China Releases Trial Corporate Climate Disclosure Standard Aligned with IFRS S2

China's Ministry of Finance, alongside multiple ministries, the central bank and regulators, has released the Corporate Sustainable Disclosure Standard No. 1 — Climate (Trial), a new voluntary standard structurally aligned with the IFRS Foundation's IFRS S2 climate reporting framework. The ministry said it will expand mandatory application progressively to listed companies, large enterprises and eventually smaller businesses.

The new Chinese climate disclosure standard follows the main structure of IFRS S2, incorporating key pillars including Governance, Strategy, Risk and Opportunity Management and Metrics and Targets. A notable addition to the Chinese standard is the inclusion of reporting on climate-related impact information, covering the impact of business activities including value chain activities on climate change, which goes beyond the investor-focused financial materiality emphasis of IFRS S2. The ministry said development has already started on application guidelines for industries including power, steel, coal, petroleum, fertiliser, aluminium, hydrogen, cement and automobiles.

China's decision to release a trial climate disclosure standard aligned with IFRS S2 marks a significant step in the global convergence of sustainability reporting frameworks and has direct implications for international investors assessing Chinese companies. The voluntary status of the initial standard, combined with the ministry's stated intention to expand mandatory application progressively, means companies can begin building disclosure capabilities ahead of formal regulatory deadlines. For Indian companies operating in global supply chains alongside Chinese counterparts, China's alignment with IFRS S2 standards strengthens the case for India to accelerate its own convergence between BRSR Core and international sustainability reporting frameworks.

The ministry said the standard will provide a mechanism to enable green and low-carbon development, solve greenwashing problems through standardisation, and support guidance of capital flows to low-carbon projects. The rollout strategy moves from listed companies to non-listed companies, from large enterprises to SMEs and from qualitative to quantitative requirements, and from voluntary to mandatory disclosure over time. Industry-specific application guidelines for high-emission sectors are expected to be released progressively, creating a full-chain industry application system covering basic guidelines, specific guidelines and sector-level application guidance.

Key figure — Voluntary initially, with mandatory expansion planned