2025.06.19 ZHU, He (George)、NI, Tianling (Carey Nee)、Cui Xiao
In recent years, laws and regulations on Environmental, Social and Governance (ESG) have been enacted at the European Union (EU) level, including but not limited to the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD), and the Ecodesign for Sustainable Products Regulation (ESPR). In China, several mandatory and voluntary disclosure rules have also been introduced, especially for listed companies. The enforcement of these new laws, regulations and rules is gaining attention. Discussions have focused on whether these rules impose excessive burdens and how they may be simplified or clarified to achieve a balance between ESG/sustainability standards and economic development. In the U.S., however, the future direction of ESG/sustainability is clouded by uncertainty due to the return of the Trump administration. In any case, 2024 was an historic year for the burgeoning of ESG rules globally, transitioning from theoretical discussion to practical implementation (as evidenced by the variety of ESG/sustainability issues that our ESG team has assisted with during the year). Here we have highlighted some important topics that Chinese companies should pay attention to in 2025.
1. Chinese Companies Going Global/Exporting are Becoming Overwhelmed by the Number of EU Sustainability Regulations on Supply Chain Management
2. Mandatory Disclosure Requirements for Listed Companies are Becoming Increasingly Stringent, Following the Release of the Exchanges’ Sustainability Disclosure Rules
3. Global Regulators Accelerate the Adoption of ISSB Standards, While China Establishes a Unified Sustainability Disclosure Guidelines System
4. Regulation of Traditional Environmental Issues is Increasingly Stringent, and the Standards for Environmental Compliance are Constantly Evolving
5. Further Restrictions on Plastics – A Fact that Cannot be Underestimated
6. Further Restrictions on Forest Products – A Topic That Companies Need to Focus on in The Future
7. Concerns are Increasing around Climate Risks, and Expectations are Increasing for Companies to Manage and Disclose Carbon Reduction Targets and Plans
8. Concerns are Growing about Biodiversity and Expectations are Increasing for the Impact of Corporate Management and Disclosure on Natural Capital
9. ESG Initiatives May Have Compliance Risks, and Companies Need to Assess and Review These to Update Their Compliance Management Systems
10. ESG Challenges for AI Await Legislation and Regulation
1. Chinese Companies Going Global/Exporting are Becoming Overwhelmed by EU Sustainability Regulations on Supply Chain Management.
The CSDDD was issued by the EU and came into effect in 2024. It requires large enterprises to adopt sustainable and responsible business practices in their operations and global supply chains. The CSDDD also applies to non-EU companies of certain business scales engaging within the EU. Other EU ESG-related regulations that are already in effect (such as the Corporate Sustainability Reporting Directive (CSRD), which aims to enhance corporate transparency by requiring companies to disclose their sustainability performance), will be implemented in phases. As required by the CSRD, the earliest group of companies were originally scheduled to start publishing reports in 2025, disclosing their qualitative and quantitative ESG information. This will be extended to global supply chains, largely affecting Chinese companies exporting to the EU and not just those with direct investments in the region.
As part of the Omnibus I package, issued in February 2025, the EU introduced an initiative aimed at streamlining and integrating the CSRD, the CSDDD, and the EU Taxonomy into a comprehensive regulatory framework. This aimed to reduce overlap and conflict between regulations, as well as the reporting costs and management burdens. In April 2025, the European Parliament adopted the “stop-the-clock” directive, which postponed the implementation of both the CSRD and the CSDDD. We have observed that some export companies are facing requests from their EU clients to submit ESG/sustainability disclosure reports or declarations within a few days. If these companies have previously done little in this area and lack professional support, they may feel unprepared and overwhelmed.
2. Mandatory Disclosure Requirements for Listed Companies are Increasingly Stringent, Following the Release of the Exchanges’ Sustainability Disclosure Rules
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Key Notes: We recommend that enterprises which have business relationships with EU entities or have established companies in the EU pay close attention to the EU regulations and official guidance related to supply chain sustainability. They should promptly build up their ESG management and disclosure system, as well as those covering their supply chains.
Due to constraints in length, this article highlights only the first topic and provides general key notes. Interested companies are welcome to contact us at ecoenvpro@junhe.com for the full report in Chinese and English.
We are closely monitoring and tracking ESG regulations at both domestic and international levels, maintaining close collaboration with relevant institutions, and are able to provide comprehensive services to Chinese companies going global or engaging in exports.
If you require assistance in identifying compliance obligations for ESG regulations in China and overseas (such as the EU region), establishing an ESG management system, conducting ESG due diligence for companies or supply chain, disclosing ESG information, tracking ESG regulations, or carrying out training, please feel free to contact us via email at ecoenvpro@junhe.com.
Many thanks to team member Jiayi Ren and Min Qian for their support with the translation.
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