Everything You Need to Know About ESG in China

This year’s environmental, social, and governance space has been characterized by a focus on the ‘dual carbon’ goals, an emphasis on disclosure, and the insurance industry going green

In 2023, China’s environmental, social, and governance (ESG) policy and market has continued to develop quickly, with three notable characteristics. First, there has been a focus on China’s “dual carbon” goals of peaking carbon emissions by 2030 and achieving carbon neutrality by 2060. The second has been a strong emphasis on disclosure and product growth, the third has been the insurance industry accelerating its drive toward going green.

As with previous years’ policy reviews, this article posits that the development of China’s ESG market is inseparable from the growth of China’s green finance market. Therefore, it makes no distinction between ESG and green finance policies.

The ‘dual carbon’ goal

Shortly after China announced its “dual carbon” goals in 2020, the central bank proposed establishing a comprehensive green financial system to support carbon neutrality, signaling that the goals had become the core focus of green finance. In 2023, this remains the main theme of green finance policies, with significant efforts being made in green credit, green bonds and other areas.

One notable change in 2023 has been the increased attention to transition finance.

Last year, the central bank-led G20 Sustainable Finance Study Group introduced a framework for transition finance. This year, the G20 Sustainable Finance Study Group continues to prioritize transition finance. The central bank has also publicly stated that it has conducted research on transition finance standards in four sectors — steel, coal power, construction materials, and agriculture — with plans to publish once conditions are ripe.