There are two major challenges to climate disclosure, and it is a "marathon" for enterprises to respond to
Every reporter Huang Zongyan and every editor Wen Duo
Recently, the Shanghai Stock Exchange, the Shenzhen Stock Exchange and the Beijing Stock Exchange issued guidelines for the sustainability reporting of listed companies (hereinafter referred to as the "Guidelines"), which will be implemented from May 1, 2024.
The reporter noted that in the third chapter of the "Guidelines", "Environmental Information Disclosure", "responding to climate change" was listed as the first topic, and there were nearly ten corresponding articles, which was the most in all topics, and the importance of it can be seen.
It is not difficult to understand that enterprises, as an important force in social and economic development, play a pivotal role in addressing climate change, because climate change may bring various risks and challenges to the production and operation activities of enterprises, such as supply chain disruptions, changes in market demand, etc. By disclosing relevant information, companies can better identify and assess these risks, and formulate corresponding countermeasures to ensure the stable development of enterprises.
In the past, companies faced many problems when disclosing relevant climate information, such as differences in their own industries, business scales, and geographical locations, and there was no unified standard and no clear disclosure regulations for climate-related information that needed to be disclosed. After the implementation of the Guidelines, companies will need to disclose according to the specified content specifications, which will undoubtedly make enterprises face some challenges - these challenges include scenario analysis, climate adaptation assessment, etc.
Recently, in an interview with the reporter of "National Business Daily", Dr. Guo Peiyuan, Chairman of SynTao Green Finance, pointed out that there are two main challenges in climate disclosure, one is carbon emission data, such as the measurement of Scope 3 (which refers to the greenhouse gas emissions indirectly generated by an organization in the upstream and downstream of its value chain), and the other is scenario analysis, because many companies are not familiar with this concept. So, how should enterprises deal with these two challenges? Guo Peiyuan believes that efforts can be made from two aspects: capacity building and consensus building.
A few days ago, Shi Yichen, senior academic adviser of the International Institute of Green Finance of the Central University of Finance and Economics and chief economist of Zhongcai Green Index, told the reporter of "Daily Economic News" that there are relatively few third-party institutions on the market that can provide scenario analysis or stress testing services Actions of the enterprise are punished.
Climate Change Disclosure: Helping Enterprises Achieve Orderly Transformation
Addressing climate change has become one of the world's most important concerns, and many countries or organizations have established corresponding information disclosure frameworks to comprehensively assess whether companies' performance on this issue is in line with sustainable development values. It is understood that the most widely used framework is the information disclosure framework launched by the TCFD (Task Force on Climate-related Financial Disclosures), which includes four parts: "governance", "strategy", "risk management" and "indicators and targets".
The Guidelines also give an important place to the issue of climate change. In Chapter 3 of the Guidelines, "Environmental Information Disclosure", "Responding to Climate Change" is listed as the first topic, and the corresponding 9 articles are listed, which is the most clause among all substantive topics. Article 21 states: "In addition to disclosing the governance, strategies, impacts, risks and opportunities management, indicators and targets related to climate change in accordance with the provisions of Chapter II of these Guidelines, the disclosing entity shall also disclose relevant information on climate change in accordance with the provisions of this section." ”
It can be seen from the above that the climate change information disclosure framework of the Guidelines is consistent with the TCFD framework to a large extent, fully highlighting the characteristics of integration with international standards.
Guo Peiyuan told the "Daily Economic News" reporter that the issue of climate change is a relatively hot issue in the world. It is generally referred to as "climate change" abroad, and is generally regarded as related to "dual carbon" in China. When it comes to "dual carbon", it will have an impact on enterprises in all aspects, including both risks and opportunities, and for most enterprises, it may involve how to achieve their own orderly transformation in the overall energy transition process.
Qian Junfa, director and deputy general manager of Kaiying Network, recently told the "Daily Economic News" reporter that the specific measures of enterprises in different industries will be different, some in emission reduction, some in energy conservation and other aspects. At the same time, he believes that the sooner companies update their ideas and equipment, the sooner they can make the transition in the short and long term.
Climate Resilience Assessment: It is recommended that companies start with qualitative disclosures
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At the same time, the Shenzhen Stock Exchange also encourages qualified companies to disclose Scope 3 greenhouse gas emissions, use scenario analysis and other methods to conduct climate adaptation assessments, and hire third-party institutions to verify or verify greenhouse gas emissions and other data.
In addition, the Guidelines explain scenario analysis in detail: "Scenario analysis refers to the process and method of determining and evaluating the range of potential outcomes of future events under uncertain conditions. In the case of climate change, companies can use climate-related scenario analysis to assess how the physical and transition risks of climate change may affect their business, strategy and financial position in the future. ”
Although the Guidelines provide relevant disclosure directions, how to assess, measure and verify the relevant work for companies that have not carried out relevant work before, or whose business is less relevant to climate change, are practical challenges.
In this regard, Qian Military Law expressed a similar view. He believes that domestic companies face the problem of choosing standards when disclosing climate-related information, and at present, they can only rely on international standards. Therefore, he "hopes that the national level will issue an ESG indicator system with Chinese characteristics as soon as possible, [which] will help companies implement relevant plans."
In Guo's view, there are two main challenges to climate disclosure.
The first is the accounting of greenhouse gas emission data. "Some companies may not even have calculated Scope 1 (direct greenhouse gas emissions generated by an organization) and Scope 2 (greenhouse gas emissions generated by an organization's purchased energy), and some companies may have calculated Scope 1 and Scope 2, but it is undoubtedly a difficult point for those industries with long value chains, such as automobiles and finance, to calculate Scope 3," Guo said. In response to this problem, enterprises should be gradually familiar with and carry out relevant capacity building, and there needs to be some emission factor libraries or some public measurement platforms and tools for enterprises to use. ”
He continued: "The second is scenario analysis. For climate change issues, the current mainstream analysis method in the world is scenario analysis. But for many companies, scenario analysis is still a less familiar concept. Therefore, it is also necessary for enterprises to establish a consensus and realize that this is a gradual and clear process, and it is impossible to be very precise and quantitative all at once. Enterprises can start with qualitative expression, which is a process from easy to difficult. ”
Kwok added that the process requires a balance of speed, like a marathon.
Finally, Shi Yichen put forward some suggestions: at present, there are relatively few third-party institutions in the market that can provide scenario analysis or stress testing services, and it is suggested that the China Shanghai Association can take the lead and carry out corresponding training; secondly, the exchange can cooperate with the "Guidelines" to launch another "code of operation" to facilitate and standardize the actual work of enterprises; finally, establish a supporting punishment mechanism to punish enterprises that falsify data or have "greenwashing" behaviors.
