Executive Summary
Governments around the world are now promoting low-carbon activity through a range of
policies and regulations aimed at encouraging economic development whilst reducing
emissions of greenhouse gases (GHG) including carbon dioxide (CO2). Growing public
awareness in many of the same countries is fueling momentum for clearer action to mitigate
climate change. The emerging policy frameworks will increasingly influence business activities
through a range of fiscal and other mechanisms. China’s 12th Five Year Plan for National
Economic & Social Development sets specific targets for national efforts to reduce CO2
emissions relative to economic growth. It aims for energy consumption per unit of GDP to be
reduced by 16% and carbon dioxide (CO2) emissions per unit GDP by 17% by 2015 relative to
2010 levels. These targets mean that going forward the government will be placing greater
significance on corporate CO2 emissions when assessing company performance.
To succeed in this low-carbon transition, corporations will need to respond more rapidly and
proactively to emerging opportunities and risks, moving to set their own low-carbon strategies
in the context of the longer-term developing plan.
This ‘Guideline for Chinese Corporate Carbon Strategy’ has been prepared by The Climate
Group to summarize approaches companies in China can take to setting effective low-carbon
strategies, drawing on or analysis of experiences from pioneering corporations around the
world. It aims to build awareness of and support for low-carbon development modes for
Chinese corporations, including both general guidance and specific recommendations for
three critical industries: power, finance and supply chain manufacturing.
The contents of the Guide fall under six topics described in the remainder of this summary.
1.
Risk & Opportunity Analysis
As with any transition, the development of a low-carbon economy brings both risks and
opportunities to companies. Risks come from legal, regulatory and policy changes, increased
market uncertainty, disruptions to resource and energy supplies, phase-in and phase-out of
technologies, and changes to the business environment in supply chains. Opportunities also
arise from the same policy changes and new markets, as well as from the business innovation,
enhanced competitiveness and improved brand image that responding to these changes can
encourage. Incorporating climate change into the corporate decision-making process going
forward can identify opportunities to mitigate risk, reduce energy consumption and CO2
emissions, enhance resource efficiency, build acceptance from consumers and the market,
strengthen competitiveness at home and abroad, grow profits and enhance sustainability.
2.
Developing & Implementing a Low Carbon Strategy
To build a fuller understanding of risks and opportunities, an important first step is for
corporations to assess and verify their own greenhouse gas (GHG) emissions to create an
emissions inventory, an emissions reference level for ‘business as usual’ and a target for
reducing GHG emissions against this reference.
Assessing GHG emissions usually requires measurement of six primary greenhouse gases
(including CO2 and methane) at an organizational level and/or at the product level. Useful
measurement tools for this process include the GHG Protocol developed by World Resources
Institute (WRI) and the World Business Council for Sustainable Development (WBCSD); the
ISO 14064 standard developed by International Standards Organization (ISO); and the PAS
2050:2008 ‘Specification for the Assessment of the Life Cycle Greenhouse Gas Emissions of
Goods and Services’ developed by the British Standards Institution (BSI). Implementation
steps for these tools are introduced in this Guide, and corporations are encouraged to choose
the appropriate tool based on their situations.
Whilst the measurement process is only a start, it enables the ultimate goal of managing and
reducing GHG emissions. The next step is for companies to identify effective strategies for
emissions management and reduction. This Guide provides detailed information on emissions
reduction strategies, including emissions reduction through structural change, green public
facilities, using clean technology, management improvement and market tools.
3.
Capacity Building for Implementation
Delivering against a low carbon strategy will require companies to drive transformations in
relevant institutional structures, policies and management systems. Building general capacity
to do this is therefore an important element of leading companies’ plans. In particular, building
executive team awareness and understanding of the key issues is central to success. Clear
leadership from the executive team is essential for the successful implementation of
low-carbon strategy. The Guide recommends that companies establish a low-carbon working
group with active participation of key executives. Working group responsibilities should include
developing strategy, oversight and monitoring of progress against the plan, ensuring effective
corporate and public communications, and incorporating carbon into existing management
and assessment systems. In addition, corporations should ensure appropriate staff training
and education systems are in place.
A GHG emissions data collection and administration system should serve as the basis for the
strategy and is the key to the smooth implementation of strategy. This system should include
data demands, data sources identification, data collection responsibility clarification, data
quality control and other sub-systems.
4.
Tracking Progress, Co-operation and Communication
To minimize the investment required in emissions control, corporations need to track the
implementing process and assess the effectiveness and outcomes. Public disclosure of
emissions control efforts can help to inform stakeholders of corporations’ efforts and to
improve their public reputation. Some corporations pioneering low-carbon development have
realized the business value in CO2 emissions measurement, disclosure and management.
These processes are particularly important for corporations competing in international markets
and preparing for future regulatory requirements. More and more consumers and investors are
expecting corporations to adopt strategy to address climate change. Corporations looking to
succeed in the developing low carbon economy should therefore begin developing low-carbon
strategies early.
We recommend that leading companies also seek to participate proactively in the
policymaking process at national and regional levels. Those demonstrating progress and
learning from their own low carbon strategies can play a key role in supporting effective policy
development and can also build their reputation through this process.
5.
Securing finance
Securing finance is a critical element in delivery against a low-carbon strategy. Effective
financing tools will also improve risk control and general corporate performance. This Guide
outlines potential financing channels including bank credit, supply chain financing, energy
performance contracting, and revenues from Clean Development Mechanism (CDM) and
future cap-and-trade schemes. In our guidelines for the financial sector, we introduce and
analyze progress by domestic and foreign financial institutions in lending to low-carbon
projects and developing low-carbon financial products.
6.
Advices for Policymakers
In the past few years of close cooperation and communication with Chinese corporations, The
Climate Group has identified two primary obstacles to companies’ implementation of
low-carbon strategies: lack of financing and inadequacy of policy incentives. We hereby
suggest that the national and regional governments issue further financial, fiscal, tax and
energy measurement policies to incentivize corporations to save energy and reduce emissions.
Our suggestions include: promotion of correlated and market-oriented pricing mechanisms for
coal and electricity; assisting financial institutions to identify candidate projects for priority
financing and to develop innovative assurance approaches for energy-saving funds; and
establishment of independent third-party verification for measuring energy savings. Regional
governments have more influence on suppliers because of their relatively small size. So the
energy saving and climate change policy on regional level should made to be instructional and
stimulant rather than to be general and sketchy.
Going forward The Climate Group will continue to select and work with leading corporations
and governments on energy efficiency and emissions reduction to explore the most effective
models for operating low carbon projects. Whilst advancing programmes to reduce corporate
carbon emissions in China, we also will continue to advise on low carbon policymaking for the
central and regional governments.