Recently, China's Ministry of Ecology and Environment (MOE), Ministry of Finance (MOF), People's Bank of China (PBOC), and State Administration of Financial Supervision (SAFS) jointly issued the Opinions on Promoting Voluntary Disclosure of Corporate Greenhouse Gas Information (hereinafter referred to as the “Opinions”), which aims to strengthen the main responsibility and willingness of corporations in controlling greenhouse gas emissions, enhance the ability of corporations to cope with climate risks and transparency, and improve the ecological and environmental governance system and the mechanism for green and low-carbon development.

The Opinions set out milestones: by 2027, the policy system and technical standards for voluntary disclosure of corporate GHG information will have been basically established, and the enthusiasm, quality and capacity of corporate disclosure will have been effectively enhanced. The exploration and demonstration of voluntary corporate GHG information disclosure in key industries and pioneer regions will be steadily promoted, and the application scenarios of disclosure information will be more abundant. By 2030, the general framework and technical standard system for voluntary disclosure of corporate GHG information will be further improved, the willingness, ability and quality of enterprises to disclose information will be significantly enhanced, and the disclosure information will be widely used, resulting in a voluntary disclosure model of GHG information that is on a par with the international standard, mutually recognized and serves the high-quality development of enterprises.

Constructing a “voluntary disclosure” system for the whole process

The Opinions put forward six major tasks to solve the difficulties in disclosure:

1. Build a supporting technical specification system for corporate GHG information disclosure.

Accelerate the construction of the national database of greenhouse gas emission factors, and improve the accounting methods and reporting guidelines for greenhouse gas emissions of enterprises in key industries. Improve and perfect the national unified sustainable disclosure guideline system, formulate relevant standards for product carbon footprint accounting and information disclosure, and guide and support enterprises to disclose product-level carbon emission information.

2. Enrich and expand the forms and channels of corporate greenhouse gas information disclosure.

Explore the establishment of a service platform for voluntary disclosure of corporate greenhouse gas information, and centrally display the content of voluntary disclosure of corporate greenhouse gas information. Support enterprises to prepare and publish annual reports on voluntary disclosure of GHG information, or publicly release GHG information in the form of sustainable development reports, environmental, social and corporate governance (ESG) reports, emission license implementation reports, annual reports of listed companies and social responsibility reports.

3. Enriching the application scenarios of corporate GHG information disclosure

Improve the authentication mechanism of enterprises' voluntary disclosure of GHG information, and provide solid data support for relevant application scenarios. Promote the application of enterprises' voluntary disclosure of greenhouse gas information in green consumption, green trade, green finance and other fields, and guide enterprises to proactively disclose greenhouse gas emission information. Encourage financial institutions to reasonably apply corporate greenhouse gas information and explore the development of related green financial products and services.

4. Guiding third-party organizations to participate in market-oriented services for enterprises' GHG information disclosure.

Guide third-party institutions to actively provide enterprises with market-oriented services related to GHG information disclosure, such as emission data accounting, key information verification, disclosure report verification, emission level evaluation, and investment and financing information docking.

5. Encourage enterprises to voluntarily disclose greenhouse gas information on an early and pilot basis.

Support pilot cities and parks for carbon peaking, low-carbon pilot provinces and cities, climate-adaptive cities, climate investment and financing, and collaborative innovation for pollution reduction and carbon reduction to explore the voluntary disclosure of GHG information, taking into account the local actual situation and the arrangements for addressing climate change.

6. Strengthen international cooperation on corporate greenhouse gas information disclosure.

Strengthen collaborative research and convergence of technical specifications related to voluntary corporate GHG information disclosure with international standards and norms on GHG information disclosure, sustainability information disclosure, and environmental, social and corporate governance (ESG) information disclosure, and promote mutual recognition.

Enterprise Opportunities and Challenges

Challenge: Short-term cost pressure and management upgrade

- Investment in equipment and manpower: Enterprises need to purchase carbon emission monitoring equipment, introduce third-party accounting services, and train professionals, which increases operating costs in the short term.

- Complexity of data management: The need to establish a data collection and accounting system covering Scope 1 (direct emissions), Scope 2 (indirect emissions) and Scope 3 (supply chain emissions) puts higher demands on management capabilities.

Opportunity: brand value and financing advantage

- Enhance market competitiveness: Enterprises that proactively disclose their progress in reducing emissions can establish a green brand image, attract ESG investors and consumers, and gain an advantage in the export market and international ratings.

- Green finance dividend: Enterprises with high disclosure quality are more likely to obtain low-interest loans, green bonds and other financing support.

Spawning New Businesses and Technological Innovations

1. Expansion of third-party service market

Expanding the business scope of third-party service providers has given rise to more business needs, such as accounting, verification, certification and other specialized services. Previously, such services have been limited to enterprises that are included in the carbon market, but will be expanded to a wider range of industries in the future.

2. Accelerated technology research and development

High-precision sensors, intelligent carbon management software, blockchain traceability technology and other areas are expected to break through, promoting carbon emissions monitoring from “after-the-fact statistics” to “real-time control”.

3. Supply chain synergy

Product carbon footprint accounting requirements force upstream and downstream enterprises to reduce emissions and form a green supply chain network.

Climate information disclosure is the core issue of sustainable disclosure, and it is necessary to solve the problem of data fragmentation through a unified methodology and factor library, and strengthen the credibility of third-party verification. In the future, with the expansion of the carbon market, the deepening of green finance and the integration of international rules, corporate climate transparency will become a “new yardstick” for measuring core competitiveness. We expect enterprises to use data as an anchor to seize the first opportunity in low-carbon transformation.

Author: Qinger