Who Is It Written For? China’s First Year of Mandatory Climate Disclosure

In 2026, China brought its largest listed companies under a mandatory climate and sustainability disclosure regime for the first time. The rules reach only about 457 companies, but those companies account for roughly two-thirds of national emissions. On the most basic design question, what counts as ‘material’, China sided with the European Union rather than the investor-focused global baseline set by the International Sustainability Standards Board (ISSB). This post argues that the choice matters less for what it converges on than for what it conceals: the same disclosure tools do different work depending on who is meant to read them, and in China that reader is, first, the state.

The architecture will look familiar to anyone who has read a climate disclosure rule. In 2024 the Shanghai, Shenzhen and Beijing exchanges issued sustainability-reporting guidelines built around the four pillars used internationally: governance, strategy, the management of risks and impacts, and metrics and targets. The first mandatory reports, covering the 2025 financial year, landed this spring. Above the exchanges, the Ministry of Finance is assembling a national disclosure standard aimed at a complete system by 2030. The unfamiliar part is ‘materiality’: the test that decides which issues a company must disclose.

There are two ways to draw the line. One asks only how environmental and social issues affect a company’s own finances. This is the investor’s question, and the line the ISSB draws. The other asks that and a second: how does the company affect the environment and society? Reporting against both is called ‘double materiality’, and it is the approach the European Union built into its Corporate Sustainability Reporting Directive. China chose double materiality for both the exchange rules and the national standard. It did so just as the EU, under competitiveness pressure and citing the need to compete with the United States and China, narrowed the scope of its own regime, though double materiality itself survived. Two systems converging on a label while moving in opposite directions on ambition is a warning that the label may not mean the same thing in both places.

A regime’s choices reveal who it expects to read it. In the European design, the ‘impact’ half of double materiality makes sense because of who is assumed to use it: a broad public of investors, regulators, customers, campaigners and journalists who turn information about a company’s effect on the world into pressure, through capital, litigation, procurement and reputation. That public is the engine meant to make disclosure change behaviour. It is a market plus a public sphere.

For the firms that matter most to China’s emissions, that engine runs differently. The largest emitters are disproportionately state-owned, and the disclosure push did not begin with investors demanding it. It began at the top: the state assets regulator told centrally owned listed companies to reach full sustainability-reporting coverage by 2023, well before the exchange rules bit, and framed the exercise as serving national strategy. Among firms already reporting, central state companies made up well over half; private firms, about a fifth. So who, in practice, reads the impact information and acts on it? Principally the state: as controlling shareholder of the firms in question, as the policymaker holding national carbon targets, and as author of the disclosure duty itself. Impact materiality fits China not because civil society will price a company’s emissions, but because the state has its own reasons to want them counted.

Other features confirm the same reading. The rules pointedly do not require some things the ISSB makes mandatory, such as full value-chain (Scope 3) emissions and forward-looking scenario analysis. That is not what one designs for global investors who prize comparability; it is what one designs to build domestic reporting capacity gradually, under state direction. And the list of required topics includes priorities, such as rural revitalisation, that make sense only if the intended reader is China’s own developmental state.

It would be easy, and wrong, to read this as box-ticking. The regime is real: when the controlling shareholder and the regulator both want lower emissions and better reporting, corporate behaviour can move as hard as it does under a diffuse investor market, sometimes harder, because the lines of authority are shorter. And the state is not the only intended reader. China also writes for the international capital it wants to attract, and for the standing that comes from shaping global rules rather than only receiving them. That is why the framework tracks the international structure so closely, and why the Ministry of Finance is deliberately building its standards to align with the ISSB’s. The result is a regime that speaks two languages at once: double materiality for the domestic audience that cares about impact, and ISSB-compatible architecture for the global audience that cares about financial comparability.

That dual purpose is also the regime’s central tension, and its open question. The same words, ‘double materiality’ and ‘governance, strategy, metrics’, sit on top of different machines. In Europe the machine is a market and a public that turn disclosure into pressure; in China it is, first, the state as owner and planner, and second, an international market it wants to impress. The lesson reaches past China. The question to ask of any disclosure regime is not only whether it matches the ISSB, but who is meant to read it and what they can do with what they learn. As analysts pore over China’s first mandatory reports, that is the question worth holding in view.

Jiaming Zhang is a PhD Candidate, Durham Law School.