United StatesSustainability-related regulation has become increasingly contested in parts of the US and Europe. Political pushback, legal challenges and shifting priorities have slowed or complicated the implementation of climate and sustainability rules in several major markets. Not in China, though.
The world’s second-largest economy is not yet a global leader in sustainability outcomes. It remains the largest emitter of greenhouse gases (GHGs) and continues to face significant environmental and social challenges.1 However, China is advancing on two fronts: industrial and climate policy on the one hand, and sustainability regulation on the other.
China’s direction of travel matters for global investors. Its policy framework is supporting the development of companies operating at scale in clean technology markets, while improving sustainability disclosures are making it easier for investors to assess risks, engage with companies and identify opportunities.
Sustainability as an economic and geopolitical strategy
China’s sustainability agenda is rooted in economic and industrial policy. The government aims for GHG emissions to peak by 2030 and to achieve carbon neutrality by 2060. Updated Nationally Determined Contributions for 2035, which will cover all economic sectors and all GHGs, further strengthen visibility on its transition pathway.
These climate commitments sit within a broader policy framework aimed at reshaping the economy around what policymakers describe as ‘new quality productive forces’. This includes sustained support for low-carbon infrastructure and a deliberate strategy to capture global export opportunities in clean technologies.
Over the past decade, China has built scale and competitiveness across sectors such as solar and wind power, electric vehicles (EVs), batteries and grid infrastructure. Chinese companies now dominate several fast-growing global markets: CATL is the world’s largest EV battery manufacturer; China Longyuan is the largest wind power producer globally; and Chinese manufacturers, led by BYD, produced around 70% of EVs globally in 2024.2
These developments are not incidental. They are central to China’s long-term economic strategy and are reinforced in the recently released 15th Five-Year Plan.3
The Plan emphasises sustainable development, energy transition and technological innovation as core drivers of growth, alongside continued investment in strategic emerging industries such as advanced manufacturing and digital infrastructure. It also highlights newer priorities, including zero-carbon industrial parks, grid expansion, energy storage and the integration of variable renewable power.
In this context, sustainability is framed less as a political or values-led agenda and more as a source of productivity, competitiveness and technological leadership.
Building a comprehensive sustainability disclosure regime
Sustainability-related disclosures play a complementary role within this broader policy framework. While industrial policy and climate targets shape the direction of economic transformation, disclosure regimes help translate policy ambition into information that investors can use to allocate capital and engage with companies.
In 2024, China’s Ministry of Finance issued the Chinese Sustainability Disclosure Standards (CSDS), establishing a national framework for corporate sustainability reporting with phased implementation expected through to 2030.
The CSDS is structured around three components: a Basic Standard setting overarching principles and governance expectations; thematic standards covering environmental and social topics; and application guidance supporting implementation and data quality.
The framework is being introduced gradually. Initial requirements are expected to focus on large, listed companies and other public-interest entities, with its scope expanding over time as reporting systems and verification mechanisms develop. This phased approach reflects an effort to balance ambition with practicality, while building reporting capacity across the market.
For investors, the importance of CSDS lies in improving the availability of decision-useful data. More consistent disclosures support better assessment of transition risks, capital allocation and corporate strategy, while also strengthening investor engagement on issues such as transition planning, emissions reporting and governance.
China’s approach also stands out for its alignment with global standards. The CSDS has been designed to be broadly compatible with International Sustainability Standards Board (ISSB) standards, and its adoption of double materiality mirrors the EU’s Corporate Sustainability Reporting Directive (CSRD). At a time when regulatory fragmentation is increasing, this alignment may help reduce complexity for multinational companies and global investors.
Sources: China Ministry of Finance (CSDS roadmap, 2024); IFRS Foundation (ISSB IFRS S1/S2); European Commission (CSRD / ESRS timeline including omnibus revisions). Timeline indicative: implementation may vary by jurisdiction and issuer type.
What this means for investors
China’s sustainability trajectory reflects a combination of industrial policy, climate ambition and regulatory development that is highly consistent and increasingly distinct from trends in some other major markets.
Sustainability outcomes remain far from world-leading. Environmental externalities, including pollution, remain significant, and concerns have also been raised in relation to social issues within parts of its manufacturing system. However, the country is simultaneously emerging as a leading developer, manufacturer and exporter of technologies central to the global energy transition.
For investors, this creates opportunities. More consistent sustainability disclosures can improve visibility on how companies are managing transition risks, while the broader policy framework continues to support growth in sectors linked to clean technologies.
As disclosure standards mature, they should also strengthen the foundation for active engagement, enabling investors to encourage better governance, clearer transition strategies and more disciplined capital allocation.
1 European Commission, 2025: Emissions Database for Global Atmospheric Research
2 International Energy Agency, 2025: Trends in the electric car industry
BYD is the world’s largest EV manufacturer, based on number of vehicles sold in 2025 (Source: Bloomberg, January 2026)
CATL is the world’s largest EV battery manufacturer, based on market share in 2025 (Source: Bloomberg, January 2026)
China Longyuan is the world’s largest wind power producer, based on generation capacity (Source: Morningstar, November 2025)
3 15th Five-Year Plan (2026-2030), March 2026
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