Episode 3 of the series features WeCarbon, a participant in the NEX Climate Fintech Accelerator 2023 and the NEX COP28 Climate Tech Accelerator. WeCarbon is a technology company providing one-stop, full-lifecycle carbon neutrality and ESG management solutions. Through its proprietary AI and data platform, it aims to become the central brain for sustainability work in key industries, providing end-to-end management across six application scenarios: disclosure compliance and green certification, cross-border green compliance, green finance, carbon and energy management, carbon assets and trading, and ESG management.
Episode highlights
Why does the voluntary emission reduction market matter so much?
How can companies turn their green benefits into economic value?
How do international policies affect carbon management for cross-border businesses?
(1) Carbon market system and policy
Carbon disclosure
In recent years, the Ministry of Ecology and Environment has steadily tightened its requirements for corporate carbon disclosure, particularly for listed companies and stock exchanges. Hong Kong was an early adopter of the disclosure requirements of the Task Force on Climate-related Financial Disclosures (TCFD). The Beijing, Shanghai and Shenzhen stock exchanges are now actively following suit with a series of rules, focusing mainly on the disclosure of key ESG-related indicators by listed companies, both state-owned and private.
In addition, the State-owned Assets Supervision and Administration Commission of the State Council (SASAC) is responsible for supervising and managing all central state-owned enterprises. Even unlisted state-owned enterprises will see their social responsibility and ESG disclosure regulated and supported.
Voluntary emission reduction trading returns
With the carbon market regulations issued by the Ministry of Ecology and Environment in 2023, China's two-part carbon market structure of mandatory carbon allowances plus voluntary emission reductions is gradually taking shape. One example is the relaunch of China Certified Emission Reductions (CCER) to encourage companies to cut emissions voluntarily. Alongside CCER, regulations on mandatory carbon emission disclosure and Carbon Emission Allowances (CEA) were issued in quick succession. These regulations make the market rules clearer and mark an important milestone in the relaunch of China's voluntary emission reduction market.
Reaching net zero cannot rely on advocates or government departments alone; it has to be driven by economic mechanisms. Specifically, reward mechanisms can encourage behaviour that cuts carbon emissions, attracting more market participation and capital. This economic cycle creates higher returns on investment and in turn drives the development of the carbon market, and the voluntary emission reduction market plays a key role in this transition.
WeCarbon worked with a chemical group in Shaanxi Province to develop forestry carbon sink products and allocated the related assets to local villagers and workers, encouraging them to take part in tree planting and other activities.
(2) WeCarbon: turning green value into economic value
Building green thinking into economic operations is the key to truly sustainable growth. WeCarbon currently focuses its business on two core areas: technology and advisory services. Its two subsidiaries specialise, respectively, in applying frontier carbon neutrality technology and in ESG capital market and strategy advisory services covering ESG investment, financing and transition strategy. WeCarbon also puts emphasis on market education and contributes to industry standards, helping more people understand the social and economic value of ESG for companies and raising awareness of its importance among listed companies and across industries.
Take a Chinese low-carbon concrete manufacturer. Before WeCarbon became involved, the company was already using red mud from a refinery as a raw material to produce "low-carbon concrete" certified as a green product. Although it had obtained some green certification abroad, it had not yet worked out how to turn this green advantage into economic benefit. WeCarbon built a management framework and a data management system for the company to track ESG-related indicators and targets, and helped it obtain a green loan for a new plant. Given the high cost of building manufacturing plants, the company would have struggled to go ahead without climate finance.
Challenges in cross-border carbon management
Countries around the world face similar challenges in reaching net zero or cutting emissions. The EU Carbon Border Adjustment Mechanism (CBAM), issued last October, has had a major global impact, covering six sectors including metals, iron and cement. However, many Chinese companies are not yet fully aware of this policy change, and companies outside China also face the question of how to adapt. CBAM involves not only straightforward policy compliance and tax payment, but also many mechanisms, including certification of product carbon footprints.
WeCarbon is also actively looking for opportunities to take its local business model and products global. To help companies better understand and comply with carbon emission policies, WeCarbon will soon launch WeGreenPass, a one-stop cross-border green compliance solution. Through an online data management and reporting platform, it provides fast, reliable, smooth and user-friendly end-to-end services covering reporting, certification, reduction and offsetting, helping companies worldwide meet cross-border green compliance challenges such as the EU CBAM.
This article was originally produced by New Energy Nexus.