Analysis on the Linkage Between ESG Disclosure and Audit Quality from the Perspective of Corporate Governance

Abstract

The disclosure of ESG information is gradually shifting from a voluntary practice to an institutional obligation. This has expanded the information border of organisations and has resulted in changes in the structure of corporate governance. In April 2024, the Shanghai, Shenzhen and North Stock Exchanges released Guidelines for Sustainable Development Reports of Listed Companies. In 2025, China Securities Regulatory Commission (CSRC) respectively updated the information disclosure and governance rules, which put sustainable development reports in the required disclosure scope. As of the end of 2025, 1,869 listed companies produced sustainability reports, representing 34.7% of all listed companies and over 70% of total market capitalisation. Of them, 67.3% had built governance structures and 44.0% had defined quantitative targets. In July 2025, the Chinese Institute of Certified Public Accountants released the draft of the "Guidelines for Sustainable Information Assurance" to create a regulatory basis for non-financial information assurance. From the perspective of corporate governance, the relationship between the two is an integrated governance loop, not a one-way flow of information, in three ways: optimising the information environment, changing the governance structure, and implanting the audit mechanism. Information disclosure minimises information asymmetry in audits. The assurance system creates a new layer of supervision for non-financial information assurance. They are mutually reinforcing and together offer an interactive system for governance through transparency and disclosure through auditing.