Shanghai Stock Exchange released on Jan 17 a set of two documents concerning sustainability reporting guidance, aiming to drive listed companies' high-quality environmental, social, and governance (ESG) reporting.

The two documents provide sample disclosures, which will help companies to build a corporate structure and management process facilitating their sustainable growth. Companies will also be guided to identify important topics to make related disclosure.

For example, the guidance has not only outlined carbon emission calculation methods and scenario analysis procedures, but also summarized 22 disclosure focuses to help listed companies locate key items around climate change topic, according to the exchange.

Meanwhile, the new documents have enriched the interpretation of standards. They have helped listed companies to better understand relevant rules by elaborating technical concepts, standards and requirements.

For example, detailed descriptions can be found around climate-related physical risks and transition risks, climate-related financial impacts and transition plans, and the scope of greenhouse gas emissions.

Voluntary reporting is a basic rule of ESG disclosure, as the exchange stated in the documents. The exchange encourages listed companies to prepare reports based on sample texts and disclosure focuses from the newly released guidance. No additional mandatory disclosure is required.

In 2024, a total of 1,193 exchange-listed companies issued ESG reports, sustainability reports or social responsibility reports for the 2023 fiscal year, accounting for 52 percent of all exchange-listed companies and marking an uptick of 6 percentage points year-on-year. This has pointed to new records both in absolute number and disclosure ratio.

As of end 2024, up to 342 SSE-listed companies were covered by MSCI ESG ratings. Among them, 100 companies received an upgrade in the latest rating and eight companies were rated AAA, reaching a world-leading level.

As broad-based ESG indexes building on benchmark indexes such as SSE 50 Index, SSE 180 Index and CSI 300 Index have increased over the past year, the number of products tracking ESG and other sustainability indexes reached 89 by the end of 2024. The number of green exchange-traded funds reached 45, with the total asset under management exceeding 130 billion yuan ($17.9 billion), as the exchange has calculated.