Sustainable development capacity to support the green transition

1. Sustainable development capability to support green transformation

Over the past 50 years, the frequency of extreme weather events has increased about 75-fold. If the environment continues to deteriorate, it will not only have a lot of impact on people's lives, but also bring great risks to the production and operation of enterprises. Therefore, governments and enterprises of all countries have introduced policies or made commitments to actively carry out green transformation, reduce greenhouse gas emissions, and jointly cope with the challenges brought by climate change.

As a big energy consumer, China's energy transformation process has been further accelerated after the "double carbon" goal was proposed. It is expected that by 2040, the share of non-fossil energy demand in primary energy will reach about 42%. The chemical industry as one of the pillar industries of China's national economy, in the context of the new requirements of the "dual carbon" goal and the general trend of energy transformation, the pressure of carbon reduction and green development has increased rapidly. Combined with domestic and foreign energy development trends and industry transformation direction, Chinese chemical enterprises can consider the following three development ideas:

(1) Comprehensively accelerate and promote carbon reduction transformation in the energy production process in the short term, vigorously promote energy conservation and emission reduction, and take the lead in creating a resilient and flexible core business in the process of industry transformation.

(2), from the strategic level layout of low-carbon technologies, including new materials and application development, plastic recycling, carbon capture and storage (CCS) commercial landing, equipment electrification upgrade and a series of high-potential emerging technologies, focus on accelerating innovation, research and development and testing, early realization of commercial promotion and operation, grasp the market opportunities, while doing a good job in the reserve of technical solutions.

(3) Combine all kinds of self-produced and imported raw material resources to promote all kinds of clean energy, biomass energy and new energy power generation, while combining the development potential of hydrogen energy, accelerate the development and enrichment of hydrogen scenarios, and lay the foundation for the exploration of industry layout after the future transformation of new energy.

To build world-class sustainability capabilities and operations, Chinese enterprises can start from three aspects:

(1) According to the new trend and new normal, and combined with the company's own situation, formulate a clear green low-carbon vision and carbon reduction goals. Clarify the development strategic layout, carry out business portfolio sorting, link the theme of carbon reduction with corporate strategy and business transformation, formulate carbon reduction strategic planning and promotion roadmap, so as to lay out future formats in advance, balance traditional business and emerging business, and achieve a smooth transition.

(2) Plan carbon reduction measures at the asset level, design climate risk response plans, and prepare for and implement transformation at the business operation level. At the same time, we carry out green innovation in supply chain and finance, and strive to lead the industry's green and low-carbon extension innovation and exploration in combination with the company's own capabilities. Such as increasing financial investment, using corporate venture capital (CVC) to accelerate investment in green innovation.

(3) Carry out the transformation of green and low-carbon operation and management mode, improve the ability of low-carbon operation optimization, low-carbon business exploration and new construction, adjust the organizational structure, strengthen the construction of low-carbon and green culture and action publicity, introduce systematic processes and solutions, and escort the green and low-carbon energy transformation.

The green zero carbon transition is still in the exploration and research stage in technology, industry and policy, and many uncertainties also mean greater development and impact potential. With the help of McKinsey, a number of the world's leading oil, gas and chemical companies from many countries and regions combined with their own endowments to explore and determine their own green energy transition and development path, clear the transformation vision and start the transformation, and begin to focus on leading the next round of rapid development. Based on its international perspective and experience, McKinsey is willing to work with Chinese chemical companies to formulate vision and path planning for zero-carbon development and energy transition, assess the potential impact of the new situation on the core assets of Chinese chemical companies, and explore related new business opportunities. It also supports the investment demonstration and launch of new directions related to zero carbon and energy transformation, provides end-to-end support for the actual operation and promotion of zero carbon business, and designs, implements and optimises the sustainable development governance framework for the company, so as to comprehensively help and accelerate the sustainable development transformation of Chinese chemical enterprises.