Shaping China’s ESG Future: From Comprehensive Reporting to Dual Carbon Mechanisms
15 September 2026
China, one of the world’s largest economies and the largest exporters, is developing increasingly comprehensive sustainability reporting systems. These advancements are driving greater corporate demand for national carbon trading mechanisms while creating significant opportunities for global carbon management across supply chains.
Pathway to a Unified Disclosure Framework
China has reached a major milestone in sustainability disclosures. As of 30 April 2026, all 430 mandatory disclosure entities completed their 2025 annual sustainability reports, achieving a 100% disclosure rate (China Association for Public Companies, 2026). This marks a significant improvement in disclosure quality, with further enhancements expected in quantitative reporting, financial impact analysis, and target monitoring.
Looking ahead to 2030, a critical period for China’s green transformation, the country plans to establish a unified disclosure framework aligned with its dual carbon goals. The scope of reporting entities will gradually expand from listed to non-listed companies, and from voluntary to mandatory disclosure. A unified set of rules will better enable enterprises to participate in global trade and investment, strengthen international competitiveness, and allow China, as a key global supply chain hub, to play a pivotal role in worldwide carbon management and emissions reduction.
China’s Dual Carbon Markets
Tightened regulations and greater transparency in carbon disclosure are uncovering hidden emissions and reducing greenwashing. Companies with excess emissions are driven to participate in the carbon market to achieve compliance and fulfil their corporate social responsibility. China operates two main carbon markets:
1. National Emissions Trading System
High carbon-intensity sectors, including power generation, steel, cement and aluminium smelting, are required to manage their emissions by trading China Emission Allowances on the Shanghai Environment and Energy Exchange.
2. Certified Emission Reduction (CCER) Program
In the voluntary carbon credit market, companies can support eligible emission reduction or removal projects by trading CCER on the China Beijing Green Exchange.
Beyond compliance, carbon trading provides strong financial incentives for innovation and technology development. It also enhances corporate accountability and transparency through rigorous tracking and trading of emissions, helping companies build greater trust with investors and stakeholders.
Unlocking Global Carbon Economy Opportunities
Increasing carbon transparency across supply chains helps mitigate climate risks and secures access to global markets and capital. Supply chain emissions typically account for more than half of a company’s total carbon footprint, emissions that were previously hard to track and manage.
With improved disclosure and rising transparency in China, local companies are better positioned to access global markets. By strengthening their low-carbon capabilities, they gain a competitive edge in supplier selection and the green economy through better risk mitigation and regulatory compliance. At the same time, these developments enable multinational companies to more effectively manage emissions throughout their supply chains, accelerating progress toward carbon neutrality.
Reference:
1. China Association for Public Companies (2026). Analysis Report on Sustainable Information Disclosure by Mandatory Disclosure Entities in 2026.
https://www.capco.org.cn/xhdt/xhyw/202606/20260611/j_2026061109274100017811413817034883.html
Contributor:
Gloria So
Partner, Advisory Services
SW Hong Kong
E:
gloria.so@shinewing.hk
