In his welcome remarks, Tom Delay, Chief Executive at the Carbon Trust highlighted that "achieving carbon neutrality is no easy task, but the challenges also present opportunities," adding that green finance will play a growing role in China’s transition.
New challenges for decarbonisation
Chai Qimin, Director of Strategic Planning at NCCS, emphasised the scientific urgency of decarbonisation. The climate challenge has "transformed from an intergenerational sustainability issue to an immediate crisis, leaving us with very limited space for carbon emissions," he argued. Climate governance is a global issue with far-reaching implications across political, economic and non-traditional security spheres. “[Climate change] is a matter of energy, industry, economy, trade, finance, science and technology and other development issues," he added.
Large companies are responding to the pressure to tackle their supply chain emissions as they seek to become carbon neutral. In China alone, more than 800 large companies have set carbon neutrality by 2050 targets – some even aim to reach this by 2030. Especially across ICT, textile and manufacturing sectors, businesses seek to reach carbon neutrality ahead of national climate targets.
"Energy transition investment and financing, climate finance products and the financial value of carbon markets, are all becoming compelling forces. Institutional investors are deeply involved in international carbon finance as they diversify," Chai explained, outlining some of the new developments in China’s move towards Net Zero. These include innovative initiatives around carbon efficiency benchmarking, ESG investing and carbon disclosures for financial institutions, listed companies, bond issuers and other market players. As organisations begin to decarbonise, the market infrastructure is also gradually extending.
CDP China's Corporate Cooperation and Supply Chain Programme Director, Gui Xuan highlighted that the company’s questionnaire, which reached more than 2,700 businesses, revealed that measuring and managing supply chain emissions is no longer nice-to-have, but is becoming a competitive advantage for multinational brands.
Decarbonisation in practice
During the event, business representatives across sectors such as manufacturing, energy, packaging and financial services shared some of their own experiences and challenges.
Wang Yutian, Head of Sustainability at Sino-Ocean Group, explained how a full value chain emissions assessment showed that the Group’s Scope 3 emissions far exceeded Scope 1 and 2, thus requiring climate action across its full value chain. This is where she said the responsibility, difficulty and pressure of decarbonisation lies for companies.
Working with suppliers to reduce supply chain emissions
When Foxconn, an electronics manufacturing giant, measured its corporate emissions, for example, it soon realised the significance of its supply chain on Foxconn’s footprint. Supply chain emissions account for 70%, of Foxconn’s footprint, which makes engaging suppliers as part of the company’s climate strategy all the more critical.
Providing suppliers with technical support to reduce their emissions and become more sustainable is extremely important, according to Hong Rongcong, Chief Environmental Officer and Vice General Manager, at Foxconn. Following the company’s Scope 3 assessment, Foxconn selected ten suppliers to encourage and support them in their carbon reduction efforts. “The results have been promising, some suppliers have achieved a 10-20% reduction in emissions in a year,” he explained.
Longi Green Energy, the Chinese listed company and supplier of solar PV solutions, measured the amount of renewable energy production corresponding to all PV products listed since 2012. The manufacturer joined international initiatives such as RE100 and the Science Based Targets initiative (SBTi) to manage its own production energy use, explained Wang Zifu, Sustainability Manager at Longi Green Energy. This led to new investments into green technology.
Innovating product ranges
By switching to plant-based plastics, Tetra Pak has effectively reduced the carbon footprint of its food packaging products. Nie Yanpeng, Sustainable Transformation Manager at Tetra Pak China, shared the greenhouse gas emission distribution map of Tetra Pak's whole value chain in 2021, demonstrating a steady pace of progress in its carbon reduction efforts.
Wang Xuetong, Product Planning Manager at BOE, said that carbon emission reduction strategies should be clearly developed on a step-by-step basis. “They must include all aspects of the product life cycle, such as design, production and transportation,” he added.
Certifying carbon footprints
Demonstrating carbon footprints that are in line with international standards, and transparent communication also play a big role. As part of GP battery involvement in Amazon ’s Climate Pledge Friendly initiative, the company worked with the Carbon Trust to get its product footprints certified.
The power of finance in the decarbonisation process
Decarbonisation in the financial sector is becoming a hot topic, as financial institutions will play a key role in the route to Net Zero. Ms. Su Ting, Researcher for the Sustainable Investment Programme of the World Resources Institute (WRI), presented the latest progress of the ‘Net Zero Target Setting Standard for Financial Institutions’, which will launch by the end of 2023.
Lin Yuan, Senior Institutional Carbon Management Specialist at Asian Infrastructure Investment Bank (AIIB), presented its goal of achieving 50% of its climate investment and financing by 2025. Lin Yuan pointed out that a “clear, credible and traceable carbon footprint is a top priority, requiring both emission reduction and data management.”
In April 2021, Bank of Jiangsu released the first carbon neutral action plan for financial services of Chinese commercial banks. It promises to allocate at least 200 billion Chinese yuan for climate investment and financing the 14th Five-Year Plan period. At least 50 billion Chinese yuan will be allocated to support the clean energy industry and the goal to reduce carbon emissions through financial services, during the same period. The aim is to cut at least 10 million tonnes of carbon emissions through financial services. Dong Shanning, Deputy General Manager of the Green Finance Department of Bank of Jiangsu, said that this target is a 34-fold increase in the amount of climate investment and financing. It is also ten times the carbon emission reduction promoted by credit and lending.
As a representative of primary market investment institutions, Zuo Lin, a Partner at Sequoia Envision Carbon Neutral Fund, shared the value of decarbonisation to investors. "It has become a social consensus that electricity is more economical than oil, taking climate costs into consideration. Replacing fossil energy is creating a positive social value."
To achieve carbon neutrality, businesses and financial institutions need more technical support in setting their climate targets and creating and implementing these decarbonisation strategies, argued Zhao Lijian.
