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CHINA FIRMS SEE FINANCIAL BENEFITS FROM CARBON FOOTPRINTING

Corporate sustainability is based on the idea that companies can best fulfill their social commitments by running their core business operations sustainably, not merely through charitable donations.Seven years ago, only 5 out of 100 top China-listed companies responded to the Carbon Disclosure Project's survey, but 45% replied in 2014. China director Li Rusong talks about the latest developments.

"There have been both behavioral and mindset changes especially from the banking and ICT sector. In particular, mobile phone companies are realizing carbon disclosure is a very good platform for them to be doing an exercise to improve energy efficiency, and save money. The policy push is there; companies have to comply with government regulations. The market incentives are also there. Consumers’ environmental awareness is awakening, though individual consumer power is limited. But collective power from multinationals as huge purchasers will play a big role. Institutional investors are increasingly looking at sustainability. Even with Chinese investors, we see a trend towards engaging in dialogue with their investees".

The most important factor behind this growing interest in corporate sustainability has been the investors, but there is a larger driving force, and that is the purchasing power of multinationals.

Despite progress, companies revealing their data are a minority. For that, it is important to convince the government that disclosure is useful for China’s competitiveness, and at the same time, to convince the companies that disclosure is useful for them too. Disclosure is in itself a competitiveness exercise; they get to know their strong and weak points, and their sector’s trends. It allows them to see their potential risks and identify innovation points. Of course, companies won’t deal with problems automatically; it’s still up to the company leadership’s determination to take this forward. But disclosure is a very good foundation for possible change.

Furthermore, if NGOs really want to solve problems, they should work with corporations, and a lot of Chinese NGOs are beginning to see this point, and they already started working with corporations in different ways.

Another project is Green Credit that is important in encouraging environmentally-friendly practices.

Currently, some pension funds, state-owned banks, ICBC, and China Construction Bank are all learning from their international peers who have pioneering programs. The People’s Bank of China and other state-owned banks have been cooperating with the British Embassy on green Credit initiatives for a few years. They have also researched into green credit policies in the EU and the U.S., even sending their staff there to learn.

Finally, it is necessary convincing government officials with a very practical approach, to reach out to them, to show a track record that shows will benefit companies and China, CDP has to prove that it is a trustworthy organization.

The main problem is that local governments may fail to implement central government’s environmental policies fully, because there is a gap between the awareness of central government and provincial governments. But provincial governments’ limitations are not due to a lack of drive to learn, but to tough realities. Sometimes, they just feel that revealing information could lead to an unknown situation. They are unsure about the utility of CDP’s data, and concerned it will jeopardize Chinese corporate secrets, or even their position.

 

The gLAWcal Team

POREEN project

(Source: China Dialogue)

Thursday, 5the February 2015