Pathway to neutrality for corporates in China

Updated: Apr 28, 2021

Executive Summary

On September 22, 2020, the Chinese government has pledged to reach carbon emission peak by 2030 and reach carbon neutrality by 2060. To align with the "30·60" Goals, the government has since issued serious sustainability-related regulation and compliance, and more is yet to come. And if you are marketing or any of your products have an association in regions like the EU, legislations in sustainable disclosures may apply. More transparency and tighter emission control are expecting to come next.

In a previous article, we wrote about the Opportunities and Challenges of Carbon Finance in China, and as the carbon market start to grow, we are focusing on how corporates could benefit from it and start their neutrality strategies.

For corporate entities that do not fall in the Key pollutant-discharging entities list. According to China’s Interim Rules for Carbon Emissions Trading Management that came into effect on February 1, 2021, key pollutant-discharging entities are enterprises in specific industries with annual emissions of at least 26,000 tons. These enterprises are allocated with a certain emission allowance and being required to report on their emission details each year and being reviewed in March. In the country's 14th Five-Year Plan, key pollutant-discharging entities have expanded from the power generation sector to possibly sectors like steel and cement, with more to join the trading market. It is time to get ready for your neutrality strategy. Before setting up your climate neutrality plan, you need to first learn more about what is climate neutrality.

In addition, to follow regulation alignments, business leaders can share their insights and experience to inform policy and regulation; they can also shape public expectations on how sustainable growth can be advanced, said CISL.

GC Insights understands the importance of upholding the MRV (Measuring Reporting and Verification) framework. We are here to help you leverage the process to serve your priorities to build a sustainable business model and gain sustainable growth at the same time.

The first step to moving forward is to understand the Legal Requirements and Opportunities & Risks associated with reaching carbon neutrality to know what to prioritise with your resources at hand.

And the next starting point is, of course, knowing what you are dealing with in particular, what the targets are and what they mean for your organization. Once that’s been clear out, do your GHG inventory accordingly then identify and analyse possible opportunities and risks in your portfolio. Finally, learn some of the available options for your mitigation strategy in China. Lastly, review and get assurance with your audit results constantly to keep on track with your neutrality ambitions. Eric Usher from the UNEP FI suggests organizations make sure the selected targets and actions are science-based; consistently aggregated and tracked; growing transparency to ensure the integrity of the organization. The MRV (Measuring Reporting and Verification) framework should be upheld.

However, the legal requirement is only one transition risk to a low-carbon economy, companies should get comfortable with their carbon management from top to bottom through value chains for climate mitigation. It is time to evaluate your current position and start catching up.

The "30/60" Goals to carbon neutrality is undergoing as the 14th Five-Year Plan started; what's next for enterprises?

Here is a short guide to carbon neutrality:

What is Carbon Neutrality?

Whether you are using ‘carbon-neutral’, ‘net-zero’, or ‘climate neutral’ in your goal, they all reflect the same intent to reduce or eliminate your organisation’s impact on the climate system. And it is important to consider what materiality in your relevant sectors. In most cases, these terms are and can be used interchangeably, but there are differences in how they are defined and what they are taken to mean in terms of how goals are to be achieved. According to the IPCC Special Report: Global Warming of 1.5°C & SBTi, CDP, the definitions are as follows:​

(Written by Yitong Yuan)

To read the full report, please click here!

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