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Carbon neutrality commitment for China: from vision to action

  • Special Feature: Original Article
  • Managing Climate Risks for a Sustainable Future: Adaptation Strategies and Resilience
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Abstract

China’s newly announced carbon neutrality goal manifests its determination to advance green and low-carbon development. The country aims to peak carbon dioxide emissions by 2030 and achieve carbon neutrality by 2060. Consequently, guidelines and action plans have been actively deployed and issued. The carbon neutrality commitment (vision) and its detailed deployment (action) would contribute to climate change mitigation and corporate market value. Therefore, we categorize the carbon neutrality-related events and analyze their impacts on the stock market from July 2020 to March 2021. The main findings are as follows: (1) The action event have increased the carbon neutrality-related stocks by 0.04%, while that of the vision event is  – 0.003%, indicating that investors’ confidence increases when the carbon neutrality commitment is accompanied by specific and detailed guidelines. (2) The impact of carbon neutrality announcement becomes more positive and significant after related events occur repeatedly. (3) Carbon neutrality-related power industry and state-owned enterprises are potential beneficiaries of this decarbonization goal. Our study supplements the literature on climate policy and its economic value, potentially contributing to the next stage of global decarbonization.

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Notes

  1. Retrieved from International Energy Agency. https://www.iea.org/. Last accessed 15 August 2021.

  2. Carbon neutrality, or net zero CO2 emissions, indicates that CO2 emissions in a given period are equal to the amount of CO2 eliminated. Retrieved from the Xinhua Net. http://www.xinhuanet.com/world/2015-12/01/c_1117309642.htm. Last accessed 15 August 2021.

  3. Retrieved from the Central Commission for Discipline Inspection and State Supervision Commission website: http://www.ccdi.gov.cn/yaowen/202009/t20200926_226245.html. Last accessed 15 August 2021.

  4. Retrieved from the Xinhuanet: http://www.xinhuanet.com/world/2015-12/01/c_1117309642.htm. Last accessed 15 August 2021.

  5. Concept stocks are a group of stocks chosen from the same topic and market consensus. Carbon neutrality-related stocks rely on the concept of carbon neutrality to support their prices.

  6. Wind and Choice are major financial data and analytic tool providers in China, covering domestic and foreign stocks, funds, bonds, foreign exchange, insurance, futures, financial derivatives, spot trading, macroeconomics, financial news, and other fields. These two databases are frequently cited by the Chinese and English media, research reports, and academic papers. Retrieved from https://www.wind.com.cn and http://choice.eastmoney.com/. Last accessed 15 August 2021.

  7. Following the 4th meeting of the 13th National People’s Congress of the People’s Republic of China and the 4th meeting of the 13th National Committee of the Chinese People’s Political Consultative Conference, relevant departments and the public are paying more attention to the carbon neutrality initiative. The abnormal volatility is no longer likely to be caused by a single type of event; therefore, we limit the cut-off time of the sample to March 3, 2021.

  8. As the financial variables are quarterly data, our time fixed effects are quarterly fixed effects.

  9. If the carbon neutrality initiative is not proposed on trading day, the next trading day is considered as an event day.

  10. Retrieved from Baidu Index. https://index.baidu.com/v2/index.html#/. Last accessed 15 August 2021. Founded in 2000, Baidu is the largest Internet AI company in China. Baidu Search, also the most widely used search engine in China, publishes a search intensity index that summarizes the number of queries for certain words in a given city and on a given day among both desktop and mobile users since 2010. The search index is generated using an algorithm similar to Google Trends.

  11. These 380 companies are chosen from the same industries of carbon neutrality-related stocks, after deleting companies with significant modification, data incompleteness, or newly listing during sample period.

  12. Power industry includes production and supply of electricity, steam, and hot water, involving in the development and application of clean energy; environment industry includes ecological protection and environmental governance; manufacturing industry includes paper, petrochemical, chemical, steel, nonferrous machinery, etc. Note that all sample companies from these industries are related to carbon neutrality commitment.

  13. Retrieved from: http://www.hexun.com/. Last accessed 15 August 2021. Currently, Hexun is the only website in China with internet news and information service license, information network transmission audio-visual program license, and securities investment consulting qualification. It covers more than 60 million users monthly and over 100 million users annually. This Social Responsibility Report of Listed Companies published on the website evaluates the social responsibility of China’s listed companies from the five indicators—shareholder responsibility, employee responsibility, supplier responsibility, consumer responsibility, and environmental social responsibility. It aims to advocate listed companies to actively fulfill their social responsibility and establish a social responsibility system. Currently, the report has been widely recognized by government departments, industry experts, and academic scholars, and has become one of the authoritative reports to evaluate Chinese listed companies.

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Funding

The study is supported by the Youth Academic Team in Humanities and Social Sciences of Wuhan University [Grant Number 4103-413100001], and the National Natural Science Foundation of China [Grant Number 72073106].

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Authors and Affiliations

  1. School of Management, Huazhong University of Science and Technology, Wuhan, China

    Hanmin Dong

  2. School of Energy and Environment, City University of Hong Kong, Hong Kong, China

    Hanmin Dong

  3. School of Economics and Management, Wuhan University, Wuhan, China

    Yishuang Liu & Zhihui Zhao

  4. Institute for International Studies, CICTSMR, Wuhan University, Wuhan, China

    Xiujie Tan

  5. Climate Change and Energy Economics Study Center, Wuhan University, Wuhan, China

    Xiujie Tan

  6. Urban Institute and Department of Civil Engineering, Kyushu University, Fukuoka, Japan

    Shunsuke Managi

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  1. Hanmin Dong
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Correspondence to Xiujie Tan.

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Handled by Dayong Zhang, Southwestern University of Finance and Economics, China.

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Appendix

Appendix

See below Tables 7, 8, and 9

Table 7 Carbon neutrality-related companies’ code
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Table 8 Carbon neutrality-related events
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Table 9 Descriptive statistics of variables
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Dong, H., Liu, Y., Zhao, Z. et al. Carbon neutrality commitment for China: from vision to action. Sustain Sci 17, 1741–1755 (2022). https://doi.org/10.1007/s11625-022-01094-2

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