The Global Convergence of Standards

for Climate-related Disclosure

Enterprises need to take immediate action to prepare for the future

Chinese companies’ 2022 CDP disclosure report

April 2023

1
 Overview of environmental information disclosure on
CDP platform (April 2023)

18,700+
Companies representing half of global
market capitalization disclose to CDP

740+
Investors with over us$130 trillion in
assets requested companies make
environmental disclosure through CDP
 300+
CDP supply chain members
wielding over US$5.5 trillion in
purchasing power

1,100+
Cities, states and regions shared best practice
4
CONTENTS

Executive Summary...............................................................................................................................6
1. The development and future trend of global climate policy and sustainability disclosure
standards..............................................................................................................................................8
1.1 Broader consensus on and cooperation in global climate governance.............................8
1.1.1 China will work actively and prudently toward the goals of reaching peak carbon
emissions and carbon neutrality, and implement the National Strategy for
Climate Change Adaptation..............................................................................................8
1.1.2 EU promotes sustainable development through further legislation, requiring
companies to disclose sustainability information.......................................................9
1.1.3 China and the US resume climate cooperation and launch the Framework for
Transition Finance to support green development....................................................10
1.2 National and international sustainability disclosure standards gradually converge.....10
1.2.1 The Global Sustainability Disclosure Standards will be launched soon, which
may accelerate the convergence of international standards..................................11
1.2.2 EU and the US introduce climate-related disclosure requirements compatible
with the TCFD framework................................................................................................11
1.2.3 China accelerates sustainable development, with HKEX taking the lead in
aligning with international standards............................................................................12
2. A Panorama of CDP Disclosures and CDP Development Trends in 2022.........................14
2.1 The number of global and Chinese CDP disclosures continues to grow at a high rate,
with an annual growth rate of over 40%..............................................................................14
2.2 CDP together with other parties continues to drive response to climate change in
China and globally....................................................................................................................15
3. Analysis of the CDP questionnaire responses by Chinese companies and key findings....17
3.1 Governance: improving top-level design.............................................................................18
3.2 Strategy: enhancing climate assessment...........................................................................20
3.3 Risk management: improving management framework.................................................23
3.4 Metrics and targets: proactively expanding the scope.....................................................25
3.5 Brief Summary............................................................................................................................30
4. Case Study............................................................................................................................................32
4.1 Ping An Insurance (Group) Company of China..................................................................32
4.2 Yanfeng.........................................................................................................................................35
4.3 Zhongxing Telecommunication Equipment Corporation (ZTE).....................................37
5. Prospects............................................................................................................................................41
6. Appendix (CDP methodological framework & technological standard updates)............43
Acknowledgements............................................................................................................................45

5
Executive Summary

The year 2022 witnessed broader consensus on global climate governance reached by the

international community and more opportunities for cooperation. COP27 was successfully convened

in November and at the meeting, governments agreed to establish a Loss and Damage fund to

provide financial support to developing countries. The EU continued to lead the world in climate

change-related legislation, passing the most stringent regulations. The G20 Sustainable Finance

Working Group, co-chaired by China and the U.S., released the G20 Framework for Transition Finance,

to promote the financial sector's support for the transition of high-carbon emitting sectors to low and

net-zero paths. China has been implementing the National Strategy for Climate Change Adaptation,

establishing a policy system for reaching peak carbon emissions and carbon neutrality.

International sustainability disclosure standards gradually converged, attaching great significance

to climate change. In March 2022, the International Sustainability Standards Board (ISSB) published

two exposure drafts of IFRS® Sustainability Disclosure Standards (ISDS), namely IFRS General

Requirements for Disclosure of Sustainability-related Financial Information (S1) and IFRS Climate-

related Disclosures (S2). ISSB has taken its final decisions on the technical content of the drafts of

ISDS, with their expected issuance at the end of Q2 2023;1 The EFRAG Project Task Force on European

Sustainability Reporting Standards (EFRAG PTF-ESRS) released the first set of draft European

Sustainability Reporting Standards (ESRS); The United States Securities and Exchange Commission

(SEC) has released a regulation on climate-related disclosures for listed companies in the country.

Besides enhancing requirements for the disclosure of environmental information, China has been

striving to align with international standards, with its Hong Kong SAR taking the lead. For example,

HKEX issued the Guidance on Climate Disclosures in November 2021, requiring companies to

strengthen climate disclosures; It is expected that listed companies in relevant industries in Hong Kong

will have to make climate-related disclosures in line with the TCFD framework by 2025.

In 2022, CDP has been working with multiple parties to actively promote corporate responses

1
Available at https://www.casc.org.cn/2023/0224/238659.shtml

6
to climate change by planning to include S2 in its environmental disclosure platform from 2024

onwards, creating an open framework that makes environmental disclosure easier for SMEs and

other businesses, and including questions on issues such as biodiversity in its questionnaire. In

2022, the number of global and Chinese CDP disclosures continued to increase at a high rate, with

an annual growth rate of over 40%. Among them, more than 2,700 companies in China (including

Hong Kong, Macao, and Taiwan) participated in CDP disclosure, an increase of 43% over last year.

Drawing on the TCFD framework, companies have taken actions to respond to climate change

focusing on the four pillars of governance, strategy, risk management and metrics and targets.

According to the 2022 disclosure data collected by CDP, more than 20% of Chinese companies

have conducted scenario analysis to identify climate related risks and opportunities; more than

30% of Chinese companies have incorporated climate change into their corporate strategies; more

than 40% of Chinese companies have provided incentive measures for managing climate issues;

nearly 60% of Chinese companies have set carbon reduction targets; and more than 70% of Chinese

companies have board level participation in climate governance. It is expected that in the future, the

official release of ISDS will guide Chinese companies to further improve their climate governance

and assess climate impacts in a scientific and systematic manner. Fewer than 20% of Chinese

companies currently disclose their Scope 3 emissions from purchased goods and services, below

the global disclosure average. However, in 2022, the percentage of Chinese companies disclosing

Scope 3 emissions has already increased in relation to 2021, and it is expected that as China's

carbon emissions database is established across industries, more companies will follow the ISDS

guidelines to disclose their Scope 1, 2 and 3 GHG emissions, further closing the gap with global

percentages.

Amid rising global uncertainty and strategic opportunities and risks, in addition to actively

addressing climate risks, Chinese companies should seize opportunities related to climate change,

seek green cooperation, identify their direction in terms of climate strategy in the changing

environment, further enhance environmental and sustainability disclosure, and lay a solid foundation

for their development in the global market.

7
1. The development and future trend of global
climate policy and sustainability disclosure
standards

1.1 Broader consensus on and cooperation in global climate governance

In 2022, amid the slow recovery of global economy from the impact of the Covid-19 pandemic

and the ongoing Russia-Ukraine conflict, global energy-related CO 2 emissions grew by 0.9% 2.

Considering the current carbon emissions and the remaining carbon budget, there is now a 50%

chance that global warming of 1.5°C will be exceeded in nine years3. Against this backdrop, COP27,

convened in November 2022, achieved a historic outcome with governments agreeing to provide “loss

and damage” funding for vulnerable countries hit hard by climate disasters. In the same year, at the

15th Conference of the Parties (COP15) to the Convention on Biological Diversity convened by the

UN in Montreal, governments agreed on a new Global Biodiversity Framework committing to protect

30% of Earth's lands and oceans by 2030. Among targets of the framework, it is required to ensure

that large and transnational companies and financial institutions disclose their risks, dependencies,

and impacts on biodiversity.

1.1.1 China will work actively and prudently toward the goals of reaching peak carbon emissions
and carbon neutrality, and implement the National Strategy for Climate Change Adaptation

In October 2022, the 20th National Congress of the Communist Party of China was held, and

the report to the Congress proposed that "China will work actively and prudently toward the goals

of reaching peak carbon emissions and carbon neutrality". Based on China's energy and resource

endowment, we will advance initiatives to reach peak carbon emissions in a well-planned and

phased way in line with the principle of building the new before discarding the old. We will exercise

better control over the amount and intensity of energy consumption, and transition gradually toward

controlling both the amount and intensity of carbon emissions. We will promote clean and high-

2
CO2 Emission in 2022 published by International Energy Agency in March 2022
3
Carbon Budget 2022, from Global Carbon Project
8
efficiency energy use. We will speed up the planning and development of a system for new energy

sources, and strengthen our systems for energy production, supply, storage, and marketing to ensure

energy security. We will improve the statistics and accounting system and the cap-and-trade system

for carbon emissions. The carbon absorption capacity of ecosystems will be boosted. We will get
4
actively involved in global governance in response to climate change.”

The National Strategy for Climate Change Adaptation 2035, jointly released by 17 departments

in May 2022, states that "Based on the exposure and vulnerability of various areas and regions to

the adverse impacts and risks of climate change, it further clarifies the key areas, regional patterns,

and assurance measures for China's climate change adaptation work.” 5 The strategy follows

the ecosystem approach, covering both the natural ecosystems and the social and economic

systems. In order to achieve China's 2035 vision, it proposes major measures, such as analyzing

and assessing the impacts and risks of climate change, improving the climate change governance

system, forming a working system of climate system observation – impact risk assessment – taking

adaptation actions – evaluation of action effectiveness, and enhancing society's climate change

adaptation awareness and ability.

1.1.2 EU promotes sustainable development through further legislation, requiring companies to

disclose sustainability information

In November 2022, the European Parliament and the EU Council adopted the Corporate Sustainability

Reporting Directive (CSRD). The CSRD will cover all undertakings listed on a regulated market in the EU,

and all large companies incorporated in a EU member state that meet two of the following three

criteria for two consecutive years (balance sheet total assets greater than €20 million, a net turnover

of more than €40 million, or an average number of employees during the financial year of more than 250);

with respect to non-EU incorporated companies that have one subsidiary listed on a EU regulated market,

have significant EU revenues, or have one subsidiary in the EU that meets some of the large company

requirements, disclosure obligations need to be fulfilled at the group or subsidiary level as appropriate.

Also, under the current CSRD proposal, reporting information must be subject to third-party attestations.

Under the CSRD proposal, the scope of companies covered by the mandatory disclosure of sustainability

information and the requirements of disclosure will be significantly increased.

4
Report to the 20th National Congress of the Communist Party of China, October 16, 2022
5
For details, see The National Climate Change Adaptation Strategy 2035
9
1.1.3 China and the US resume climate cooperation and launch the Framework for Transition
Finance to support green development

In November 2022, the Group of Twenty (G20) Summit was held in Bali, Indonesia. The day

before the official opening of the G20, Chinese President Xi Jinping met with the US president

Joe Biden and agreed to jointly work for the success of the 27th Conference of the Parties to the

United Nations Framework Convention on Climate Change (UNFCCC). Since China and the US, the

world's two largest emitters of greenhouse gases, account for 40% of global carbon emissions,

their agreement on climate issues could help drive the steady development of the global climate

governance system. The G20 Bali Summit adopted the G20 Framework for Transition Finance, the

outcome of the G20 Sustainable Finance Working Group, which is co-chaired by China and the US

The main purpose of the framework is to promote the financial sector's support for the transition

of high-carbon emitting sectors to low and net-zero carbon. The Framework for Transition Finance

includes five pillars: identification of transition activities and investments, reporting of information on

these activities and investments, developing transition-related finance instruments, designing policy

measures, and assessing and mitigating the negative social economic impacts of transition activities

and investments. The landmark framework provides a reference of basic principles for countries to

prepare transition finance policies.

1.2 National and international sustainability disclosure standards gradually

converge

In response to the International Organization of Securities Commissions (IOSCO) statement

calling for globally consistent, comparable and reliable sustainability disclosure standards, the IFRS

formally announced the establishment of ISSB during COP26. Created to meet existing international

disclosure requirements, ISSB consolidated several international organizations such as the

International Integrated Reporting Council (IIRC), the Climate Disclosure Standards Board (CDSB),

the Sustainability Accounting Standards Board (SASB), and signed a Memorandum of Understanding

with the Global Reporting Initiative (GRI). The disclosure framework developed by ISSB is based

on the four pillars of the Task Force on Climate-Related Financial Disclosures (TCFD) and the work

of ISSB is supported by the G20. During COP27, CDP also announced that it would incorporate the

10
IFRS S2 Climate-related Disclosures into the CDP disclosure platform from the 2024 disclosure

cycle onwards. Major countries or regions have recently issued their own sustainability disclosure

standards, which are to a large extent compatible with the TCFD framework and attach great

significance to climate risk.

1.2.1 The Global Sustainability Disclosure Standards will be launched soon, which may accelerate
the convergence of international standards

In March 2022, the ISSB published two exposure drafts of IFRS® Sustainability Disclosure

Standards (hereinafter referred to as ISDS), namely IFRS S1 General Requirements for Disclosure

of Sustainability-related Financial Information (hereinafter referred to as S1) and IFRS S2 Climate-

related Disclosures (hereinafter referred to as S2), with the final standards currently proposed to be

released by the end of the second quarter of 2023. Drawing on the TCFD framework, both S1 and S2

focus on the four pillars of governance, strategy, risk management and metrics and targets, with S1

focusing on the overall disclosure requirements related to corporate sustainability and S2 focusing

on the disclosure requirements for corporate climate-related topics.

In February 2023, the ISSB decided to introduce a requirement to permit preparers to

consider open-ended sources of guidance to identify and disclose sustainability-related risks

and opportunities. This means that in the short term, companies can follow other established

sustainability disclosure standards or frameworks when identifying sustainability-related risks and

opportunities other than climate change (such as SASB or GRI). But in the long term, companies

should consider understanding, sorting out or establishing a comprehensive sustainability disclosure

framework to systematically improve or optimize their ability to identify, manage and disclose

sustainability-related risks and opportunities.

1.2.2 EU and the US introduce climate-related disclosure requirements compatible with the TCFD
framework

In November 2022, the European Financial Reporting Advisory Group (EFRAG) submitted

the first set of 12 draft European Sustainability Reporting Standards (ESRS) to the European

Commission for adoption. Building on the TCFD, the ESRS require companies to disclose their

strategy and business model, climate scenario analysis, Scope 3 greenhouse gas emissions, as well

as value chain-related sustainability risk assessment, greenhouse gas emissions, labor, community

11
impact, and product and service information. Based on the double materiality principle, companies

are required to disclose both their impact on sustainability issues (environment, society, employees,

human rights, anti-corruption and governance) and the impact of sustainability issues on the

development, performance, and financial condition of companies.

In March 2022, the US Securities and Exchange Commission (SEC) published proposed rules

for climate-related disclosure by US public companies6. The proposal imposes strict requirements on

US public companies to report information on greenhouse gas emissions and climate-related risks.

US public companies are required to report their Scope 1 and 2 greenhouse gas emissions and get

independent third-party attestations to enhance climate-related disclosures. SEC officials said most

companies listed on the S&P 500 index may be required to report greenhouse gas emissions from

their supply chains and consumers.

1.2.3 China accelerates sustainable development, with HKEX taking the lead in aligning with
international standards

China is at the stage of voluntary disclosure plus mandatory disclosure by some companies. In

December 2021, the Ministry of Ecology and Environment issued the "Measures on the Management

of Environmental Information Disclosure for Companies". Focusing on companies with high

environmental impact and public concern, the Measures require the disclosure of environmental

information in accordance with the law by key emission units, corporates implementing mandatory

cleaner production audits, listed companies that meet the prescribed circumstances, debt issuing

corporates and other entities. For example, key emission units are required to disclose eight

types of information, including information on corporate environmental management, pollutant

generation, treatment and emissions, and carbon emissions. In June 2022, the State-owned Assets

Supervision and Administration Commission of the State Council (SASAC) issued the "Measures

for the Supervision and Administration of Energy Conservation and Ecological Environmental

Protection of Central Enterprises". It is required that central enterprises should actively implement

the concept of green, low-carbon, and circular development, incorporate energy conservation,

ecological environmental protection, and the strategic orientation and target requirements of carbon

peaking and carbon neutrality into enterprise development strategies and plans, develop orderly

6
SEC Proposes Rules to Enhance and Standardize Climate-Related Disclosures for Investors (US Securities and Exchange Commission)

12
around the main business, and develop the energy conservation, environmental protection and other

green and low-carbon industries. China actively participates in the global promotion and adoption

of sustainable disclosure standards and strives to align with international sustainable development

rules. The Ministry of Finance and China Securities Regulatory Commission (CSRC) both submitted

feedback on the ISDS exposure drafts. On December 31, 2022, ISSB and the Ministry of Finance

jointly announced the establishment of an office in Beijing, which is expected to start operations in

mid-2023.

In June 2022, the Hong Kong Green and Sustainable Finance Cross-Agency Steering Group

noted that as a priority, the Securities and Futures Commission (SFC) and the Hong Kong Exchanges

and Clearing Limited (HKEX) were evaluating a climate-first approach to implement the ISSB

standards for Hong Kong listed companies. HKEX has incorporated several key recommendations

from TCFD into the ESG reporting requirements and conducted its fifth review of ESG disclosures in

November 2022, coming up with key recommendations on board governance of ESG issues, social

issues, and climate change. In terms of climate change, it is recommended that issuers should

commence the planning and building of the necessary infrastructure and systems for climate

reporting requirements in the future.7 Meanwhile, the Hong Kong Green and Sustainable Finance

Cross-Agency Steering Group has announced its intention to make climate-related disclosures in line

with the TCFD framework mandatory by 2025.

7
This refers primarily to the findings of the latest review of issuers' environmental, social and governance (ESG) disclosures published by
Stock Exchange of Hong Kong Limited (the Exchange), a wholly-owned subsidiary of Hong Kong Exchanges and Clearing Limited (HKEX),
on 25 November 2022.
13
2. A panorama of CDP disclosures and CDP
development trends in 2022

2.1 The number of global and Chinese CDP disclosures continues to grow at
a high rate, with an annual growth rate of over 40%

More than 18,700 companies worldwide disclosed climate change-related environmental information

through CDP in 2022, an increase of 42% in relation to last year; among them, more than 2,700 companies in

China (including Hong Kong, Macao and Taiwan) participated in CDP climate change-related environmental

information disclosure, an increase of 43% year over year.

Figure 1: Global and Chinese CDP disclosure trends from 2020-2022

18,636 2,723
42% 43%
13,124 1,902
38% 32%
9,526 1,446

2020 2021 2022 2020 2021 2022

Global China

Among the 2,723 Chinese companies that responded to the climate change questionnaire, 2,580

companies submitted responses to their customers and 368 companies submitted responses to their

investors or submitted responses independently. Overall, Chinese companies participating in climate

change disclosures are more driven by the purchasing power of their customers. On the one hand, as

a major manufacturing country with high-quality and stable output, China is favored by global buyers

and has an important role in the global supply chain; on the other hand, increasing impacts of adverse

climate, tightening environmental regulations, and volatile energy prices have led to an urgent need

for international brands to find more climate-resilient suppliers as partners to implement a low-carbon

transition in business.

More than 95% of the companies invited by investors to participate in the CDP disclosures are

listed companies. In 2022, 376 companies in Mainland China, Hong Kong, Macau and Taiwan were

14
invited by investors to participate in CDP disclosures on environmental issues, a significant increase

of 68% over last year. This is mainly due to two reasons: firstly, investors are increasingly pushing

for disclosure and expanding the scope of invitations; secondly, companies' own disclosure and

management awareness has increased and the response rate has improved.

However, overall, the number of Chinese listed companies participating in CDP disclosures is

lower than the global average. While major markets around the world have introduced or are explicit

about the forthcoming introduction of "mandatory environmental information disclosure" requirements,

Chinese mainland is still at the stage of "mandatory + voluntary disclosure". Due to the difference

in market environments in terms of policy, in 2021, the disclosures by listed companies in China

accounted for less than 10% of the overall CDP disclosures, compared to the global average of about

25%. In 2022, the percentage of disclosures by listed companies in the overall CDP disclosure in China

increased to 14%, narrowing the gap with the global average (27%).

2.2 CDP together with other parties continues to drive response to climate
change in China and globally

Globally, besides Europe, the U.S., Singapore, Brazil, etc., the number of economies requiring
mandatory disclosure has further increased, and relevant requirements have been further enhanced.
The European Sustainability Reporting Standards (ESRS), submitted for adoption in June 2023, require
companies to disclose not only financial information, but also their impacts on the environment. These
apply to the entire value chain of companies, thus having global impacts. In this context, CDP stands
ready to support companies in making the disclosures required by the law through the CDP disclosure
platform, to encourage companies to be better prepared for the future. In China, in the second half of
2022, CDP China participated in the development and delivery of the TCFD course of the United Nations
Sustainable Stock Exchange (UNSSE) initiative, and delivered an online course to companies listed on
the Hong Kong Stock Exchange and Shenzhen Stock Exchange, to improve companies' understanding
of disclosure requirements and enhance their disclosure capabilities.
In 2022, at the 27th Conference of the Parties (COP27) of the United Nations Climate Change
Conference, CDP announced that S2 will be included in the CDP disclosure platform from 2024
onwards. Since 18,700+ companies representing half of global market capitalization disclose
data through CDP, the move means that the standards may be rapidly extended to about 20,000
companies worldwide. Therefore, this paper analyzes the research results in light of the requirements
of the draft ISDS. Another positive action by CDP in the process of standardizing and digitizing

15
basic climate data is the announcement of the creation of a Net Zero Data Public Utility (NZDPU). In
November 2022, CDP announced that it would work with the Climate Data Steering Committee (CDSC)
in an effort to provide the underlying data for the NZDPU. In China, CDP China will work with the ISSB
Beijing office, which will begin operations in mid-2023, to provide support to companies in China and
developing economies to make information disclosures.
To make disclosure easier for small and medium enterprises (SMEs) and other businesses,
in 2021, CDP partnered with the International Chamber of Commerce (ICC) and the Exponential
Roadmap Initiative to create a modular, open framework that resulted in the production of a bespoke
questionnaire set shorter than the full CDP questionnaire. The brief questionnaire has just over
40 questions on climate, deforestation risk, and water security, making it easier for disclosers to
understand than the full CDP questionnaire. After a successful pilot involving hundreds of companies,
in 2022, CDP completed the adaptation of the questionnaire for SMEs, which CDP is now rolling out
for banks. When it comes to supply chains, SMEs are a critical part of the picture. While the full CDP
questionnaires have worked well for the world's largest companies, SMEs typically need something
shorter, simpler and with no prior assumed sustainability knowledge, albeit still aligned to TCFD. This
development will facilitate disclosure by SME clients of banks or SME suppliers of large clients. In 2022,
CDP delegated some of the questions in its questionnaire to the Hong Kong Green and Sustainable
Finance Cross-Agency Steering Group for custom development of a questionnaire for local SMEs in
Hong Kong. CDP also facilitated two capacity building activities to guide SMEs on their disclosure
journey and help financial institutions tackle the challenge of accessing climate and environmental data
from their SME clients. Globally, this is one of the deepest collaborations between CDP and regulators.
The COP15 of the UN Convention on Biological Diversity took place in December 2022. For the
first time, CDP included questions on biodiversity in its questionnaire, revealing that companies have
recognized the importance of it but have not yet taken significant practical actions. In September
2022, CDP announced that it would expand the scope of the disclosure system and that from 2023
companies would disclose against new questions and metrics on plastic, initially through the water
security questionnaire. CDP is uniquely positioned to scale disclosure, standards, and existing best
practices across the global economy. CDP is keen to discuss further with various partners on how
to leverage the CDP disclosure system to accelerate implementation of the new Global Biodiversity
Framework and track progress against its targets.

16
3. Analysis of the CDP questionnaire
responses by Chinese companies and key
findings
Based on the analysis of the results of the 2022 CDP questionnaire for Chinese companies and

drawing on the TCFD framework, this report identifies the following four key findings:

1. Governance: Chinese companies attach a high degree of importance to climate governance,

with over 70% of them having board-level climate governance. Yet, less than 50% provide salary

incentive measures for managing climate issues and targets, which may result in unclear authority

and responsibility for climate governance and inadequate incentives in some companies.

2. Strategy: Over 60% of Chinese companies are aware of the implications of climate-related risks

and opportunities on their strategies and finance, while only about 1/3 of them incorporate the

issue of climate change into their strategic consideration. Chinese companies were significant

underperformers in pushing their suppliers into involvement with climate governance when we

compared the involvement rate of their suppliers to the global average. Those findings indicate

that most Chinese companies are currently improving their awareness of climate change and

practical actions need to be further strengthened.

3. Risk management: More than 70% of Chinese companies have built procedures for assessing

and managing climate-related risks and opportunities. However, less than 20% of them

identified chronic and systematic climate risks respectively. Chinese companies are at the

beginning stage of managing climate risks, and efforts are needed to develop a comprehensive

and systematic approach to identifying, assessing, and managing such risks, and also integrate

climate risk factors into their overall risk management system.

4. Metrics & targets: Over 70% of Chinese companies have disclosed their Scope 1 emissions.

For Scope 3 emissions, that figure was significantly lower, with less than 20% of companies

having disclosed them (from purchased goods and services), indicating that the accounting

and disclosure of carbon emissions upstream and downstream the value chain needs to be

further strengthened. There is great enthusiasm among Chinese companies to set up carbon

reduction targets with nearly 60% of them having established absolute or intensity objectives.

In contrast, less than 10% has depicted long-term net zero targets, reflecting the lack of

ambition of Chinese companies to set long-term carbon reduction targets.

17
3.1 Governance: improving top-level design
Companies gradually formulate their climate governance structures

The 2022 CDP questionnaire asks Chinese companies whether there is board-level oversight of

climate-related issues within their organization, and finds out that 77% of Chinese companies have

board-level climate governance, reflecting the importance Chinese companies attach to it. At the

same time, the ISDS exposure draft has also proposed disclosure requirements on the governance

structure, the clarity of which will determine the overall awareness of climate governance and its

performance by a company. According to PwC's 26th Annual Global CEO Survey - Asia Pacific8, 46%

of Asia Pacific CEOs prioritize climate change in business activities. This trend is most obvious in

Australia, China, Japan, New Zealand, and Singapore. With 27% of Asia Pacific CEOs saying that their

companies will be exposed to the threats of climate change in the next five years and 17% saying

that such exposure will take place in the next 12 months, the importance and urgency of climate

governance is growing among senior management in the China region.

Figure 2: Board-level participation in climate governance by Chinese companies in 2022

Yes
77%

No
23%

Companies urgently need to integrate climate considerations into their performance and
remuneration management system

The 2022 CDP questionnaire asks companies if they offer incentives for the management of

climate-related issues, with 45% of Chinese companies providing salary incentive measures for

managing climate targets, and 34% of them indicating that they plan to introduce such measures

in the next two years. The ISDS exposure draft contains detailed disclosure requirements on

how companies monitor progress in setting and implementing targets related to significant

climate-related risks and opportunities, including the linking of relevant performance indicators

to remuneration. “Measures for the Supervision and Administration of Energy Conservation and

8
PwC, Leading in the new reality: 26th Annual Global CEO Survey - Asia Pacific, released in January 18, 2022

18
Ecological Environmental Protection of Central Enterprises”9 released by the State-owned Assets

Supervision and Administration Commission (SASAC) of the State Council in 2022 requires that

the results of the assessment and evaluation of energy conservation and ecological environmental

protection of central enterprises should be included in the business performance assessment

system for the heads of central enterprises. With increasingly clear policies and standards guiding

Chinese companies, it is expected that they will further improve the effectiveness of performance

and remuneration management in climate governance.

Linking climate-related performance to salary incentives is key to implementing climate

governance in companies, so as to drive action by managers, responsible departments, and

employees. Climate performance incentives can be provided through long-term incentive schemes

and should be integrated into existing human resource management systems. Companies should

systematically plan their governance system, sort out their climate governance structure, define the

responsibilities at each level, and agree on the specific objectives of each responsibility, so that they

have the basic conditions to design their salary incentives.

Figure 3: Percentage of Chinese companies providing salary incentive measures

for managing climate targets in 2022

No, plan to provide such measures

within 2 years
34%
Yes
45%

No, do not have any plan to provide such

measures within 2 years
21%

9
Measures for Supervision and Administration of Energy Conservation and Ecological Environmental Protection of Central Enterprises
released by the State-owned Assets Supervision and Administration Commission of the State Council has been effective since August
2022
19
3.2 Strategy: enhancing climate assessment
30% of companies integrate climate change into their business strategy and financial planning

The 2022 CDP questionnaire has investigated the impact of climate-related risks and

opportunities on the business strategy and financial planning of Chinese companies. It finds out

that 31% of Chinese companies have incorporated climate change into their business strategy and

36% incorporated climate change into their financial assessment. As international and domestic

organizations and markets further promote sustainable development, and the ISDS exposure

draft proposes that an entity should be required to disclose strategies for climate-related risks and

opportunities, it is increasingly important for Chinese companies to consider climate issues at the

strategic level. However, Chinese companies currently lack clear guidelines and analytical tools for

disclosure, and some have not even established relevant professional teams, which can collaborate

with professional third-party partners to develop their climate strategies. The net zero transformation

services provided by PwC help companies analyze the current state of climate change, assess the

capabilities needed to transform their business, identify strategic options, develop a business case,

and adjust their operating model10 to develop a sound and efficient climate strategy roadmap. In the

path of climate strategy transition, companies also need to understand and develop green financial

products, properly identify climate-related strategic opportunities, and drive the greening of value

chains. Chinese companies can work with professional institutions to get support in policy and

market analysis, management experience sharing, and low carbon technology introduction.

Figure 4: Percentage of Chinese companies considering climate change in their

strategies and financial assessments in 2022

Percentage of Chinese companies considering climate Percentage of Chinese companies considering climate
change in their strategies in 2022 change in their financial assessments in 2022

No
69%
No
Yes 64%
Strategies in 36%
any area or
areas affected
31%

10
PwC, Building Blocks of Net Zero Transformation

20
20% of companies apply scenario analysis to identify climate risks and opportunities

In the 2022 CDP questionnaire responses, 61% and 49% of Chinese companies identified the

strategic and financial implications of climate-related risks and opportunities respectively, indicating

that some Chinese companies have considered climate risks and opportunities prior to the official

release of the ISDS. In their climate risk and opportunity identification process, 23% of Chinese

companies have conducted qualitative or quantitative climate scenario analysis. Climate scenario

analysis is one of the most important tools to help companies effectively identify and analyze the

risks and opportunities presented by climate change. At its core is the construction of climate and

environmental risk transfer models to assess how climate-related risks are transferred to a company.

The ISDS exposure draft requires companies to use scenario analysis to conduct climate resilience

assessments, disclosing the results of the climate resilience analysis and the process used. In case

unable to use such scenario analysis, it requires companies to explain in detail the techniques and

methods used to assess climate resilience. Scenario analysis is based on certain climate knowledge,

models, data, and analysis, and poses a great challenge to the data integrity, data granularity, and

professional competence of companies. Therefore, Chinese companies are in urgent need of

improving their own capabilities in this regard or seeking external consultancies.

Figure 5: Percentage of Chinese companies identifying climate-related risks and

opportunities and using scenario analysis in 2022

0% 10% 20% 30% 40% 50% 60% 70%

Identifying climate-
related risks to strategy 61%
and finance

Identifying climate-
related opportunities to 49%
strategy and finance

Conducting scenario 23%

analysis

21
A few companies promote emissions reduction in the upstream supply chain

According to the findings of the 2022 CDP questionnaire on Chinese companies promoting

emissions reduction in the value chain, 70% are already addressing climate governance with parts

of their value chains, with half of them engaging their clients in climate governance, but only 28%

doing so with their suppliers, which is lower than the global figure of 39%. According to PwC's 26th

Annual Global CEO Survey - Asia Pacific11, when asked about threats, Asia Pacific CEOs stated that

over the next 12 months they will be particularly exposed to inflation, macroeconomic volatility,

and geopolitical conflict; however, when considering threats in the next five years, climate seems

to be progressively impacting operations of companies in the Asia Pacific region through a cycle of

disruption of supply chains and inventory.

Figure 6: Percentage of companies involving climate governance in

their value chains in 2022

0% 10% 20% 30% 40% 50% 60% 70% 80%

Number/
percentage
of companies
involving climate 70%
governance in
their value chains
Number/
percentage
of companies
involving their 54%
clients in climate
governance

Number/
percentage
28%
of companies
involving their
suppliers in climate
governance

The current drivers of supply chain emissions reduction by Chinese companies are limited due

to the lack of economic benefits that this might bring. The Implementation Plan for Promoting Green

Consumption12 issued by the National Development and Reform Commission and other departments has

systematically designed an institutional policy system to promote green consumption, comprehensively

promote the green transformation of consumption in key fields, and continuously improve standards

related to green products. The maturing market of green consumption is expected to create new market

opportunities for green products, driving companies to integrate emissions reduction initiatives across

11
PwC, Leading in the new reality: 26th Annual Global CEO Survey - Asia Pacific, released on January 18, 2022
12
The National Development and Reform Commission and other departments, Implementation Plan for Promoting Green Consumption,
released on Jan 18, 2022.
22
the value chain. According to the CDP questionnaire, 13% of Chinese companies already offer low carbon

products or services. Currently, the supplier emissions management of most companies focuses only

on supplier screening and capacity building, with only a few companies covering data collection13. In this

regard, if Chinese companies want to seize the opportunities of green consumption, they need to step up

their efforts to strengthen specific work in various aspects of emissions management of their suppliers,

for example, by linking carbon data in the upstream and downstream supply chain and incorporating

environment-related performance into supply chain management.

3.3 Risk management: improving management framework

Most companies have integrated climate-related risks into their risk management processes

The 2022 CDP questionnaire surveys Chinese companies on their climate risk management

processes. It finds out that 72% of Chinese companies have built procedures for identifying,

assessing, and managing climate-related risks and opportunities. In the management framework

proposed by the ISDS exposure draft, stakeholders of a company need to understand how the

company's climate-related risks are identified, assessed, and managed, and whether they are

integrated into existing risk management processes. Building on the integration of climate-related

risks into their processes, Chinese companies can further improve their climate risk management,

establish a risk control mechanism covering ex-ante, ex-interim, and ex-post factors, integrate

climate risk management with enterprise risk management, build a comprehensive risk management

system, and develop specific climate risk management tools.

Figure 7: Percentage of Chinese companies with procedures for identifying, assessing,

and managing climate-related risks and opportunities in 2022

Yes
72%

No
28%

13
CDP, Charting a Path Forward to Net-zero: A Research Report on the Opportunities and Challenges Faced by Listed Companies in the
Chinese Mainland and Hong Kong in Relation to Decarbonisation, released in December 2022.

23
Chinese companies need to systematically identify, assess, and manage climate-related risks

The 2022 CDP questionnaire asks Chinese companies to identify risks with the potential to have

a substantive impact on their business. Among the eight types of transition risks and physical risks

collected, acute physical, current regulation, market, and emerging regulation are the types identified

most often in the climate-related risk assessments by Chinese companies, reflecting that Chinese

companies are more concerned about some short-term risks at this stage, such as the impact of

extreme weather events on their finances and strategies. Less often identified are transition risks

that have more direct impact on companies, such as current policy, shifts in market supply and

demand, and upcoming policies; Chinese companies pay less attention to chronic physical risks that

lag behind the current impact and more indirect transition risks, such as reputation and technology,

with less than 20% of them identifying such risks.

Figure 8: Climate-related risks identified by Chinese companies in 2022

acute physical 36%

current regulation 30%

market 30%

emerging regulation 27%

chronic physical 19%

reputation 12%

technology 11%

0% 5% 10% 15% 20% 25% 30% 35% 40%

Overall, Chinese companies are still at the early stage of climate risk awareness and

management and need to further develop a comprehensive and systematic approach to climate

risk identification, assessment, and management. Developed countries, particularly those in Europe,

have been aware of climate risk for a long time, and some companies have been concerned about

the impact of climate risk after the adoption of the Kyoto Protocol almost 20 years ago. At present, a

series of management tools and scenario analysis guidelines for climate risk have been established

across the world. Compared to the 50 to 70 years it will generally take for developed countries to

24
realize carbon neutrality after reaching peak carbon emissions, China has only 30 years between

the planned transition from peak carbon to carbon neutrality, so the transition risks for Chinese

companies are even more severe. Chinese companies can systematically manage climate risk by

taking into account their own realities and drawing on existing international climate risk assessment

methodologies. Firstly, companies need to establish a baseline and objectives to enable their

management or board of directors to understand climate risks as early as possible, analyze the gaps

between their practices and international disclosure standards and regulatory requirements, and be

informed of the progress of the practices of peer companies, on the basis of which they can set up

a roadmap for climate risk management that suits them. Secondly, companies need to identify and

analyze climate-related risks and opportunities. At this stage, companies need to identify and analyze

climate risks by industry, region, and business unit through proper quantitative or qualitative scenario

analysis, and to build internal capacity for climate risk assessment. Lastly, companies need to

integrate climate-related risks and opportunities into their risk management framework and climate

risk factors into their current risk control system. For major climate risks, companies should further

study and develop response strategies and set corresponding climate risk monitoring indicators.

3.4 Metrics and targets: proactively expanding the scope

Nearly 70% of companies have set up climate-related targets, but only 10% have set net zero targets

The 2022 CDP questionnaire asks companies about the setting of net-zero targets, carbon

emission targets and other climate-related targets. It finds out that 68% of Chinese companies have

set climate-related targets, of which 59% have set absolute or intensity emissions reduction targets,
and only 10% have set net-zero targets. More Chinese companies have set emissions reduction

and climate-related targets, reflecting their proactive actions in the context of China's carbon

peak and neutrality commitments and long-term action on climate change. However, for the long-

term systemic project of "net zero emissions", companies face key challenges, such as difficulties

in collecting data on Scope 3 emissions, limited influence on value chain emissions reduction,

difficulties in accessing low-carbon energy, high comprehensive costs of low-carbon transition, lack

of clarity of local emissions reduction policies, etc.14 impeding their efforts to set net zero targets.

Demonstrating climate leadership in the industry is one of the key drivers for companies to commit

to net-zero emissions. 15

14
CDP, Scoping Out: Tracking Nature Across the Supply Chain – Global Supply Chain Report 2022, released in March 2023.
15
CDP, Charting a Path Forward to Net-zero: A Research Report on the Opportunities and Challenges Faced by Listed Companies in the
Chinese Mainland and Hong Kong in Relation to Decarbonisation, released in December 2022.
25
 Figure 9: Climate-related targets set by Chinese companies in 2022

70% 68%

59%
60%

50%

40%

30%

20%

10%
10%

0%
Net zero target Carbon reduction Any climate target
target

Case studies: Lenovo Group Limited16

Lenovo has set its targets of greenhouse gas emissions reduction. The targets cover

emissions from Scope 1, 2 and three categories of Scope 3 (use of sold goods, purchased

goods and services, and upstream transportation and distribution).

Lenovo has established Science-Based Targets and has made its immediate goals

public through the website of Science Based Targets initiative (SBTi): Lenovo is committed

to reducing Scope 1 and 2 GHG emissions by 50% in absolute terms by FY2029/2030,

using FY2019/20 as the base year; within the same target timeframe, Lenovo is committed

to reducing GHG emissions by 25% from each of the three categories of Scope 3, namely,

the use of sold goods (laptops, desktops and servers), purchased goods and services, and

upstream transportation and distribution.

Lenovo's roadmap to achieve these goals includes: progressive optimization of

climate change KPIs and assessment processes; collection of climate-related information;

development of climate change incentive policies, etc. Meanwhile, through its CDP supply

chain membership, Lenovo collects environment-related information from suppliers and

assesses their environmental performance, and continuously tracks the environmental

performance of the supply chain and the progress of its goals.

16
Source: Lenovo 2022 CDP Climate Change Disclosure

26
70% of companies disclose carbon emissions data, but less than 20% of them disclose such data

for Scope 3 purchased goods and services

In the 2022 CDP questionnaire, findings state that 75% of Chinese companies disclose Scope 1

emissions and 58% disclose Scope 2 emissions. These proportions are essentially the same as those

in 2021. 16% of Chinese companies have disclosed carbon emissions from purchased goods and

services in Scope 3, a slight increase over the proportion in 2021. Compared to the global average of

36% included in the CDP Global Report, the percentage of Chinese companies disclosing emissions in

the upstream supply chain is still lower. On the one hand, Chinese companies are still unaware of the

measurement of the environmental impact of their supply chains; on the other hand, the difficulties

in traceability of Scope 3 data and the lack of uniform disclosure requirements, emission accounting

methods, and carbon emission factor databases have led to a lack of overall Scope 3 emissions

disclosure and inadequate data quality. The SEC's proposed climate disclosure rules for US-listed

companies, the ISDS exposure drafts, and the EU ESRS all require participating institutions to disclose

their Scope 1, 2 and 3 GHG emissions and emissions intensity. As Chinese companies go global and

align with international standards, they need to gradually build and improve their carbon accounting

and disclosure capabilities, establish carbon emissions data collection mechanisms, and develop tools,

templates and carbon management systems to track and manage carbon emissions data effectively.

Figure 10: Respective proportions of Chinese companies disclosing Scope 1, 2,

and 3 emissions (from purchased goods and services)
0% 10% 20% 30% 40% 50% 60% 70% 80%

75%
Scope 1
75%

57%
Scope 2
58%

13%
Scope 3
(purchased 16%
Goods &
Services 36%

2021 China 2022 China 2022 Global

27
Chinese companies implement various emissions reduction initiatives to save energy and reduce
carbon emissions

In 2022, 66% of Chinese companies are taking active emissions reduction initiatives, a significant

increase from 44% in 2021. The total number of emissions reduction initiatives has increased

significantly in line with the increase in the number of companies participating in CDP disclosure

(see Section 2. The number of Chinese companies participating in CDP climate change-related

environmental information disclosure increased by 43% over 2021), with an increase of almost 50% in

2022 compared to 2021. Energy efficiency in production processes and energy efficiency in buildings

account for nearly half of the emissions reduction initiatives undertaken by Chinese companies,

indicating that Chinese companies are taking more practical actions to reduce carbon emissions while

decreasing operating costs through energy savings and consumption reduction. Among the major

emissions reduction initiatives, the adoption of company policy or behavioral change has increased

significantly compared to 2021, accounting for 17% of all emissions reduction initiatives. More Chinese

companies have established a corporate management systems for implementing emissions reduction

actions, which will help to further systematically promote the long-term and in-depth low-carbon

transition. The implementation of emissions reduction initiatives is a long-term project for companies.

They can usually start with systematic planning to identify specific emissions reduction initiatives,

prioritize the implementation of these through an analysis of financial benefits and carbon reductions,

and finalizing the implementation of actions through specific carbon reduction projects.

Figure 11: Types of emissions reduction initiatives implemented by Chinese companies

2021 2022

18%
20%
32% 28%

7%
8%

10%
10%

20%
10% 20% 17%

Improving energy efficiency in Company policy or Use of low carbon

production process behavioral change energy in production
Waste reduction and
Energy efficiency in buildings Others
material recycling

28
 Case studies: Cscec International Construction Co., Ltd 17

China State Construction Engineering (Hong Kong) Limited (CSHK) releases the "Carbon

Neutral Commitment for the Construction Period of Organic Resource Recovery Centre Phase II"

(O.PARK2), committing to achieve carbon neutrality during the construction period of O.PARK2.

The project of Organic Resource Recovery Centre Phase II (O.PARK2) incorporates the concept

of sustainable development and is designed to gain a Platinum rating under the BEAM Plus rating

system. Measures include maintaining 40% of the original plants on site and replanting trees

throughout the slope, increasing the green area by 50% by building gardens and urban farms on

the roof of buildings to integrate the buildings into the surroundings and reduce the impact on

landscape. The project also uses renewable building materials and energy efficient technologies to

minimize carbon emissions during its entire lifecycle. To calculate the expected avoided emissions,

the project used the operational control approach to determine the organizational boundary and

covered the time period from 5 September 2019 to 31 August 2021. During the project period the

company used low carbon building materials, such as up to 100% recycled steel and metal iron, as

well as the concrete with ground granulated blast-furnace slag (GGBS) as a replacement for 60% of

cement, which is expected to avoid emissions of 18,337 metric tons of carbon dioxide equivalent

per functional unit when compared to the reference product/service or baseline scenario. The

revenue generated from this green low-carbon project accounted for 0.2% of total revenue for

the reporting year and the company believes that this approach can be extended to all types of

construction projects.

Companies need to pay more attention to internal carbon pricing mechanisms

Only 3% of Chinese companies responding to the 2022 CDP questionnaire use internal carbon

pricing, and 23% of companies indicate that they would not establish an internal carbon pricing

mechanism in the next two years. However, in its section about the cross-industry metric categories,

the ISDS exposure draft has specific requirements for companies to disclose internal carbon prices:

on the one hand, a company is required to disclose the price for each metric tonne of greenhouse

gas emissions that it uses to assess the costs of its emissions; on the other hand, a company is

required to disclose how it is applying the carbon price in decision-making (for example, investment

17
Source: CSCEC International, CDP Climate Change Disclosure in 2022

29
decisions, transfer pricing and scenario analysis). The ISDS exposure draft also gives a specific

definition of internal carbon price, i.e., "Price used by entities to assess the financial implications of

changes to investment, production and consumption patterns, as well as potential technological

progress and future emissions-abatement costs." There are two types of internal carbon prices. The

first type is a shadow price, which is a theoretical cost or notional amount that the entity does not

charge but that can be used in assessing the economic implications or trade-offs for such things

as risk impacts, new investments, net present value of projects, and the cost-benefit of various

initiatives. The second type is an internal tax or fee, which is a carbon price charged to a business

activity, product line, or other business unit based on its greenhouse gas emissions (these internal

taxes or fees are similar to intracompany transfer pricing). Internal carbon price is an effective tool

of a company for managing and promoting a low-carbon transition, and the process of setting it

up needs to be continually validated and tested through corporate practice, to arrive at a carbon

pricing model that fits the company's carbon targets and reduction path. Chinese companies should

pay more attention to internal carbon pricing, mobilize their departments to reduce emissions by

establishing internal carbon pricing mechanisms, achieve their own emissions reduction targets

more effectively, avoid the risks of climate change and seize more business opportunities brought

about by climate change.

3.5 Brief summary

Chinese companies can draw on the TCFD framework and plan holistically along four pillars:
governance, strategy, risk management, and metrics and targets.

Companies take concrete actions through climate-related risk and opportunity governance.

Governance requires, on the one hand, the involvement of the board of directors, elevating the work

to the high level of decision-making; on the other hand, it is necessary to establish a governance

structure and assign specific responsibilities to the corresponding departments and employees.

The effective functioning of the governance structure requires appropriate salary incentives, and

the alignment of responsibilities and rights in climate governance contribute to the systematic

implementation of climate governance. In the future, Chinese companies will need to strengthen

their governance structures and promote the establishment of supporting mechanisms, such as

remuneration policies, to help implement climate governance actions.

30
 By incorporating climate change into their strategies, companies can prevent and manage the

risks of climate change, and at the same time seize the business opportunities that it presents.

The basis of a climate strategy is the identification of climate-related opportunities and risks

and the quantification of the resulting financial impact to support strategic decisions. Chinese

companies need to consider adopting scenario analysis to systematically analyze the climate risks

and opportunities they face under their current strategies. At the same time, companies should

identify the business value of driving climate actions in the value chain and integrate the low-carbon

transition of the value chain into the approaches of their climate strategy.

Climate risk management in a company is a systematic effort, and implementing it in the

specific processes is an important step in driving a systematic response to climate change. Chinese

companies should learn from international climate risk assessment methods, set a roadmap for

future risk identification, assessment, and management, improve corporate capabilities for climate

risk assessment, identify and analyze the climate risk factors they are facing, develop assessment

and monitoring metrics, and integrate climate risk management into the overall corporate risk

management.

Companies need to put climate governance into practice by setting specific climate-related

metrics and targets. On the whole, Chinese companies are currently on a relatively weak footing in

terms of Scope 3 carbon emissions disclosure, internal carbon pricing and net zero target setting.

The quality of the disclosure of metrics and targets can be gradually improved by continuously

consolidating the accumulated data base, strengthening internal and external capacity building,

mobilizing suppliers to participate in emissions reduction actions, and establishing a data collection

and monitoring system.

Given the gap between the current status of carbon information disclosure by Chinese

companies and the requirements of TCFD and ISDS exposure drafts, it is recommended that

companies should develop a climate information disclosure management team and establish an

internal climate information disclosure system as soon as possible, and gradually improve their

climate information disclosure system from such aspects as board-level oversight, climate risk

and opportunity assessment, carbon emission management and climate target setting, in order to

enhance their climate resilience and capabilities for sustainable development.

31
4. Case Study

4.1 Ping An Insurance (Group) Company of China 18

Background
Founded in 1988 in Shekou, Shenzhen, Ping An Insurance (Group) Company of China, Ltd.,
emerged as the pioneering publicly traded insurance company in China. Over time, it has transformed
into one of the country's three leading integrated financial conglomerates. In light of China's dual carbon
targets, the Group has proactively worked to drive carbon neutrality and sustainable development
across the nation. It has established green finance development goals and a comprehensive 2030 plan
for operational carbon neutrality, with the aim of achieving net zero emissions of greenhouse gases,
including carbon dioxide, within its own operations. It also explores avenues for carbon neutrality in its
asset portfolio. To better turn the principles of sustainable development into actions, it has launched a
five-year agenda focusing on sustainable development initiatives.

FigureFigure
12: Ping An'sAn's
12: Ping Governance Structure
Governance Structurefor
forSustainable
Sustainable Development
Development

Board of Directors Oversee all ESG issues and be

Strategy

responsible for the strategic

level

planning of sustainable
development, risk management,
policy making and progress
Strategy and investment Committee review.
Management

Group Executive Committee Be responsible for the management

of core ESG issues such as green
level

finance, and rural revitalization,

as well as the Group's external
communication and publicity
Sustainable Development Committee concerning sustainable development.

Group ESG Office

Execution
level

Coordinate sustainable
development work in
and outside the Group.
ESG Taskforce (CSR/IR/PR/Group Functional Representatives）

Group Function Units

Practice level

Branding & PR, Brand Office, HR, Finance,

Planning, Asset, Management, Inter Control,
Procurement, Others
Execution Matrix
Insurance
Member
Investment
Companies
Banking Ping An Group Execution Matrix
Technology

18
Source: Ping An Group's 2022 Sustainability Report

32
Climate Governance
Ping An has implemented a four-tier governance structure, with the Board of Directors at the
helm, to supervise and manage climate change and carbon neutrality concerns. Each level of the
organization has governance mechanisms designed specifically for climate-related affairs. Through
ongoing improvements in the management and regular reporting mechanisms of ESG practices and
risks, it ensures timely dissemination of climate risk management objectives, plans, implementation
progress, and outcomes to the Board of Directors and management. This approach enables more
effective climate risk management within the company.

Climate-related Risks and Opportunities

Ping An identifies climate-related physical and transition risks and uses publicly accessible
scenarios to analyze climate scenarios, strengthen assessment and management of climate-related
risks, and plan the roadmaps for emissions reduction.

Figure 13: Climate-related Risks and Opportunities for Ping An

Figure 13: Climate-related Risks and Opportunities for Ping An

Risk Business Magnitude

Risk Type Climate Risk Risk Examples Time Horizon Segments
Factors Categories of Impact
Involved
Operational • Climate disasters may cause physical losses to the physical
Climate disasters Long term The whole Group Significant
Physical risk assets in the affected areas, resulting in asset impairment.
risks Climate change • Climate change leads to business loss of specific clients.
Medium to Banking, asset
Credit risk long term management, etc. Minor

New economic • If the government issues new policies to support low-carbon

Credit risk, transition, high-emission economic activities will be under
policies on market risks, Medium to Banking, asset
pressure, and low-carbon industries may benefit from the Medium
low-carbon long term management, etc.
etc. move. The policies may have a positive or negative impact on
transition the business of specific clients.
Emerging low- Credit risk, • Emerging low-carbon technologies rapidly take over the
carbon market risks, market, while the development of clients in traditional sectors Medium to Banking, asset
long term management, etc. Medium
technologies etc. is hindered.

Fluctuating Credit risk,

• The cash flows of high-emission clients are affected by the Medium to Banking, asset
Transition prices in the market risks, fluctuation of carbon prices. long term management, etc. Significant
carbon market etc.
risks

Credit risk,
Higher • Higher standards for energy use in buildings may require more
operational
environmental investments in renovation for the purposes of energy Short term The whole Group Significant
risk, market conservation and environmental protection
standards
risks, etc.

• With the increasing public concerns for climate change and

green and low-carbon development, inconsistency of the
Concerns of Reputation The whole Group Medium
company's business models with the trend of low-carbon Long term
investors risk economy may impair the corporate reputation and affect
rating results.

The company has incorporated climate-related risks into the Group's ESG risk management,
building a full management process - advance, intermediate and afterward - risk management
mechanism. This mechanism is specifically tailored to the different assets within the organization.
To improve its risk prevention and governance performance, it has integrated ESG's core theories
and standards with the Group's risk management practices and relied on such strategies as the
implementation of a dual control model that involves both the Group and its member companies,
the adoption of ESG integrated risk management approaches, and the provision of a unified ESG
management system along with dedicated management tools.

33
 Key Measures

Developing low-carbon buildings: Ping An's Scope 2 emissions, primarily attributed to

purchased electricity, constitute 87.5% of its total operational emissions, surpassing those of Scope

1 or 3 emissions. To realize its 2030 carbon neutrality goal set for its operations, it started with

buildings. For instance, when constructing a commercial building in Shenzhen, it employed a free

cooling' system, heat recycling system, high-performance elevation design and other cutting-edge

technologies, resulting in a remarkable 46% reduction in energy consumption. In Beijing, guided

by the design philosophy of "Green, Energy-saving, Low-carbon, and Environmentally Friendly",

it promoted energy-conservation and emissions reduction while ensuring optimal comfort and

practical functionality in its commercial buildings.

Cutting office-related emissions: In 2022, Ping An 's total paper consumption amounted to

1,559 tons. During the same period, it launched a series of campaigns to minimize office supply

wastes and reduce operational emissions, which garnered significant participation from its major

office buildings. These efforts involved promoting double-sided printing, adopting online paperless

processing systems, relying more on online conferences, and encouraging improved office behaviors,

resulting in a reduction in office-related carbon emissions.

Transitioning from brown assets to a green future: Ping An plans a cut or phase-out of its

investments in brown assets to facilitate the achievement of its low-carbon targets and transition

of its asset structure to a green future. The Group has made it clear that its future financial support

will be correlated with transition roadmaps and targets, imposing stringent thresholds, and listing

management systems on various aspects of the four industries with the highest carbon emissions.

Promoting investments in green assets: To promote the development of global green economy,

Ping An prioritizes and focuses its investments on assets that remove carbon dioxide.

In September. 2022, the company launched green bonds funds, aimed at supporting

the growth of renewable energy-based electricity generation in countries along the Road

and Belt. These funds will add an additional 181 MW of electricity-generating capacity from

renewable sources, bringing their total capacity up 71,770 MWh while cutting 135,012 tons

of CO2 emissions.

34
4.2 Yanfeng 19
Background
The Shanghai-based Yanfeng Automotive Interiors (YFAI) operates 82 plants and technology
centers across 17 countries with 27,000 global employees. The company designs, develops,
and manufactures automotive interiors and exteriors for all carmakers. It considers sustainable
development as a cornerstone of its global corporate strategy. It places particular emphasis on
carbon neutrality, greenhouse gas emissions reduction, and development of lightweight product
portfolios to enhance fuel efficiency and minimize landfill waste. Moreover, the company collaborates
with Schneider Electric, Sphera, iPoint, and the Responsible Supply Chain Initiative (RSCI) and other
organizations to effectively work towards achieving its carbon neutrality goals.

Climate Governance
YFAI has established a Sustainable Development Committee, led by the CEO as the chairman,
who is responsible for assessing and managing climate-related risks and opportunities, reviewing risk
management policies, reporting significant risks, and making informed decisions. The global climate
risk managers are appointed to coordinate and manage risks on a regional level, providing regular
reports to the CEO. The regional risk managers are assigned to assess risks specific to their respective
regions. Additionally, the Sustainability Council, consisting of multiple functional departments such as
procurement, R&D, operations, finance, human resources, legal, IT, and public relations, collaboratively
defines sustainable development metrics and encourages its members to take actions within their
respective sectors so as to facilitate the implementation of lighthouse projects.
The company has included climate metrics as part of its employee incentive mechanisms by
integrating the Scope 1 and 2 carbon emissions reduction targets for the 2020-2023 period into its
long-term incentive plan for its senior management team. It also provides financial incentives for
EHS managers who successfully meet energy-saving goals and obtain ISO 50001 certification. To
further rise energy efficiency, it has introduced the Energy Hunt Program, which encourages the
active involvement of all factory employees in this effort.

Climate-related Risks and Opportunities

After assessing acute physical, chronic physical, current regulation, emerging regulation, science
and technology, laws, market and reputation, and other physical and transition risks, YFAI has taken
targeted measures.

19
Source: YFAI's 2022 CDP Climate Change Disclosure and 2021 YANFENG Corporate Social Responsibility Report

35
 Figure 14: Climate-related Risks and Opportunities for YFAI
Figure 14: Climate-related Risks and Opportunities for YFAI
Risk Type Climate Risk Risk Examples Time Horizon Magnitude Solutions
Factors of Impact
The company faces various
• Develop energy management plans to save energy.
legal frameworks as it
Current regulation Medium term Medium • Follow international standards to set specific targets for reducing
operates across over 12
energy consumption.
countries.

Science and Technology holds the key • Product and service R&D.
Medium to
Transition technology to the success of its Medium term • Regularly receive customer feedback.
high
risk business models. • Develop lightweight solutions.

It places greater importance • Identify customers' needs for sustainable development and
Reputation on corporate image and Medium to
Short term climate strategies.
negative feedback from its low
• Conduct climate-related risk governance.
stakeholders.

The company also recognizes the identified risks as potential climate-related business
opportunities. It actively engages in renewable energy projects, implements energy efficiency
measures, innovates its products and services, and adapts to market shifts that proceed from the
evolving consumer preferences. It promotes its climate-related risk and opportunity management
system to global organizations and constantly enhances its effectiveness.

Setting Climate Goals

Guided by the dual-carbon strategy, YFAI aspires to Scope 1 and Scope 2 carbon neutrality by
2030 and a 50% reduction in Scope 3 emissions (upstream supply chain). At the same time, it has
set its sights on comprehensive global carbon neutrality by 2040. In addition to these overarching
goals, it has also established specific targets related to energy consumption and energy efficiency.
By 2030, it aims to ensure that renewable energy sources account for 100% of its total energy
consumption. In 2020, it also set a target to improve energy efficiency by 3% annually across all its
global automotive interiors manufacturing areas.

Key Measures
Internal operation: in 2022, thanks to improved resource efficiency and adoption of renewable
energy, YFAI reduced its Scope 2 emissions by 217,152 tons, a 22% drop from that of last year.
Use of renewable energy: YFAI has collaborated with global partners on six solar panel projects.
One notable project involved the installation of 1,373 solar panels on the roof of the Neustadt factory
in Germany, estimated to generate approximately 532,000 kWH of electricity annually. In 2021, the
automotive supplier utilized a total of 48,000 square meters of solar panels worldwide. By 2022,
renewable energy had become the exclusive power source for all its European factories.
Enhancing resource efficiency: YFAI has taken a range of measures to improve resource
efficiency in its daily production. One example is that it globally sourced 3,736,160 kilograms of

36
recyclable materials. Since it applied the proprietary Compression Hybrid Molding (CHyM) process,
the company was able to save 1,600,000 kilograms of plastic for 6,000,000 door panels produced
worldwide, compared with conventional manufacturing methods.
Raising employees' awareness about carbon reduction: To achieve the sustainable
development goals designed for its business units and the entire company, YFAI has implemented
the Energy Hunt Program across its global interior factories, encouraging active participation from all
employees. As part of the program, one energy-saving advocate will be appointed within each factory
and provided with specialized training. These advocates play a vital role in driving the program's
success by regularly communicating performance and progress updates.
Across the entire value chain: With the help of carbon footprint monitoring tools, YFAI
effectively engages with customers and suppliers, offering more sustainable solutions and reducing
emissions at all stages of the value chain.
Product carbon footprint accounting: Apart from company-level climate mitigation measures,
YFAI introduced product carbon footprint software for its automotive interior products in 2021 to
improve its environment reporting at the product level. This software allows the company to measure
the carbon footprints of various interior applications and provide data support to downstream
customers for carbon accounting purposes.
Developing sustainable products: As an automotive interior manufacturer, YFAI is committed
to developing sustainable products. For example, the company has developed a sustainable steering
wheel that reduces carbon monoxide equivalent emissions by over 95% per kilogram during production.
Its environmentally friendly interior decorations incorporate recycled fabrics that are 100% recyclable,
and its lightweight design of dashboard crossbeams reduces weight up to 50%.
Evaluating suppliers' climate-related performance: To deepen collaborations with suppliers,
YFAI has identified sustainable development as a key part of its procurement process and an
essential criterion in evaluating supplier performance. To date, the majority of its direct suppliers
have successfully undergone this process. It also organizes an annual Yanfeng Outlook Day event
where suppliers are introduced to current and future sustainable development initiatives, along with
collaborative opportunities.

4.3 Zhongxing Telecommunication Equipment Corporation (ZTE) 20

Background

ZTE Corporation is a global provider of telecommunications and information technology.

Founded in 1985 and listed on both the Hong Kong and Shenzhen Stock Exchanges, the company has

20
Source: ZTE's 2022 CDP Climate Change Disclosure and 2021 ZTE's Sustainability Report

37
been committed to providing innovative technologies and integrated solutions for global operators,

enterprise customers, and individual consumers from over 160 countries, serving over a quarter of

the global population. The company adheres to the concept of "Innovation, Convergence, and Green

Development" throughout its product lifecycle, from R&D to production, logistics, and customer

services. It has been releasing the sustainability report/CSR report to the public since 2009 as well as

participating in CDP climate disclosure since 2008. To tackle the challenges posed by the low-carbon

transition, it has paved a green path to the digital economy by promoting green operations, green

supply chain, green digital infrastructure, and empowering the green development of industries to help

operators and industrial consumers transition to a green, low-carbon, and sustainable future.

Climate Governance

ZTE has established an organizational structure for sustainability within the company. At the top

level, its Board of Directors reviews the company's annual sustainable development strategy, major

projects, and related work plans, and regularly discusses reports from the Sustainable Development

Management Committee to ensure that the company's sustainable development goals are achieved.

The Sustainable Development Management Committee comprises the senior management members

of the company, including the Executive Vice Presidents, Chief Operating Officer, and Chief Strategy

Officer. The committee implements the decisions of the company's Board of Directors on sustainable

development in terms of the environment, society, and governance, guards the company against

relevant risks, and reports the work progress to the Board of Directors on a regular basis. Under the

Figure 15: The Sustainability Governance Framework of ZTE

Board of Directors

Sustainable Development Management Committee

Sustainable Development Working Group

Optimizing Staying away Leading with Empowering Securing Promoting Upholding Shouldering
Governance from Redlines High-End Industries Customers' Green Win-Win CSR to
to Prevent and Adhering Talent and Through Trust with Development Cooperation Contribute to
Operational to Compliance Supporting Innovation Openness and to Tackle to Grow with the Global
Risks in Operations Employee and Building Transparency Climate Partners Community
Development the Foundation Change
of Digital
Economy

38
coordination of its Human Resources Department, the Sustainable Development Working Group

consists of representatives from all units within the company (Compliance, Strategy, Finance and

Accounting, Supply Chain, Securities, Quality, Learning and Development, Marketing, R&D, Branding,

Cybersecurity, Operations Management, and ZTE Foundation). The working group reports ESG

information to the Sustainable Development Management Committee and provides necessary

information for decision-making. It also guides and supports the units in executing sustainable

development strategies and decisions.

Climate-related Risks and Opportunities

Identifying climate-related opportunities from product and service R&D: ZTE's customers,

including major telecom operators both internationally and domestically, have stringent requirements

for supply chain and product energy efficiency. They expect suppliers to set emissions reduction

targets, demonstrate progress in emissions reduction, offer energy-efficient products, and disclose

carbon footprints. ZTE understands that setting emissions reduction and energy efficiency goals

not only helps the company save costs but also attracts and retains customers with needs for

low-carbon development, thereby enhancing its overall market competitiveness. To capitalize on

these opportunities, it has strategically restructured its former Digital Energy Product Operation

Department. By integrating power electronics, energy storage technology, cloud technology, and

artificial intelligence, it aims to rapidly digitize its energy and develop innovative energy-saving

products and services. Furthermore, it has increased its R&D investments in energy efficiency,

operations, and low-carbon innovation within its production to enable its production process to be

low-carbon and highly energy-efficient.

Setting Climate Goals

ZTE Corporation has clearly set its ambitious goals to reach "carbon peak" by no later than 2030 and

achieve "carbon neutrality" by no later than 2060. Acknowledging the immense challenges of the low-

carbon transition, ZTE is strategically developing green solutions for enterprise operations, supply chain,

digital infrastructure, and industry empowerment to drive the progress toward its dual carbon goals.

Key Measures

Green operations: since 2021, ZTE has been inviting external certification agencies to conduct

annual on-site inspections within the company and to verify its global greenhouse gas emissions in

39
accordance with the ISO 14064 standard. It has also provided relevant carbon emission data in its

annual sustainability report.

Green supply chain: ZTE collaborates with partners across its global value chain to establish

a "green supply chain", focusing on energy conservation and emissions reduction in raw material

selection, material recycling, and logistics and transportation. The company requires its suppliers

and partners to adhere to the environmental and social responsibilities.

Green digital infrastructure: ZTE is actively working towards minimizing its infrastructure

carbon footprints by deploying green sites and data centers. Firstly, in the construction of

communication network energy infrastructure, it has introduced the concept of a new "zero-carbon"

energy network and promoted its application through the adoption of green energy sources.

Secondly, in the design and implementation of site products and solutions, it has integrated low-

carbon and environmentally friendly principles, such as reducing resource waste and promoting

smart collaboration, to establish green sites. Thirdly, it has developed digital solutions like UniSite+,

PowerPilot, and iEnergy, which have been widely deployed in operator networks worldwide, effectively

supporting energy conservation and consumption reduction.

In addition, it is dedicated to the development and provision of eco-friendly products. This

includes using recyclable phone packaging, designing smart devices with low energy consumption,

as well as building high-performance data centers. Environmental protection requirements have

become an integral part of its conceptual design, performance appraisal, design finalization, and

product certification processes, establishing a full-lifecycle management system for green products

that intends to reduce carbon emissions during product sales and use.

Empowering the green development of industries: ZTE continuously drives ICT innovation

and collaborates with industry partners to explore green application scenarios. It launched its own

green energy strategy in 2021, demonstrating its commitment to promoting green energy. With over

500 green innovation patents, it consistently improves efficiency, reduces energy consumption, and

contributes to building a green and low-carbon society through technological innovations. Moving

forward, it will further strengthen its basic research efforts in new energy, new materials, and new

components, striving for key technological breakthroughs. By promoting the extensive adoption of

digital technologies across various sectors for sustainable development, it will ultimately achieve

carbon neutrality.

40
5. Prospects

There is a growing global consensus on addressing climate change and protecting our

environment. As part of its efforts in global governance and in building a shared future for mankind,

China's commitment and actions in this regard are essential for the great rejuvenation of the Chinese

nation. In its 20th National Congress report, the Chinese government highlighted the pursuit of a

"modernization of harmony between humanity and nature" as one of the five defining characteristics

of China's modernization. Consensus turns into actions only when information is disclosed.

Comparable corporate environmental information applying increasingly consistent standards will

provide key data foundation for shaping carbon policies and managing green investment portfolios

and green supply chains.

Climate and environment legislation are becoming increasingly stricter in the European and

US markets, with a wider coverage of mandatory disclosure and more rigorous requirements.

One example is the EU's Corporate Sustainability Reporting Directive (CSRD), which applies to an

enterprise's global supply chain and companies trading securities in the EU market, and mandates

reporting on the environmental impact of corporate activities. Consequently, certain Chinese

companies may be affected. The Chinese mainland currently has voluntary and mandatory

disclosure mechanisms running in parallel. But research has commenced on developing Chinese-

specific standards for sustainability information disclosure. Within this context, Chinese businesses

shall stay informed about and understand the evolving information disclosure requirements set by

policymakers and investors regarding the environment, climate, and nature conservation and gain

deeper insights into environment disclosure practices to prepare for compliance.

The global sustainability disclosure standards are converging and becoming increasingly

compatible. Recent sustainability disclosure standards introduced by major countries and regions

demonstrate a strong alignment with the TCFD framework and regard climate risks as an important

consideration. The ISDS (draft), which is built on existing international disclosure requirements,

encompasses the four pillars of the TCFD disclosure framework. This initiative is supported by

China and other G20 members. As a platform that has consistently adopted mainstream disclosure

standards, CDP is committed to contributing to the standardization and digitization of essential

41
climate data. Following the comprehensive integration of the CDP questionnaire with the TCFD

framework in 2018, during COP27, CDP announced that it is to incorporate ISSB's climate-related

disclosure standards into its disclosure system starting from 2024. This move ensures that nearly

20,000 companies worldwide, which have already disclosed through CDP will be exempt from

duplicative disclosure, effectively reducing their compliance costs. Chinese companies can use the

CDP questionnaire to proactively familiarize themselves with international mainstream disclosure

standards and make early preparations.

Regarding environmental disclosures and management of impact on environment, Chinese

companies have made continuous improvements, offering the international community Chinese

wisdom and solutions in combating climate change. Notably, some top-notch Chinese companies

have moved beyond mere on-request disclosure and have proactively leveraged CDP to establish

and manage their global green supply chains. By doing so, they aim to catch up with global leading

counterparts by empowering their supply chains to play a more extensive role in decarbonization,

thereby gaining a competitive advantage in this new international arena.

2023 must be a year of accelerated action as we strive to achieve the arduous task of limiting

global warming to 1.5°C. On the domestic front, the journey towards achieving "carbon peak" and

"carbon neutrality" is faced with numerous challenges, necessitating collaborative efforts and

collective actions. The Chinese president Xi Jinping once said, "Charge at the toughest and aim

at the farthest", which means to take on the biggest challenges and go after the most ambitious

goals. Looking ahead, CDP is looking forward to fostering broader and deeper cooperation with

stakeholders in China, working together to drive transformations in combating climate change and

protecting biodiversity to build a greener, more prosperous, and sustainable future.

42
6. Appendix (CDP methodological framework
& technological standard updates)

CDP facilitates companies in promoting the transparency of their environmental actions, scaling

up their environmental efforts, and embracing accountability through its standard questionnaire

system, which embraces three different types of questionnaires: the climate change questionnaire,

which focuses on companies' response to climate change risks and their efforts in emissions

reduction; the forests questionnaire, which addresses companies' management of deforestation

risks and improvement of traceability in commodity supply chains; and the water security

questionnaire, which highlights companies' water security risks and enhancement of water efficiency

in their operations. The dimensions contained in these questionnaires have been aligned with the

reporting framework recommended by the TCFD, covering Governance, Strategy, Risk Management,

and Metrics and Targets. As a result, CDP now has a TCFD-aligned environmental database.

Table 16: The Relationship Between the Climate Change Questionnaire and TCFD's Recommendations
CDP Climate
Dimension TCFD's Recommendations for Disclosure
Questionnaire
Provide board-level supervision information on climate-related risks
and opportunities.
Governance C1.1b; C1.2; C1.2a
Provide management-level responsibilities on assessing and
managing climate-related risks and opportunities.
Provide the short-, medium-, and long-term climate-related risks and
opportunities identified by organizations.
C2.1a: C2.3: C2.3a;
Provide the implications of climate-related risks and opportunities on C2.4; C2.4a: C3.1: C3.2;
Strategy
an organization's business, strategies, and financial planning. C3.2a; C3.2b; C3.3; C3.4;
C-ES3.7; C-FS3.7a
Provide resilience to an organization's strategies, considering
different climate scenarios including those relevant to 2°C or below.

Provide the procedures to identify and assess climate-related risks.

Provide the procedures to manage climate-related risks. C2.1; C2.2; C2.2a;

Risk
C-FS2.2b; C-FS2.2c;
management
Provide how the procedures for identifying, assessing, and managing C-FS2.2d; C-FS2.2e
climate-related risks could be integrated into an organization's overall
risk management activities.
Disclose the metrics applied by an organization when it assesses
climate-related risks and opportunities through its strategies and risk C4.1; C4.1a; C4.1b;
management procedures. C-FS4.1d; C4.2; C4.2a;
Metrics and C4.2b; C6.1; C6.3; C6.5;
Disclose information on Scope 1, 2, and 3 (if applicable) greenhouse
targets C6.5a; C9.1; C-FS14.0;
emissions and relevant risks.
C-FS14.1; C-FS14.1a;
Provide an organization's targets on climate-related risks and C-FS14.1b; C-FS14.1
opportunities management and progress toward them.

43
 CDP provides a general questionnaire for each of the three themes (Climate Change, Forests,

and Water Security), along with industry-specific questionnaires tailored to sectors with significant

environmental impact, taking into account their unique characteristics. In addition, CDP has

developed comprehensive scoring methodologies for each questionnaire, encompassing base

scores and score weights for each grade.

Questionnaire scoring is conducted by accredited scoring partners trained by CDP. Its internal

scoring team then collates all scores, running data quality checks to ensure that scoring standards

are accurate and consistent.

CDP ranks participating companies within their global industry peers based on four ascending

levels: (1) Disclosure (D-/D), (2) Awareness (C-/C), (3) Management (B-/B) and (4) Leadership (A-/A).

These four levels present their progress in the journey of environment management.

CDP upholds the principles of voluntary, public, and transparent disclosure. The methodologies,

which are subject to annual updates, are publicly accessible on its official website and can be

obtained free of charge. Additionally, companies' annual ratings are shared with invited investors and

procurement customers through the platform. Companies have the flexibility to decide whether to

publicly disclose their ratings on the CDP official website, in accordance with their own discretion.

By participating in annual environmental data disclosure, companies can reap various benefits.

They can enhance their reputation, move ahead of market regulatory requirements, strengthen their

competitive advantage, identify environmental risks and opportunities, track and measure progress,

and lower financing costs. Research indicates a positive correlation between higher environmental

performance scores and improved financial results among companies. Notably, over the past eight

years, the "STOXX Global Climate Change Leaders Index", which is based on the CDP's 'A-List', has

delivered an average annual return 5.8% higher than other comparable indices21.

21
The date is based on the aggregate performance (total returns) of the STOXX Global Climate Change Leaders Index and the STOXX
Global 1800 Index between December 19th, 2012 and November 17th, 2021.

44
Acknowledgements

CDP would like to express its sincere gratitude to the companies and partners involved in the

consultation during the preparation of this report. Its appreciation also goes to PwC China for their

invaluable support in the preparation and publication of this report. The report was co-authored

by CDP China and PwC China with each party holding the copyrights and other related intellectual

property rights for their responsible sections of the report and subsequent revisions.

45
Authors

CDP China PwC China

Wu Furong (Flora Wu) Cai Xiaoyin (Amy Cai)
CDP China Country Director PwC China ESG Managing Partner
[email protected] [email protected]

Li Fei Ni Qing
CDP China Associate Director PwC China ESG Markets Leader
[email protected] [email protected]

Gui Xuan Wang Ying (Mendy Wang)

CDP China Lead of Corporates and Supply PwC China ESG - Climate and Sustainability
Chain Partner
[email protected] [email protected]

CDP China Cui Junlian

Room 1902, Tower A, Beijing Wanda Plaza PwC China ESG - Climate and Sustainability
No. 93 Jianguo Rd, Chaoyang District Senior Manager
Beijing 100022 [email protected]
Tel: +86 (0)10 5820 3261
Shi Kangjie
PwC China ESG - Climate and Sustainability
Senior Associate
[email protected]

Wang Yiyang
PwC China ESG - Climate and Sustainability
Associate
[email protected]

46