China is ramping up its climate ambition. In September 2020, Chinese President Xi Jinping announced that the nation will aim to peak CO2 emissions before 2030 and achieve carbon neutrality before 2060.
During December’s Climate Ambition Summit, President Xi reiterated the nation’s carbon-peaking commitment and presented specific plans and timelines for the emissions reduction goal.
China’s targets are bold, in line with the Paris Agreement. Not only do they set an early timeline for CO2 emissions peak, but also clearly map out an emissions path after peaking.
In addition, China’s net zero goal makes the global implementation roadmap of the Paris Agreement clear; the nation’s net zero goal will contribute largely to global emissions reduction. China is responsible for around 28% of global annual greenhouse gas (GHG) emissions, and, according to Climate Action Tracker, achieving China's carbon neutral target by 2060 alone could reduce global temperature rise by 0.2 to 0.3 degrees Celsius.
Corporate action holds the key - and leaders are paving the way
These targets cannot be met without ambitious climate action in the private sector.
Globally, 1,541 companies with total annual revenues of more than US$11.4 trillion (equivalent to more than 50% of the GDP in the U.S.) have committed to net-zero emissions targets, the annual GHG emission of which is estimated around 3.5 billion tons (higher than the total annual GHG emissions of India).
In the Greater China region, 37 companies are setting climate targets through the Science Based Target initiative (SBTi). Among them, 13 companies have submitted their targets, and four have committed to achieving net-zero emissions by 2050. 11 companies committed to 100% renewable electricity (through the RE100 initiative). All Chinese companies must now follow, setting ambitious targets and taking urgent action.
Supporting the net-zero vision makes business sense
Today’s corporate leaders know that climate action goes hand-in-hand with business success.
By joining the early movers setting ambitious targets, Chinese companies will be in a better position to access financial resources, with capital flow being redirected to align with China’s net-zero targets.
The government will increase its investments in climate action and sustainable development. Crucially, it will link green recovery stimulus packages with climate action and environmental sustainability, and promote support for green projects in public budgets and investments.
Many investors and procurement agencies have already specified high-standard climate strategy and policies. Globally, 515 investors with assets of US$106 trillion were evaluating climate risks through CDP data when making investment decisions. More than 150 procurement agencies with over $4 trillion in procurement are partnering with us to drive corporate transparency and action.
In China, CDP has established partnerships with Harvest Fund and other leading financial institutions. CDP's environment database also supports the development of most of the world's index products related to sustainable development.
The role of disclosure
Disclosure is the first step for Chinese companies to take climate action. Measuring and reporting on risks and impacts is vital to addressing them and making progress on targets.
In 2020, a record of over 9,600 companies with 50% of global market capitalization disclosed environmental data through CDP, of which around 1,400 companies are from China. Notably, 2 Chinese companies (Huawei Technologies Co., Ltd. and Lenovo Group) were named on CDP’s A List this year, and nine received an A- score. This demonstrates a growing awareness of the importance of environmental transparency and a willingness from Chinese business stakeholders to take climate risk seriously and improve climate performance.
In addition, most of the Chinese disclosing companies are suppliers. Given the key role of China in the world’s value chains, this is a positive signal for building long-term resilience in global operations, and for laying a foundation for a green recovery.
The future is net-zero – and the global economy is undergoing a transformation. With President Xi’s announced,we can expect China to play a critical role.
Companies must prepare for the transition – starting with disclosure - and seize the business opportunities available to those who lead the way to a carbon neutral future.
CDP stands ready to support Chinese companies in their journey from disclosure and insight, through to action and environmental leadership.