How to Launch a Supplier Decarbonisation Programme in China

To launch a supplier decarbonisation programme in China, start with a small cohort of high-emission suppliers where you have real commercial leverage, ask for data that Chinese national systems already produce, and focus the first reduction push on electricity and energy efficiency. Then build the programme into sourcing decisions, contracts and supplier reviews, so that carbon performance affects who wins business rather than sitting in a separate sustainability survey.

The timing is better than it was even two years ago. China now has a national carbon market covering heavy industry, a domestic product carbon footprint framework, a green electricity certificate system recognised by RE100, and mandatory sustainability reporting for its largest listed companies. A programme designed around these systems will get further, faster, than one that imports a European questionnaire and hopes suppliers fill it in.

Why a China programme needs its own design

Many buyers treat China as one region within a global supplier engagement platform. That usually produces low response rates and estimated data. The better approach is to design around the regulatory infrastructure your suppliers already operate within.

Four developments matter most:

• The national emissions trading system now includes heavy industry. In March 2025, China extended its ETS beyond power generation to steel, cement and aluminium smelting, adding around 1,500 companies. Covered entities must submit monthly emissions reports with supporting evidence, reviewed at national, provincial and municipal level 1. For 2025, allocation moved to an intensity-based, benchmarked approach, with compliance due by the end of 2026 2.
• Product carbon footprints are becoming a national system. The 2024 implementation plan, issued by the Ministry of Ecology and Environment (MEE) with 14 other ministries, rests on a standards system and an emission factor database. GB/T 24067-2024, adapted from ISO 14067, provides the national quantification method, and certification pilots run in 25 provinces 3 11. China’s 2026–2030 national climate plan, issued in July 2026, calls for carbon footprint requirements to be built into government procurement, green finance, trade and industrial policy 4.
• Renewable electricity claims now run through one instrument. A 2023 notice made green electricity certificates (GECs) the sole proof of renewable electricity attributes in China 5, and RE100 gave GECs unconditional recognition in May 2025 6.
• Large listed suppliers are publishing sustainability reports. Constituents of the SSE 180, STAR 50, Shenzhen 100 and ChiNext indices, and dual-listed companies, had to publish reports covering 2025 by 30 April 2026 8.

For European buyers of iron, steel, aluminium, cement or fertilisers, there is an added driver: the EU Carbon Border Adjustment Mechanism (CBAM) entered its definitive regime on 1 January 2026, with a 50-tonne annual threshold per importer 7. Certificates for 2026 imports are bought from 2027 12, so verified installation-level data from Chinese producers has a direct cost implication.

Step 1: Choose a first cohort you can actually move

Do not start with every supplier. Start with a screening of purchased goods and services, the Scope 3 category that dominates most manufacturers’ and retailers’ footprints, using the GHG Protocol Scope 3 Standard as the accounting reference 10.

A spend-based estimate is enough to rank categories. Then select a first cohort using three filters:

1. Emissions weight. Categories involving metals, chemicals, plastics, textiles wet processing, glass or energy-intensive components usually rise to the top.
2. Leverage. Favour suppliers where you are a meaningful customer, have a long-term relationship or are negotiating new volume.
3. Readiness. ETS-covered producers, listed suppliers and those already asked for data by other global brands will respond faster.

Keep the first cohort small enough that a named person can speak to each supplier directly. Relationship management matters more in China than a well-designed portal.

Step 2: Ask for data that suppliers already produce

The most common mistake is sending a long questionnaire in English that asks for a corporate inventory in a format the supplier has never produced. Instead, tier your data request to what each supplier type is likely to hold.

Supplier type	What they probably already have	What to ask for first
ETS-covered steel, cement or aluminium producer	Monthly verified emissions data under MEE rules	Site-level emissions and production volumes; CBAM-relevant installation data where applicable
Listed company in a mandatory index	Published sustainability report with Scope 1 and 2	Report link, product- or site-level allocation for your purchases
Exporter already supplying global brands	Corporate carbon inventory, possibly a PCF	Product carbon footprints to GB/T 24067 or ISO 14067
Small or mid-sized private supplier	Electricity and fuel bills, production records	Annual energy use by source and output volume

For the smallest suppliers, energy bills and production data are enough to calculate a reasonable site-level estimate. MEE’s national electricity carbon footprint factor (0.6205 kg CO₂e/kWh for 2023, published in January 2025) gives a consistent default for grid electricity 3. Where suppliers can provide provincial or supplier-specific factors, record which one you used.

Provide templates in Chinese, explain why each field is needed and say how the data will be used. Suppliers are often cautious about sharing production volumes or process information with customers who may use it in price negotiations, and data-security rules also shape what can leave China. Agree confidentiality terms early.

Step 3: Prioritise reduction levers that work in China

Once the baseline is in place, move quickly to action. Suppliers engage more when a programme produces something useful to them, such as lower energy bills or a stronger position with export customers.

Electricity. For many light manufacturing suppliers, purchased electricity is the largest share of site emissions. Options include rooftop solar, green power trading where provincial markets allow it, and unbundled GECs. Because I-REC issuance in China has ended 13 and GECs are now RE100-recognised 6, buyers should update any supplier guidance that still refers to I-RECs. Be clear about the hierarchy: on-site generation and physical green power are stronger claims than unbundled certificates, and GECs from older assets may not satisfy every buyer’s criteria.

Energy efficiency. Compressed air, motors, boilers, heat recovery and building systems are familiar levers with established local contractors. Energy audits are a practical first ask.

Process and materials. In metals, the biggest reductions often come from choosing lower-emission production routes, higher recycled content or suppliers already improving against ETS benchmarks. This can mean changing supplier or specification, which is a procurement decision rather than a supplier-engagement task.

Logistics. Relevant for some categories, but rarely the priority for a first-year programme.

Do not promise suppliers savings you have not estimated with them. Payback depends on local tariffs, subsidies, site ownership and operating hours.

Step 4: Build carbon into commercial decisions

A programme that sits only with the sustainability team will stall. Make it part of how procurement manages suppliers:

• Tenders: add carbon data availability and a credible reduction plan as scored criteria for priority categories.
• Contracts: include data-sharing obligations, review dates and, where proportionate, reduction commitments.
• Supplier reviews: add carbon progress to quarterly or annual business reviews alongside quality, cost and delivery.
• Support: consider co-funding energy audits, sharing technical resources or offering longer-term volume commitments in exchange for investment in renewables or efficiency.

Decide in advance what happens when a supplier refuses to engage. If nothing changes commercially, other suppliers will notice.

Step 5: Align targets and claims with international frameworks

If your company has, or plans, a science-based target, the supplier programme is how you deliver the Scope 3 part of it. The SBTi’s Corporate Net-Zero Standard Version 1.3.1 remains the framework for validation during 2026. Version 2.0 validation opens in Q1 2027, and all new submissions must align with Version 2.0 from 1 February 2028 9. Check the final supplier-related criteria before setting engagement-style targets, and make sure your supplier data can show real progress rather than just commitments.

Keep public claims conservative. Report which data is estimated, which is supplier-specific and which is verified, and avoid claiming reductions that come solely from switching emissions factors.

A realistic first-year plan

Period	Focus	Output
Months 1–2	Spend-based screening and cohort selection	Ranked category list and named first cohort
Months 2–4	Supplier kick-off meetings and tiered data request	Baseline for cohort, with data quality flagged
Months 4–6	Energy audits and electricity sourcing reviews	Supplier-specific reduction options
Months 6–9	Commercial integration	Updated tender criteria, contract clauses, review agenda
Months 9–12	Progress review and second-cohort planning	Year-one results and expanded scope

Common pitfalls

• Treating a high response rate as success when most data is still estimated.
• Asking every supplier for the same depth of data regardless of emissions weight.
• Ignoring the difference between Chinese and European methodology choices, which can make year-on-year figures inconsistent.
• Relying on unbundled certificates as the main lever and describing the result as supplier decarbonisation.
• Running the programme without a Mandarin-speaking lead who can build trust with supplier management.

For a broader view of category prioritisation and supplier data across the region, see our guide to supply chain decarbonisation in Asia. If you are planning a programme with suppliers in mainland China, Hong Kong or Taiwan, talk to our team.

Sources

1. International Carbon Action Partnership (ICAP), “China officially expands national ETS to cement, steel and aluminum sectors”, updated 10 April 2025. https://icapcarbonaction.com/en/news/china-officially-expands-national-ets-cement-steel-and-aluminum-sectors
2. International Carbon Action Partnership (ICAP), “China releases 2024–2025 allowance allocation plan for industrial sectors in National ETS”, 1 December 2025. https://icapcarbonaction.com/en/news/china-releases-2024-2025-allowance-allocation-plan-industrial-sectors-national-ets
3. Sino-German Cooperation on Climate Change (GIZ), “China releases 2025 report on product carbon footprint management”, 11 July 2025 (summarising MEE’s 2025 Progress Report). https://climatecooperation.cn/climate/china-releases-2025-report-on-product-carbon-footprint-management/
4. Sino-German Cooperation on Climate Change (GIZ), “China issues National Climate Plan for 2026–2030”, 28 July 2026. https://climatecooperation.cn/climate/china-issues-national-climate-plan-for-2026-2030/
5. Norton Rose Fulbright, “An insight in China’s green energy certificate regime and its latest developments”. https://www.nortonrosefulbright.com/en/knowledge/publications/b79a3ad5/an-insight-in-chinas-green-energy-certificate-regime-and-its-latest-developments
6. State Council Information Office, “China’s green system wins key approval”, 20 May 2025. http://english.scio.gov.cn/chinavoices/2025-05/20/content_117884420.html
7. European Commission, Taxation and Customs Union, “CBAM definitive regime”. https://taxation-customs.ec.europa.eu/carbon-border-adjustment-mechanism/cbam-definitive-regime_en
8. Clifford Chance, “China Issues Guidelines on Corporate Sustainability Reporting”. https://www.cliffordchance.com/briefings/2024/07/china-issues-guidelines-on-corporate-sustainability-reporting.html
9. Science Based Targets initiative, “The Corporate Net-Zero Standard”. https://sciencebasedtargets.org/net-zero
10. GHG Protocol, “Corporate Value Chain (Scope 3) Standard”, 2011. https://ghgprotocol.org/corporate-value-chain-scope-3-standard
11. SESEC, “China Releases Guidelines for Product Carbon Footprint Accounting”. https://sesec.eu/china-releases-guidelines-for-product-carbon-footprint-accounting/
12. EY, “EU adopts CBAM Omnibus Regulation”, 22 October 2025. https://www.ey.com/en_gl/technical/tax-alerts/eu-adopts-cbam-omnibus-regulation
13. Ecohz, “How to Buy Green Electricity Certificates (GECs) in China”. https://www.ecohz.com/blog/buy-gec-china