The Path to Sustainable Development of Companies under Dual Carbon Targets
Published in UN-PRME Youth Forum, 2023
Introduction:
Xiyuan Zhou, an undergraduate student from The Chinese University of Hong Kong, Shenzhen, delivered a speech on the path towards sustainable development of enterprises under the Dual Carbon Goals. Zhou emphasized the significance of the Sustainable Development Goals (SDGs) adopted by the United Nations in 2015, particularly in response to climate change. She highlighted that the Paris Agreement is the most widely used measure to address climate change, aiming to keep the global temperature rise below 2 degrees Celsius compared to pre-industrial levels.
As the world’s largest greenhouse gas emitter, China has taken proactive measures to address climate change, including the adoption of the dual-carbon targets proposed by the Chinese President in 2020, which aim to achieve carbon peak by 2030 and carbon neutrality by 2060. This target sets requirements on the carbon emissions of enterprises, necessitating them to incorporate the control of carbon emissions into their development strategies. This presents a crucial opportunity for enterprises to achieve sustainable development.
Zhou emphasized the background of ESG reporting, which is the primary medium of carbon disclosure. In recent years, ESG disclosure in China has undergone significant policy changes, shifting from voluntary to mandatory disclosure. However, regulatory authorities still lead ESG disclosure in China, and there is a lack of unified guidance, leading to challenges in achieving consistent and accurate reporting.
Through her research, Zhou analyzed ESG and carbon disclosure in China, focusing on reports from the official websites of the Shenzhen Stock Exchange and the Shanghai Stock Exchange. She crawled the ESG report from the official website and used AI technology, such as NLP, to analyze the report. She found that the coverage rates of enterprise ESG and carbon reporting have shown a clear upward trend in recent years, with the financial industry and high-carbon industries having higher disclosure rates. This indicates a growing awareness and commitment to sustainability and carbon reduction efforts in China.
Zhou’s analysis showed that carbon information disclosure significantly improves the financial performance of high-carbon companies after the dual-carbon policy was proposed, indicating that the financial market has provided economic incentives for companies to disclose carbon information. Therefore, enterprises should prioritize the implementation of carbon information disclosure to achieve sustainable development.
Zhou believes that improving the quality of carbon disclosure is critical to achieving sustainable development. She presented her team’s 2022 analysis report on the carbon ranking of Chinese overseas listed companies, showing that companies with good carbon scores had better resilience during economic downturns, and investment portfolios based on stocks with higher carbon rankings had higher stock returns, indicating their stronger competitiveness.
In conclusion, Zhou emphasized the importance of accelerating carbon information disclosure and improving disclosure quality, while strengthening legislation and supervision to ensure that environmental data is correctly and timely disclosed to the public. These are essential steps towards sustainable development, and all stakeholders should play their part in achieving these goals. As we move towards a carbon-neutral future, enterprises must recognize their role in driving sustainability efforts and prioritize the implementation of effective carbon reduction strategies.