CSDS: Decoding Chinese Sustainability Standards

In a context where sustainability reporting is gradually developing in Asia, China has unveiled its own draft standards for 2024. The CSDS (Chinese Sustainability Reporting Standards) aim to bring Chinese companies' ESG disclosures closer to international standards. Designed to be consistent with IFRS-S and ESRS, these standards are expected to develop gradually and become fully operational in 2030. Scope, level of interoperability, impact on European multinationals: find out everything you need to know about the CSDS.

What are CSDS?

CSDS are China's future sustainability disclosure standards. Their creation was announced in a communication from the Chinese Ministry of Finance on May 27, 2024. This was a call for comments on a first draft of a basic standard, accompanied by a note detailing the guidelines for the development of CSDS. An official trial version of the basic standard was then published on December 17, 2024. This was followed by the first thematic standard—on climate—whose trial version was unveiled on December 25, 2025.

The future Chinese non-financial reporting standards system will be divided into three categories of standards:

1. The basic standard: similar to the ESRS 1 cross-cutting standard, it describes the fundamental principles, objectives, and general requirements of CSDS.
2. Thematic standards: these describe the disclosure requirements related to various environmental, social, and governance topics.
3. Application guides: sector-specific and cross-sector, these guides assist companies in interpreting and applying CSDS standards.

The Chinese sustainability standards project aims to standardize the publication of ESG information within its territory and improve its quality. By creating a more transparent framework that is consistent with international standards, China hopes to make its market more attractive to foreign investors.

More broadly, CSDSs aim to promote sustainable business development. They also serve Beijing's climate goals of reaching peak emissions in 2030 and carbon neutrality in 2060.

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Who are CSDSs for?

Ultimately, CSDS are intended to apply to the majority of companies operating in China. The Ministry of Finance's announcement states that the standards will gradually be extended from listed companies to unlisted companies and from large companies to SMEs. No specific timetable or thresholds have been announced at this stage. The ministry has stated that it intends to prioritize the use of its sustainability standards in key sectors. An initial pilot phase is also expected to be implemented.

Initially, large companies are encouraged to implement CSDS voluntarily. The aim is to gradually move from qualitative to quantitative requirements, and from voluntary to mandatory disclosure. Although there is no precise timetable, the Chinese government has announced a few dates. It plans to publish the first standards, including climate reporting standards, by 2027. The Chinese sustainability standards system as a whole should be operational by 2030.

How compatible is the Chinese approach with international standards?

The CSDS project is largely inspired by international ESG reporting standards. In particular, it has strong similarities with the standards of the ISSB (International Sustainability Standards Board) initiative. The basic standard directly cites IFRS-S1 in its communication. It states that the CSDS guidelines are broadly aligned with its general disclosure requirements. However, the draft Chinese ESG reporting standards differ from the ISSB on one major issue: materiality analysis.

The CSDSs adopt a dual materiality approach, similar to the ESRSs of the CSRD. The draft also plans to address numerous topics related to the three main ESG themes. There are currently 12 sustainability themes that could be subject to dedicated standards. The five environmental topics and the governance topic communicated refer directly to the ESRS thematic standards in force. The six social themes seem to broadly address the ESRS S, but also target topics such as rural revitalization and social contribution.

We can therefore expect relatively high interoperability between Chinese sustainability standards, ESRS and IFRS-S (for climate reporting). With regard to the GRI (Global Reporting Initiative), the relationship could be similar to that with the pre-Omnibus I ESRS. CSDS reporting would therefore be largely consistent with GRI reporting. However, the reverse would not be true, since the GRI, despite covering a large number of topics, only takes into account the materiality of impact.

For a better overview of the differences between CSDS and international standards, see our comparison of non-financial reporting standards.

What impact will this have on European multinationals?

The gradual implementation of CSDS sustainability standards could have a significant impact on European multinational companies, depending on their activities.

Direct ESG reporting for Chinese subsidiaries

Firstly, companies with subsidiaries in China are directly affected. Within a few years, these subsidiaries will be required to produce mandatory ESG reports based on Chinese standards. Unlike the CSRD, the CSDS project does not currently appear to include consolidated reporting at group level. However, it is likely that Chinese subsidiaries will need certain data from their European groups in order to produce their sustainability reports.

Indirect compliance to access the Chinese market

The Beijing sustainability disclosure standards may also impact companies with Chinese customers or suppliers. Through a trickle-down effect, affected companies could request certain ESG information from their international partners. In this context, adapting data collection practices and voluntarily complying with Chinese standards would offer a significant competitive advantage.

Leveraging ESG reporting experience to ensure a controlled transition

While preparing for the new CSRD reporting framework is a major undertaking, European multinationals can leverage their experience in ESG reporting. Wave 1 CSRD companies that have already published a sustainability report obviously have a head start. But Wave 2 companies, whether or not they are ultimately exempt from reporting, have also been able to prepare internally for similar disclosure requirements.

More broadly, European companies have the option of using other regulatory or voluntary reporting frameworks. The data collected via CDP questionnaires, for example, is a valuable resource for carbon and environmental sustainability indicators.

An ambitious project with some limitations

The desired level of transparency for CSDSs, interoperability with international standards, and the use of double materiality are strong signals. However, Chinese disclosure standards have several limitations that may raise questions for users of ESG information. One notable example is the absence of a defined level of assurance.

Verification by an external auditor is currently voluntary, unlike the requirements of the CSRD. Furthermore, whereas the European directive is managed at the supranational level, China has full authority to modify the CSDS at any time. Finally, the absence of thresholds and a clear timeline is currently a significant source of uncertainty for companies and investors.

Conclusion

The announcement of the CSDS project has caused a real stir in the world of ESG reporting. While the United States is embracing climate skepticism and the EU is backing down on the level of ambition of the CSRD, China is bucking the trend. The publication of Chinese sustainability standards could thus reshuffle the deck and position Beijing as one of the leaders in non-financial reporting.

Of course, we will have to wait for the publication of the various thematic standards and associated sustainability indicators before we can make an initial assessment. However, the CSDS project represents a giant leap forward toward a common language of sustainability on a global scale.

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Sources :

• Appendix 1: Guidelines, CSDS draft, Chinese Ministry of Finance, May 27, 2024
• Appendix 2: Basic Standard, CSDS Draft, Chinese Ministry of Finance, May 27, 2024
• “Ministry of Finance issued the Exposure Draft of Chinese Sustainability Disclosure Standards for Business Enterprises,” PwC China, 2024
• “Analysis of reporting standards by country: China,” Double Materiality Research Chair
• “China’s Corporate Sustainability Disclosure Standards: A Roadmap for Foreign Companies Doing Business in China,” The ESG Institute, February 3, 2025

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