supervisory Commission has also formulated five core strategies, including:
(1) Implementing the Board's sustainable development responsibilities; (2) Establishing a cross-departmental cooperation mechanism; (3) Integrating with international standards and connecting the global sustainable ecosystem; (4) Establishing a talent training and mentoring mechanism to strengthen sustainable development competitiveness; (5) Building an ESG database and establishing an information sharing mechanism.
Zhang Zhenshan stated that given the board's key role in promoting corporate sustainability, companies should establish a governance structure to promote sustainable development and set up a dedicated (or part-time) unit to promote sustainable development. Furthermore, ESG risk assessments related to the company's operations should be conducted, and relevant risk management policies or strategies should be formulated. The board should oversee the promotion of sustainable development and establish a greenhouse gas inventory disclosure schedule for quarterly board control.
In terms of international integration, Zhang Zhenshan pointed out that given the rapid changes in international trends, he will continue to pay attention to international trends and adjust promotion measures on a rolling basis. He will also consider promoting the stock exchange to join the "Glasgow Net Zero Finance Alliance" to connect the international information network.
Zhang Zhenshan further stated that there is now a corporate governance index. In response to the market's growing demand for ESG information disclosure, he will supervise the stock exchanges to establish ESG databases and promote the ESG evaluation system for listed companies.
The Financial Supervisory Commission (FSC) stated that in order to achieve future carbon reduction targets, it is imperative for companies to implement greenhouse gas audits. The FSC will convene a public hearing in February 2022 with relevant government agencies, listed companies, financial holding companies, accounting firms, and third-party verification agencies, and will officially release the "Sustainable Development Roadmap for Listed Companies" in March.
Source: CSRone (https://csrone.com/news/7241)
