Report on Climate Information Disclosure by Chinese Enterprises
The International Carbon Disclosure Project (CDP) has released a report on climate information disclosure by Chinese enterprises, summarizing the disclosure of climate information by Chinese enterprises from four perspectives: governance, strategy, risk management, and indicators. It also provides guidance for enterprises to scientifically and systematically evaluate climate impacts and improve the level of climate governance.
Overview of Climate Information Disclosure
Last year, 18600 companies worldwide disclosed environmental information on CDP platforms, with 2723 Chinese companies, an increase of 43% compared to the previous year. Among them, 2580 companies submitted climate information according to customer requirements, and 368 companies independently filled in climate information.
Overall, global regulatory policies are requiring companies to disclose mandatory climate information, and the Chinese market is still in a situation where both mandatory and voluntary disclosure exist. CDP predicts that the disclosure of climate information by Chinese companies will continue to grow in the future.
Climate Information Disclosure Based on TCFD
CDP summarizes the climate information disclosure situation of Chinese enterprises based on the four key points of the TCFD framework (governance, strategy, risk management, and indicators), and the conclusions are as follows:
- Governance: 77% of companies have board level participation in climate governance, reflecting the importance that companies attach to climate change. In terms of incentive measures for managing climate issues, 45% of companies provide salary incentives, and 34% expect to establish similar mechanisms within the next two years;
- Strategy: Regarding climate related risks and opportunities, 31% of companies incorporate climate change into their corporate strategies, and 36% incorporate climate change into their financial assessments. 23% of companies have conducted qualitative or quantitative climate scenario analysis, and 49% have analyzed the impact of climate risk on finance. In terms of supply chain carbon reduction, 70% of enterprises have jointly participated with upstream and downstream of the supply chain, and 54% have included customers in climate governance actions;
- Risk management: 72% of enterprises have processes for identifying, evaluating, and managing climate risks. Among the climate risk categories identified by corporate identity, acute physical, regulation and market accounted for the highest proportion, with 36%, 30% and 30% respectively. While for long-term risks, such as long-term physical factors, reputation and technology, the proportion of corporate identity is low, with 19%, 12% and 11% respectively;
- Indicators: 68% of enterprises have set climate related targets, of which 59% have set carbon reduction targets and 10% have set net zero targets. In terms of carbon emissions disclosure, 75% of enterprises disclosed Scope 1 emissions, 58% disclosed Scope 2 emissions, and 16% disclosed Scope 3 emissions, all accounting for an increase in proportion. 66% of enterprises are taking active carbon reduction measures, such as improving energy efficiency in production (28%) and building energy efficiency (20%);
CDP Suggestions for Climate Information Disclosure
CDP believes that there is still room for improvement in the disclosure of climate information by Chinese companies in terms of Scope 3 emissions, internal carbon pricing, and net zero targets. The global disclosure ratio of Scope 3 is 36%, while China’s disclosure ratio is 16%. This can be explained by lack of consistent disclosure requirements and calculation methods for the Scope 3 data. Chinese enterprises can establish a carbon emission data collection mechanism to solve it.
In terms of internal carbon pricing, only 3% of enterprises use carbon prices, with 23% indicating that they will not establish a similar mechanism in the next two years. Internal carbon pricing is a carbon price used by enterprises to evaluate the financial impact of investment, production, and technological progress, and is an essential tool for low-carbon transformation of enterprises. CDP believes that Chinese companies can establish internal carbon pricing mechanisms to increase their enthusiasm for carbon reduction.
In terms of net zero targets, enterprises face challenges such as data collection, insufficient value chain emission reduction effects, and difficulties in obtaining low-carbon energy. CDP believes that this is a long-term project and the enterprise needs to continuously improve in the long-term development.
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