High hopes for a greener supply chain

Experts expect China will unleash its potential in greening the global supply chain following a recent joint communique from the country and the European Union.

In the communique, the two sides vowed joint endeavors in tackling climate change and biodiversity loss. One of the areas where they pledged to engage collaboratively is reducing global deforestation.

China and the EU will enhance cooperation in conservation and sustainable management of forests, make supply chains more sustainable and combat illegal logging and associated trade, it said.

Unveiled last month, the communique was a result of late September's second High-Level Environment and Climate Dialogue between China and the EU, which Vice-Premier Han Zheng and European Commission Executive Vice-President Frans Timmermans participated in.

Dimitri de Boer, chief representative for China of ClientEarth, an environmental law charity, said that the communique is an extremely important step in the context of global action for biodiversity. One of the key drivers behind global biodiversity loss is the conversion of rainforests for the production of soft commodities such as soy, palm oil and beef, he said.

"Having this important point included in the communique gives me increased confidence that both China and Europe will quickly step up their efforts in this regard," he said.

Fang Li, country director of World Resources Institute China, said the clause in the communique left her "very excited" as she eyes the possibility that China may unveil policies that could promote a green global supply chain.

The country aims to peak carbon dioxide emissions before 2030 and go carbon neutral before 2060.Chinese central authorities unveiled a master working guideline for the targets, vowing to speed up the establishment of a green trading system.

Aside from imposing stringent management on exported products with high energy consumption and emissions, China will proactively enlarge its imports of green, low-carbon products and services focused on energy conservation and environmental protection, it said.

Fang said, "China has power that could impact the entire global supply chain."

It has the power not only because it is a major importer of soft commodities, but also because the world's relative exposure to the country has increased rapidly since the 2008 financial crisis, she said.

Fang said one possible option for China to contribute to the establishment of a green global supply chain is to add relevant clauses into the Regional Comprehensive Economic Partnership－a free-trade agreement among 15 Asia-Pacific nations including China－which will be the world's largest free trade agreement when it takes effect on Jan 1. Covering about 30 percent of the world's population, its economic and trade volume accounts for 30 percent of the world's total.

The agreement, for example, covers both major importers and exporters of palm oil. Its members can explore reasonable rules for curbing deforestation driven by the oil's production, she said.

As green trading becomes an imperative of global development, China can also leverage changes in the global supply chain through green investment and other financial instruments, Fang said. The country has adhered to a policy of attaching no strings to its investment, but it has legitimate rights to do that.

The advantage China boasts in technologies for digital measurement, reporting and verification makes Fang more optimistic about its potential in greening the global supply chain.

"The cost to trace every single trade used to be unimaginably high. The development of digital technology, however, has made it economically feasible," she said. Out of concern for food safety, China had a domestic verification system to trace its supply chain.

Through the foreign aid it provides, China can also support other countries in building sustainable farming and legislation with its successful experiences, she said.

Fang, however, also noted a problem that may pose challenges to the country's endeavor. "Currently, there is no specific government body in China that oversees the issue. Its management is related to various ministries," she said.

She said she believes that a central government body will be designated to follow up issues included in conferences participated in by the country's leadership.

According to the China-EU communique, the two sides will continue the present dialogue at least annually.

"In light of China's institutional system, the country is expected to report progress on issues covered in the previous meeting in their next dialogue," Fang said.