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The green economy: pushes and pulls on corporate china

For three decades, China has been industrialising, urbanising and expanding its role and importance in the global economy. Rapid development has propelled China to become the second largest economy and the largest carbon-emitting nation in this short time.

This report provides an overview of China’s rising population, growing demand for natural resources, and increasing production of pollution, as well as its efforts to clean up the environment and reduce carbon emissions.

It also addresses China’s role as the world’s major manufacturer for all kinds of products. In the past three decades, China’s growth and poverty alleviation coincided with the emergence of global supply chains. The key issues for multinational buyers with respect to manufacturing in China have to do with how to upgrade the environmental and social performance of a very great number of Chinese suppliers. As China’s domestic market grows, it is critical that Chinese producers also improve their environmental performance.

Finally, the China story cannot leave out the Special Administrative Region of Hong Kong. It is not only China’s international financial centre but also the hub for China’s supply-chain activities. Its open and liberal environment provides a home for many NGOs that are very active in promoting the sustainability agenda.

The green economy: pushes and pulls on corporate china summary findings include:

  • Chinese government’s policies are intended to ‘green’ the currently fossil fuel-based ‘brown’ economy through a series of decarbonisation, energy-efficiency and water-saving policies.
  • Investment in new energy-related sectors is set to be around US$770bn over the period 2011 to 2020, including an estimated US$231bn for wind power.
  • A significant challenge is around the energy–water nexus as water is needed for almost all forms of energy production and energy is also needed to pump and treat water. Improving water management has finally become a top policy priority in the 12th Five-Year Plan and specific improvement targets have been set and funds allocated for implementation.
  • The Chinese government is pushing Chinese companies, especially state-owned enterprises under its control, to improve sustainability practices.
  • Government-led sustainability practices and reporting will improve China’s corporate practices.
  • The accountancy profession has a role to play in assisting Chinese business to adapt to the changing operational and legislative landscape. ‘Big 4’ accountancy firms are already providing sustainability and climate change services to their clients in China and providing assurance over non-financial reports and factoring in environmental and social risks into corporate valuations, but the level of service falls below that in more mature markets such as the UK and Europe.
  • Hong Kong, the most developed city in China, has the potential to play an important sustainability role in the country’s evolution owing to its well-developed institutional capacity, including a liberal environment for the work of non-governmental organisations.

 

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Published: 11 Oct 2012