Low carbon standards made in China?

By Clara Brandi

image by domdeen/
FreeDigitalPhotos.net

In a recent article on Low-Carbon Standards and Labels in China, published in Oxford Development Studies, Clara Brandi asks how Chinese actors respond to the proliferation of environmental sustainability standards and what this will mean for global sustainability. This post summarises some of the findings.

Environmental sustainability standards are increasingly used by multinational companies, and could be an important tool to address global challenges such as climate change. An example are low carbon standards and labels that measure the 'carbon footprint' of a product. In the UK, Tesco was using carbon labels on 500 of its products in 2012, informing customers about the amount of greenhouse gas emissions caused throughout different stages of producing, transporting and storing the product on its way to the final consumer.

How will actors in Rising Power countries, such as China, engage with these new standards? Considering the share of emerging economies in the global economy and in global carbon emissions, this question is crucial to understand whether low carbon standards will actually make a difference on climate change. China is a particularly interesting case, as a major emitter of greenhouse gases, as home to emerging multinationals, and as 'factory of the world' supplying Western multinationals. Emerging Chinese multinationals face pressures to comply with low carbon standards in countries abroad and from financial markets. Suppliers to Western multinationals are under pressure to measure their carbon emissions so that these lead firms are able to calculate the full carbon footprint of a product throughout the supply chain.

Basically, as proposed by Simon Zadek and his colleagues, Chinese firms and the Chinese government have four options how to respond to these international sustainability standards: a) ignore them (not do anything, as long as they do not affect the competitiveness of Chinese firms), b) mitigate them (try to minimize the harm caused to the competitiveness of Chinese firms), c) promote an existing standard (if this standard can be shaped in a way to give Chinese firms a competitive advantage) or d) leverage a new standard (if this would create a competitive advantage for Chinese firms).

Ignoring or minimizing the impact of carbon standards and labels will be difficult: So far, relatively few Chinese companies use carbon standards, but requirements to move to low carbon production processes filter directly down the supply chain as international buyers become more environmentally conscious. So doing nothing may hurt the international competitiveness of Chinese firms, which tend to have relatively high carbon emissions at present.

In terms of promoting existing standards, large Chinese companies have started reporting on their greenhouse gas emissions (70% out of the largest 100 listed companies do so). Examples of companies actively engaging with their carbon footprints are China Mobile signing a Green Action Plan to reduce emissions in its supplier firms, and Lenovo setting reduction targets for emissions in its supply chain. Nevertheless, it is too early to tell if this signals a general move towards adoption of international carbon standards in China. In particular, firms producing for the domestic market may prefer to use a new low-carbon product labelling scheme that is being developed by the Chinese Ministry of Environmental Protection, which will be cheaper than paying for certification under international labels.

Leveraging new low carbon standards appears the most promising option for Chinese actors. These could be standards developed in China, or standards that Chinese actors have shaped through their engagement in international standard-setting processes. China has been developing its own sustainability standards in a range of sectors, and is currently preparing a low-carbon product labelling scheme. The first voluntary low carbon labelling standard was released by the Ministry of Environmental Protection in 2010, and it differs from international standards by certifying a product as 'low carbon' if it meets certain emissions criteria, rather than indicating its quantitative carbon footprint. Recently, the first products have been certified. Chinese actors have also been actively involved in design of the ISO 26000 social responsibility guidelines, in contrast to their earlier reluctance to engage in international standard-setting fora. This shows a trend towards becoming standard-setter rather than standard-taker internationally.

Overall, dynamics around low carbon labels in China show that Rising Powers do not necessarily cause a race to the bottom on global sustainability standards. Rather, Chinese firms engage with international low carbon standards more widely than is often assumed. Chinese actors are also creating new domestic standards around carbon labelling, and are becoming increasingly active in international standard-setting processes. So low carbon standards are likely to be changed by Rising Powers such as China, but do not seem to become any less important in the future.

For more details, please refer to:
Brandi, C. (2014) Low-Carbon Standards and Labels in China, Oxford Development Studies, 42(2), pp. 172-189. http://dx.doi.org/10.1080/13600818.2014.885938