CSDS: Decoding Chinese Sustainability Standards

Against a backdrop of sustainability reporting gradually developing across Asia, China unveiled its own draft standards in 2024. CSDS (Chinese Sustainability Disclosure Standards) aim to bring the ESG disclosures of Chinese companies closer to international standards. Designed to be consistent with IFRS-S and the ESRS, these standards are expected to develop progressively and become fully operational by 2030. Scope of application, level of interoperability, impact for European multinationals: discover everything you need to know about CSDS.

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What is CSDS?

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

The future Chinese system of non-financial reporting standards will be divided into 3 categories of standards:

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

China's draft sustainability standards aim to standardise ESG disclosure across its territory and improve its quality. By creating a more transparent framework, consistent with international standards, China aims to increase the attractiveness of its market for foreign investors.

More broadly, CSDS aims to promote the sustainable development of companies. It also serves Beijing's climate goals, namely reaching peak emissions by 2030 and carbon neutrality by 2060.

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Who is CSDS aimed at?

Ultimately, CSDS is intended to apply to the majority of companies established on Chinese soil. The Ministry of Finance's communication states that the standards will gradually extend from listed companies to unlisted companies, and from large companies to SMEs. No precise timetable or thresholds have been announced so far. The ministry states that it wants to prioritise the use of its sustainability standards in key sectors. An initial pilot phase is also expected to be put in place.

Initially, large companies are encouraged to implement CSDS on a voluntary basis. The aim is to gradually move from qualitative to quantitative requirements, and from voluntary to mandatory disclosure. Despite the lack of a precise timetable, some dates have been communicated by the Chinese government. It plans to publish initial standards, in particular climate reporting standards, by 2027. The Chinese sustainability standards system as a whole is expected to be operational by 2030.

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How compatible is the Chinese approach with international standards?

The CSDS project is largely inspired by international ESG reporting standards. It notably shows strong convergence with the standards of the ISSB (International Sustainability Standards Board) initiative. The base standard directly cites IFRS-S1 in its communication. It states that CSDS guidelines are broadly aligned with its general disclosure requirements. However, the draft Chinese ESG reporting standards diverge from the ISSB on one major point: materiality analysis.

Indeed, CSDS adopts a double materiality approach, similar to the ESRS under the CSRD. The draft also plans to cover numerous topics associated with the 3 major ESG themes. There is currently talk of 12 sustainability themes, which could be covered by dedicated standards. The 5 environmental topics and the governance topic communicated so far directly correspond to the ESRS thematic standards currently in force. The 6 social themes appear to broadly cover the ESRS S standards, but also address topics such as rural revitalisation and social contribution.

We can therefore expect relatively strong interoperability between Chinese sustainability standards, the ESRS and IFRS-S (for climate reporting). Regarding the GRI (Global Reporting Initiative), the relationship could be similar to that maintained with the pre-Omnibus I ESRS. Producing CSDS reporting would thus 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 impact materiality into account.

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

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What impact for European multinationals?

The gradual application of the CSDS sustainability standards could have a strong impact on European multinational companies, depending on their activities.

Direct ESG reporting for Chinese subsidiaries

First of all, companies with subsidiaries in China are directly affected. Within a few years, these subsidiaries will need to carry out mandatory ESG reporting based on Chinese standards. Unlike the CSRD, the CSDS draft currently appears to exclude group-level consolidated disclosures. However, Chinese subsidiaries are likely to need certain data from their European groups in order to produce their sustainability disclosures.

Indirect compliance to access the Chinese market

Beijing's sustainability disclosure standards are also likely to affect companies with Chinese clients or suppliers. Through a trickle-down effect, companies subject to the requirements could ask their international partners for a certain amount of ESG information. In this context, adapting data collection and voluntarily complying with Chinese standards would offer a significant competitive advantage.

Leveraging ESG reporting experience to ensure a well-managed transition

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

More broadly, European companies can make use of other regulatory or voluntary reporting frameworks. Data collected via CDP questionnaires, for example, is a valuable resource for carbon- and environment-related sustainability indicators.

An ambitious project with some limitations

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

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

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Conclusion

The announcement of the CSDS project sent shockwaves through the world of ESG reporting. While the United States adopts an openly climate-sceptic stance and the EU scales back its ambition on the CSRD, China is moving against the tide. 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 need to wait for the various thematic standards and associated sustainability indicators to be published before drawing any initial conclusions. Nevertheless, the CSDS project represents a giant step towards a common global language for sustainability. Need support with your non-financial reporting strategy? Rely on Tennaxia's CSR consulting and strategic support.

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Sources:

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

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