Signals going green

Chinese firms are increasingly setting the pace on corporate climate action with the adoption of science-based targets that have a supply chain amplifier effect

With the 16th APEC Energy Ministerial Meeting taking place in Beijing from Sept 10 to 11, energy security, the clean energy transition, innovation and more resilient regional energy supply chains are high on the Asia-Pacific agenda. China is already translating many of these priorities into action.

China is setting the pace for the global net-zero transition on three interconnected fronts: national decarbonization, clean technology and corporate climate action. Ambitious national goals have driven economy-wide transformation, which has helped establish China as a global leader in the technologies underpinning the energy transition. Chinese companies are increasingly turning ambition and capability into actions.

The first two are already reshaping markets. China's "dual carbon" goals — to peak carbon dioxide emissions before 2030 and achieve carbon neutrality before 2060 — have driven rapid decarbonization that may have allowed China to peak emissions well ahead of schedule. In 2025, China's carbon dioxide emissions per unit of GDP fell by 5 percent year-on-year, while the share of non-fossil energy in total energy consumption reached 21.7 percent, up from 16 percent in 2020. Wind and solar power capacity also surpassed thermal power capacity for the first time.

Those national goals have in turn helped make China a leader in the development and global supply of the "new three": power batteries, electric vehicles and solar cells. The scale of this technological transformation means that decisions made by Chinese businesses increasingly have consequences far beyond China's borders.

The third front, corporate climate action, is now gathering similar momentum.

More than 800 Chinese companies have validated targets with the Science-Based Targets initiative, including Tencent, Huawei and JD Logistics. These targets are used to frame long-term business planning as the companies operate in increasingly global markets.

This is not simply a matter of China catching up with a global trend. It is China helping to set the pace of the trend.

I saw this shift firsthand during a recent visit to China. In conversations with companies, the question I heard was no longer "what is a science-based target", but "what can I do to reach my science-based target".

The change in question is significant. It suggests that target-setting is becoming less of a destination and more of a starting point for business transformation.

For companies operating across global markets, there are clear reasons to pursue that transformation: stronger alignment with supply chain and customer requirements, enhanced competitiveness, greater resilience to future regulation and better risk mitigation. As a major buyer and exporter, China is also increasingly important in driving science-based climate action across the region. What happens in China can travel through the markets and supply chains in which its companies operate.

But the greatest opportunity may lie beyond individual companies.

China is one of the world's most important manufacturing and supply chain hubs. Companies such as Lenovo, JD Logistics, Tencent and CLP sit at the heart of regional and, in many cases, international supply chains. As they act on their own climate targets, they can engage suppliers, influence procurement and help spread new expectations and practices through dense business networks — creating a supply chain amplifier effect that carries corporate climate action beyond borders.

Lenovo provides a useful example. To tackle its Scope 3 emissions — those generated in a company's supply chain or through the use of its products — it is working closely with suppliers to improve emissions reporting, support renewable energy adoption and advance supplier decarbonization efforts. It has connected its targets to fundamental business decisions such as procurement and supply, while also extending that thinking into innovations in its technology and product design — including its Neptune liquid cooling technology, which reduces energy consumption during product use.

The next phase of the transition will not be frictionless. Companies need reliable emissions data, strong data management and internal capacity to understand and address emissions across complex value chains. Scope 3 emissions often account for the greatest proportion of a company's emissions and are among the most difficult to tackle. For China, as a major global supply chain hub, this presents significant challenges but also enormous potential for cooperation, emissions reductions, resilience and risk management.

Credible corporate climate action requires acknowledging these realities rather than pretending they do not exist. The challenge is to make progress while being transparent about the barriers that remain.

That is also why international standards need to evolve alongside the businesses expected to use them. The Science-Based Targets initiative's Corporate Net-Zero Standard Version 2.0 is one example. The standard recognizes that Chinese companies, like businesses all over the world, operate in distinct geographic, environmental and regulatory contexts with varying supply chain structures, commodity exposure and implementation challenges. It aims to maintain the integrity of corporate climate targets while recognizing the practical realities of delivering change.

China therefore has an important role to play not only as a major source of corporate climate action, but also as a proof point for what implementation can look like at scale. If corporate climate targets can translate into credible action across China's complex industrial and supply-chain landscape, and international standards can flex to those realities without compromising their integrity, there will be valuable lessons for companies in Japan, the Republic of Korea, India and Southeast Asia.

There is already strong demand for this next phase. During my recent visit, more than 20 companies registered their interest in setting science-based targets — a clear signal that the appetite for action is growing.

Science-based targets are therefore becoming more than an environmental, social and governance commitment. In China, they are increasingly understood as a credible signal of corporate climate action and good governance, helping companies respond to the expectations of customers, investors and other stakeholders as they operate regionally and internationally.

But the future of corporate climate action will ultimately be determined by what companies do with those targets. China has the reinforcing combination of national ambition, technological capability and corporate scale needed to turn climate commitments into action. Its next contribution to the global transition will be measured not simply by how many companies set targets, but by how effectively those targets translate into decisions, investment, innovation and action across their businesses and supply chains.

If China can demonstrate that ambitious corporate climate targets can become practical transformation at scale, its influence will extend well beyond the emissions reductions of individual companies. It can help set the pace for the next chapter of corporate climate action across Asia and around the world.

The author is the chief strategy and transformation officer at the Science-Based Targets initiative.

The author contributed this article to China Watch, a think tank powered by China Daily. The views do not necessarily reflect those of China Daily.

Contact the editor at editor@chinawatch.cn.