After the once in a century worldwide pandemic, 2021 comes with many changes across the globe and many challenges in front of us – continuing to fight the coronavirus, scaling up vaccine distribution and production, adjusting to lifestyle shifts driven by consumer habits and workspace changes, embracing digital business growth enabled by technology.

The global ESG revolution led by the world’s top two largest economies will be in the spotlight of the business world. ESG regulatory reforms in both countries began during the pandemic and are emerging and accelerating in 2021 with the following highlights:

In the U.S.:

• In September 2020, World Economic Forum launched a new ESG reporting framework, Stakeholder Capitalism Metrics, with the support from World Economic Forum’s 120 members. Some top global companies plan to implement the metrics immediately. The new ESG reporting framework was jointly developed with Bank of America, and the Big 4 (Deloitte, EY, KPMG and PwC).
• In December 2020, Nasdaq proposed new listing rules with the SEC that promote inclusivity, requiring listed companies to diversify their boards and to disclose various board diversity statistics. Nasdaq’s board diversity proposal, in conjunction with similar rules, have been adopted in some states, and the proposal facilitates the demand for changes in corporate boardrooms. 
• In March 2021, the SEC made several announcements to confirm the SEC’s position on the upcoming ESG regulations and prioritize climate and ESG-related risks.

In China:

• In March 2020, Hong Kong Exchanges (HKEx) issued the Updated ESG reporting guidance effective July 1, 2020. The updated guidance put climate-related disclosure as a higher priority for listed companies in Hong Kong to align with recommendations from the leading international framework for climate-related disclosure, the Task Force on Climate-Related Financial Disclosures (TCFD). HKEx also requires new Initial Public Offering (IPO) ESG readiness.
• In December 2020, a new ESG Evaluation System “XinHua CN-ESG System” was jointly launched in December 2020 by Ping An Insurance Company of China, one of the largest financial service companies in the world, and Xinhua News Agency’s China Economic Information Service, one of the largest State-backed economic information service organizations. Based on guidelines from the MSCI ESG Ratings and Dow Jones Sustainability World Index, XinHua CN-ESG System will play an important role in bridging the gap between Chinese ESG reporting standards and international standards.
• China is likely to issue an ESG policy in late 2021 with tougher disclosure requirements.

The relationship between the U.S. and China switched from strategic partners to strategic competitors in the past decade. Competition in the coming ESG revolution might accelerate ESG integration in companies from both countries, which will likely stimulate ESG revolutions around the globe.