China’s sustainable finance system is taking shape. In 2021, the People’s Bank of China (PBOC) proposed the “three functions” (resource allocation, risk management and market pricing) and “five pillars” (green finance standards system, financial institution supervision and information disclosure, incentive and constraint mechanisms, green finance products and market system, and international cooperation). It has since issued the “Guiding Opinions on Further Strengthening Financial Support for Green and Low-Carbon Development” in 2024, further clarifying the strategic role of the financial system in the green and low-carbon transition. Additionally, China continues to publish and update the “Green Industry Guidance Catalogue,” as well as principles, guidelines and standards in areas such as green credit, green bonds, green insurance and green investment. While these efforts have achieved comprehensive coverage of the five TNFD-defined drivers of nature change (see Figure 3), the emphasis on these topics varies significantly. Notably, climate change is the most frequently mentioned issue in China’s policy landscape, accounting for more than 60% of all nature-related keywords in the relevant policies.8 China has significantly accelerated policy development for midstream asset management institutions and downstream investee companies. For asset management institutions, PBOC issued the “Guidelines for Environmental Information Disclosure by Financial Institutions” in 2021, encouraging annual disclosures. For downstream investee companies, in 2024, China announced it would develop unified national sustainability standards by 2030, based on ISSB standards.14 Subsequently, the Shanghai, Shenzhen and Beijing stock exchanges (SSE, SZSE, BSE) simultaneously issued the “Sustainability Report Guidance for Listed Companies” in 2025, marking the first mandate of this nature, which applies to certain listed companies.15 With IFRS Foundation and TNFD committed to working together on enhancing nature-related financial disclosures for use by capital markets,16 these developments indicate that China will adopt unified disclosure standards for nature.1.1 Systematic framework, climate top concern 1.2 Disclosure policies and standards Despite the progress noted above, the policy framework for asset owners (such as insurance and pension funds) consists mainly of guidance, with no mandatory requirements yet.17 For example, the China Insurance Asset Management Association has issued the “ESG Responsible Investment Initiative for China’s Insurance Asset Management Industry” in 2025, which is voluntary.Overall, China’s sustainable finance policy system is advancing in segments, from infrastructure and regulatory requirements to market practices, gradually forming a systematic whole.1.3 Asset owners: Awareness through policy support 8

Nature Related Sustainable Finance in China 2025