Norges Bank Investment Management (NBIM) has told China’s stockmarket regulator that proposals for new rules on listed companies’ public reporting – while welcome – should go further, particularly regarding ESG disclosures.
In its response to the China Securities Regulatory Commission (CSRC)’s consultation on draft revisions to the standards of corporate disclosure in annual reports and semi-annual reports, NBIM said: “We welcome the CSRC’s efforts to enhance companies’ disclosures on environmental and social matters.”
But it added: “We believe that companies would benefit from more detailed guidance.”
Such guidance could refer to recognised international frameworks, NBIM said, such as the Task Force on Climate-related Financial Disclosures and the Sustainability Accounting Standards Board.
The Government Pension Fund Global (GFPG) – the NOK11.4trn (€1.1trn) Norwegian sovereign wealth fund that NBIM manages – had around $5bn (€4.1bn) in equities in China as well as some $1.8bn in fixed income in the country at the end of 2020, according to the central bank arm.
NBIM said the CSRC could also consider introducing a core set of disclosure requirements, which it said would help improve the quality and comparability of information put out.
“For sustainability information to support investment decisions, risk management processes and ownership activities across a diversified portfolio, it must be consistent and comparable across companies and over time,” the SWF manager said in the letter, signed by NBIM Chief Governance and Compliance Officer Carine Smith Ihenacho and Severine Neervoort, senior analyst, corporate governance.
The women said they welcomed the CSRC’s efforts to enhance company reporting, as well as its introduction of more detailed corporate disclosure on how boards and committees performed their duties, and the steps the authority had taken to bolster shareholder protection.
But they advocated making Chinese listed firms publish complete English versions of all reports and disclosures alongside those in the local language, in order “to further protect shareholder rights and provide equal access to information to both international and local investors”.
Changes the CSRC has been consulting on include a requirement for Chinese listed companies to gather all provisions relating to environmental and social responsibility into one dedicated section in their annual and semi-annual reports – in order to highlight the importance of this topic, according to a blog by law firm Mayer Brown.
Firms will also be required to disclose administrative penalties relating to environmental issues received during the reporting period, as well as being encouraged to voluntarily disclose measures taken to cut carbon emissions and their effect, as well as their work on alleviating poverty and revitalising rural areas, Mayer Brown wrote.
The CSRC consultation, which was published only in Chinese, closed for comments on 7 June.