Investors and other stakeholders have praised China’s updated National Biodiversity Strategy and Action Plan (NBSAP), which includes a proposal to establish a corporate biodiversity disclosure framework.
A translated version of the document seen by Responsible Investor sets out plans to “promote” the inclusion of biodiversity-related information in China’s legally mandated environmental disclosures and more broadly in ESG and sustainability reports. It also suggests establishing a “framework” for corporate biodiversity information disclosure.
Outlining what such disclosures could entail, the document says “select representative industry enterprises” should identify the impact of their relevant operations on biodiversity, and regularly monitor, assess and disclose their biodiversity risks, dependencies and impacts.
Investors and other stakeholders have welcomed this, saying it appears that China is mulling its own version of the Taskforce on Nature-related Financial Disclosures (TNFD).
Last week, the TNFD revealed details of 320 organisations that have signalled their intention to start adopting its recommendations and publishing TNFD-aligned disclosures as part of their annual corporate reporting.
Of the 320, only two – Restone Capital and Shanghai Xintonglian Packing Co – are headquartered in China.
Karine Hirn, chief sustainability officer of East Capital, notes the “interesting timing” of the NBSAP being published in the same week as the TNFD announced its “early adopters”.
“These global initiatives tend often not to be popular in China because the Chinese – often rightly so – consider them as not reflecting their reality and issues,” she says.
“At the same time, considering the number of Chinese companies targeted by Nature Action 100, clearly we know that there is a lot of work to be done in China. So, getting such strong positive signals from the highest level of decision-makers is very good.”
Nine Chinese firms – including Alibaba Group Holding, Zijin Mining Group Co and Inner Mongolia Yili Industrial Group – are on Nature Action 100’s list. The collaborative engagement initiative expects its target companies to assess and publicly disclose nature-related information.
For Nana Li, head of sustainability and stewardship for Asia Pacific at Impax Asset Management, the announcement is part of China’s national strategy to become more self-reliant when it comes to sustainable finance.
“One of the phrases I keep hearing when I have meetings in China is the approach to set standards with ‘Chinese characteristics’, so this is aligned with that idea. A Chinese version of the TNFD may have some of its own metrics, which is appropriate given how large and complex China is as an economy.”
At the same time, she says some “may be wary that China may stray from international standards and slow down its own development this way”.
Fidelity International’s head of stewardship in Asia, Flora Wang, also welcomes China’s disclosure framework proposal.
“Nature is a complex topic that often has a set of localised challenges and opportunities. We believe any additional guidance to help companies navigate the topic are positive at this stage, and localised recommendations can be consistent with global frameworks,” she tells RI.
Responding more broadly to the NBSAP, Li at Impax notes that Chinese leadership has in recent years emphasised that “green mountains and clear waters are invaluable assets”. She says: “This proactive approach is consistent with this belief.”
She adds that the action plan is a natural extension of existing policies and issued at a good time to take advantage of the momentum around biodiversity.
Alongside details on corporate disclosures, the document says financial institutions will be encouraged to incorporate biodiversity considerations into project investment and financing decisions.
Other priorities include exploring the construction of a biodiversity impact index for “key industries”, as well as establishing a multi-stakeholder industrial and commercial biodiversity protection alliance.
The document also covers financing mechanisms, including a suggestion that biodiversity protection could be incorporated into China’s green bond standard.
Moving forward, Li says the strategy and related implementation guidance – which will be issued by the relevant regulators – “will have positive influence on our engagements with Chinese companies”.
“Many Asian companies don’t consider biodiversity issues at this time, but I believe a national strategy sets the tone at the top that will help to raise the awareness of many serious issues,” she says.
Wang noted that leading companies in China are beginning to incorporate nature into overall ESG strategies, for example by adopting deforestation-free policies. The initiatives outlined in the NBSAP should encourage more business to follow suit, she adds.
Guo Peiyuan, chair of SynTao Green Finance, says the NBSAP sends a great signal.
“The number of ESG reports – or similar names – is increasing in China. Last year, around one-third of listed companies published ESG reports. [Many cover] climate change as this is a very popular topic, but not many talk about biodiversity and nature capital.”