Chinese Regulator Published New ESG Rules on Investor Relations

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Key Changes on the content of communication between listed companies and investors

Chapter II Contents and Methods of Investor Relations Management

Article 7 The content of communication between listed companies and investors in investor relations management mainly includes:

(A) The company's development strategy;

(2) Disclosure on statutory information;

(3) The company's operation and management information;

(4) Information on the company's environment, society and governance (ESG);

(5) The company's cultural construction;

(6) The methods, channels and procedures for exercising the rights of shareholders;

(7) Information on the handling of investors' appeals;

(8) The risks and challenges that the company is facing or may face in the future;

(9) Other relevant information of the company.


New Rule on Key ESG issues

The new rules published on April 11, 2022 by the China Securities Regulatory Commission (CSRC) will take effect from May 15, 2022. Following its consultation paper published on February 5, 2021, the new rules on Investor Relations Management Guide for listed companies has taken emphasis on ESG contents and risk management as a part of the updated communication content. And further expands its requirements on diverse channels on delivery these key information to investors. However, progress on communicating key ESG commitment and performance to stakeholders are lacking.


Diverse Communication Channels with Specialists on the line

As previous studies have indicated that ESG concerns from investors are not answered adequately by companies. The new rules ask listed companies to set up investor contact channels, such as telephones, faxes and electronic mailboxes, etc., which should be tasked to provide answers to these key contents with special personnel who are familiar with the underlying issues and situations. To ensure that the lines are smooth during working hours, earnestly and friendly to provide feedback to investors effectively. Any changes to the communication line or address should be announced in a timely manner.


Key ESG issues for investors

This year’s AGM season could see investors push for more ESG-related resolutions. Although, the ESG issues for listed companies are not specified in the new rules, some reference to the “Guidelines for the Content and Format of Information Disclosure by Listed Companies (No. 2) - Content and Format of Annual Reports (Revised in 2021)” might be drawn:



Investors are not always informed in regards to the ESG issues of listed companies due to lack of information and unclear channels for addressing their ESG concerns. For the 2022 AGM season, both investors and listed companies are tasked to get ready to talk about their ESG performance and explain their specific ESG profiles and development.


Besides the ESG issues listed above suggested by the “Guidelines for the Content and Format of Information Disclosure by Listed Companies (No. 2) - Content and Format of Annual Reports (Revised in 2021)”, companies shall consider apply industry-specific ESG materiality that are highly correlated to their operation and management processes and watch out for ESG controversy that could disrupt businesses’ ESG performance, ratings and increase overall business risks. By disclosing the processes of identifying ESG matters and proactively manage ESG performance, companies are better prepared for AGM seasons and increase their accountability for their investors and stakeholders.


Investors shall hold these listed companies accountable when it comes to ESG matters, as money and reputation could be on the line if poor ESG management is left unattended. For example, the popular online ride-sharing app, DiDi was suspended in China over data protection by the country’s cyberspace regulator, Cyberspace Administration of China (CAC). The regulator has ordered smartphone app stores to stop offering Didi Global’s app after finding that the ride-hailing giant had illegally collected users’ personal data, a major ESG issue that is emerging to be one of the top ESG materiality concerns for tech companies. According to CNBC, Didi made its trading debut later in an IPO that valued the company at $67.5 billion, well down from the $100 billion it had hoped for, which potential investors had resisted. New development on the app is expecting to be addressed during its AGM season.


Furthermore, The Risk Talk

Again, the risk factors for listed companies to disclosure for investor relations management during AGM are not specified in this the rules, some reference to the “Guidelines for the Content and Format of Information Disclosure by Listed Companies (No. 2) - Content and Format of Annual Reports (Revised in 2021)” is available in somewhat greater details:


Article 26 The company shall have forward-looking projection on its future development. The company's future development strategy, the business plan for the next year and the risks that the company may face should be discussed and analysed, quantitative analysis is encouraged, mainly including but not limited to:

…(4) Potential risks. The company shall disclose risk factors that may adversely affect the realisation of the company's future development strategy and business objectives (such as policy risks, industry-specific risks, business model risks, business risks, operational risks, environmental protection risks, exchange rate risks, interest rate risks, technical risks, product price risks, raw material prices and supply risks, financial risks, single customer dependency risks, goodwill and other asset impairment risks, as well as due to equipment or technology upgrading, The resignation of core technical personnel, the loss of franchise rights, etc. have seriously affected the company's core competitiveness, etc.), the content of the disclosure should be sufficient, accurate and specific, and the impact of various risk factors on the company's current and future business performance should be analysed in a quantitative manner as much as possible, and the countermeasures that have been taken or are planned should be disclosed.

For new risk factors projected this year, the company shall analyse the reasons for their occurrence, the impact on the company, and the measures and effects that have been taken or are planned to be taken. If the analysis shows that the relevant trend of change has had, is or will have a significant impact on the company's financial condition and results of operations, the company should provide management with a basic judgment on the relevant changes and analyse the extent of the impact on the company as quantitatively as possible.


ESG and climate risk factors are often overlooked or underestimated in China, which is about to change. As extreme weather events, data security and other risks related to environmental, social and governance issues are among the largest threats now facing business. The CSRC’s new rules may lacks the explanation on risk contents in communication between listed companies and investors, ESG and climate risk factors are some of the undeniable risks that cannot afford to be overlooked if investors are looking for sustainable business development. As disrupted value chains, energy shortage, human trafficking, etc. dictates the topics of social controversies, ESG claims in topics like supply chain, corruption, market regulatory, safety production, financial regulatory, securities regulatory and environmental regulatory controversies are ranked some of the top ESG violations by Quantdata, an alternative data vendor in China.


Assets in power, steel and cement industries could be under stress from climate risks in China, shown in the first phase of stress test conducted by the People's Bank of China in 2021 assessing climate stress testing results for 23 national banks. According to The World Bank Group and the Asian Development Bank’s Climate Risk Country Profile for China, the projected temperature increases in China due to climate change is expected to be above the global average. The highest emission pathway (RCP8.5) projects an increase of average temperatures in China to rise by 2.5°C by the 2050s and 5.2°C by the 2090s. Increases in annual maximum and minimum temperatures are projected to be larger than the increase in average temperature, increasing the potential health, livelihood, and ecosystem risks of global warming. In addition, increased heat stress, compounded by the urban heat island effect, represents a major threat to human health, productivity levels, and energy demand in many of China’s megacities. The report suggests that Hazards such as droughts, floods, and heatwaves are all expected to increase in probability, and increased loss and damage will be difficult to avoid without significant adaptation efforts. Time to start talking about these critical climate risks and corporate actions to mitigation as AGM seasons approaches.


Below is a list of selected indicators [0~10] from the INFORM 2022 Index for Risk Management for China For the sub-categories of risk, where higher scores represent greater risks.


INFORM Country Risk Profiles - China 2022



China Securities Regulatory Commission (CSRC). 2022. [第29号公告]《上市公司投资者关系管理工作指引》.http://www.csrc.gov.cn/csrc/c101954/c2334702/content.shtml

China Securities Regulatory Commission (CSRC). 2021. 证监会发布修订后的上市公司年度报告和半年度报告格式准则. http://www.csrc.gov.cn/csrc/c100028/cb25156c4913f4c9ea6b658cad8011f17/content.shtml

CNBC. 2021. “Didi app suspended in China over data protection.” https://www.cnbc.com/2021/07/04/didi-app-suspended-in-china-over-data-protection.html

Climate Risk Country Profile: China (2021): The World Bank Group and the Asian Development Bank.

INFORM country risk profiles - China. 2022. https://drmkc.jrc.ec.europa.eu/inform-index/INFORM-Risk/Country-Risk-Profile