Climate Disclosure.
Companies in recent years have faced some necessary pressure to take some proper measures on ethics and sustainability. The preparedness towards sustainability is concerning how financial corporates are being governed. Various risk management they are putting into place, proper strategies have taken towards significant sustainability, as well as appropriate targets put in place on sustainability (Eccles, & Krzus, 2017. p 150). However, to understand the preparedness of some companies concerning the risk control, proper governance as well as well-structured strategies, the following companies. China National Petroleum Corporation (CNPC) and Agriculture Bank of China (ABC), the companies are going to be compared and contrasted sustainability reports for their financial year, which ended in August 2019 (D’Orazio, & Popoyan, 2019. Pp 25-37).
Corporation Governance structure.
Both China National Petroleum Corporation (CNPC) and Agriculture Bank of China corporate governance strategy rules and regulations are primarily on climate and environmental safeguarding as well as their various approaches. The financial corporations are putting in place to ensure climate or ecological sustainability is appropriately achieved. Let’s take, for instance, and the China National Petroleum Corporation (CNPC) environmental approaches policies involve protecting the surrounding environment, especially in regions and locations where their key processes are taking place (Eccles, & Krzus, 2017. p 150). Whereas the proper provision of finances defines the Agriculture Bank of China, its environmental and climate set up policies. This is primarily to financially support green as well as environmental well-organized projects and proper research. , China National Petroleum Corporation (CNPC) had further best approaches, where they carried a study and came up with the number of environmental cases investigated in July 2019 and the best methods the company employed to handle the reported cases or incidents (Monasterolo, Zheng, Battiston, 2018. pp 116-142). On the other hand, when compared, the disclosure level in both companies is different simply because of differences in their sustainability and environmental policy approaches. When it comes to China National Petroleum Corporation (CNPC), climate and
policy requirements are depends on the vast amount or level of fines imposed when the corporation fails to adhere to Environmental Regulatory Institution such as EPA and China Ministry of Ecology and Environment (MEE). However, in Agriculture Bank of China, their climate disclosures are straightforward mainly because the company operates in the financial sector, hence very minimal chances of not following environmental policies
Significant Strategic Approaches
The Taskforce well guides both companies’ strategies on environmental climate change risk management and disclosure on Climate-Related Financial Disclosures (TCFD) policies as well as recommendations. Despite the strategic recommendation of the Taskforce on Climate-related financial disclosures, both corporations have adopted various different approaches towards environmental climate change. This could be because of their difference in the mode of production and operations (Monasterolo, Zheng, Battiston, 2018. pp 116-142). Whereby the strategy employed by the China National Petroleum Corporation (CNPC) is mainly to ensure that their operational activities have a minimum unwanted outcome on the environment and to achieve this important regulatory requirement as well as the company’s own laid down policies on climate change. On the other hand, the Agriculture Bank of China operates mainly on sustainable landing and social investment; they want to achieve their mission by setting some funds for socially responsible investments. This is carried out to bring much relief to investors by offering them help through capital and, at the same time, make sure that the reduction in the rate of lending is fully achieved.
Risk Management strategies
According to the Taskforce on Climate-related financial disclosures (TCFD) well-defined policies and recommendations on compliance, both China National Petroleum Corporation (CNPC) and Agriculture Bank of China have no any otherwise but to comply with the internal policies and recommendations of the Taskforce for significance conservation of the environmental climate change. And to show some serious commitment, China National Petroleum Corporation had to obtain a valid license from the Environmental Regulatory bodies for environmental protection and conservation. As well as agree with the terms and conditions that come with acquiring the environmental safeguarding document (Monasterolo, Zheng, Battiston, 2018. pp 116-142). China National Petroleum Corporation has numerous environment climate change such as the Greenhouse gas policy which help the company achieve its carbon reduction in the air as well as advancing the energy sector and advance frequent supply electric power. Both companies are required to report their climate achievement on their various policies as well as sustainability (Monasterolo, Zheng, Battiston, 2018. pp 116-142). In addition, the National Petroleum company policies on managing risk disclosures are basically directed by the environmental regulatory body’s framework and guidelines as compared to the financial corporation the Agriculture Bank of China because when you look at the policies of National Petroleum corporation, there is non-compliance that may result to a massive fine from the Regulatory institution as well as considerable environmental-climate damage.
Corporations’ main target and Metrics.
Both the National Petroleum corporation in China and the financial corporation (Agriculture Bank of China) regularly update and report their metric on environmental compliance to the Environmental Regulation body. This mainly to ascertain whether the corporations are complying with their established policies as well as recommendations (D’Orazio, & Popoyan, 2019. Pp 25-37). However, each of the companies has their approaches when it comes to internal tools and keen established oversight bodies that make sure that every corporation adheres to the regulatory compliance policies. Let’s take, for instance, and the Financial institution has well-established oversight executives management that is always in check of the corporation progress on the climate change risk control, significant strategy approaches as well as transparent and accountable governance. Similarly, the Energy corporation has its own earlier stated policy of the Greenhouse Gas Policy. Annually, reports are being submitted on power and climate resilience (D’Orazio, & Popoyan, 2019. Pp 25-37). The reports clearly indicate the true commitment of the corporation. The report contains indicative commitments such as how the company is working with other relevant sectors to reduce the amount of carbon dioxide being released to the environment as well as the suggested machines or equipment being used that are environment friendly, and that cannot cause unnecessary pollution into the air.
Both the Energy corporation company and the Financial have their various end goals they executives oversight management wants them to accomplish (D’Orazio, & Popoyan, 2019. Pp 25-37). These end goals may include climate change targets such as reduction of carbon dioxide emissions into the air, which can result in severe global warming hence affecting environmental climate. Another possible goal they would want to accomplish is the use of new but environmentally friendly and low carbon emission assets, and this can be put in place to achieve sustainability as well as ethics of climate change (D’Orazio, & Popoyan, 2019. Pp 25-37). The Financial Corporation, for instance, is aiming to offer about $75 billion to help improve the environment conservation by 2030. Very significant and laudable planning for end goals achievements while the Energy corporation, on the other hand, wants to try all they can to comply by almost 99 percent to achieve their Greenhouse Gas Policy. Similarly, do everything possible within their mandate to decrease the growing number of environmental incidents to around eight by 2023 and fully comply with its own generated policy of Greenhouse Gas Policy.
The disclosures plans by the Energy Corporation (CNPC) and the Financial Corporation (ABC) gained some positive support as well as an influence by different stakeholders, the employees, the regulatory bodies. And the government for their efforts to conserve the environment for future generations and avoid any possible occurrence of deforestation that could lead to global warming and poverty due to severe drought. Therefore, it is evident and easy to investigate the policies from different theories like stakeholder theory or legitimacy theory.
- Stakeholder theory,
Stakeholders significantly affect the level and significance of disclosure, and the corporation can smoothly and effectively operate with it. When a stakeholder is mentioned, it means it is comprised of different individuals playing various different roles, for instance, the suppliers, the customers and advisors, employees, and possibly the government (D’Orazio, & Popoyan, 2019. Pp 25-37). The theory claims that the great benefit of a business is to create significant value for its stakeholders. In China National Petroleum Corporation, the government is the stakeholder, and therefore, it should add value to the government. While the Agriculture Bank of China is
- Institutional theory,
The institutional theory states that institutionally owned business always complies with set roles and regulation by the government through regulatory theory. For instance, policies set by the supervisory organs to comply with, such as reducing the rate of carbon emissions to air; a perfect example is the China Petroleum Corporation.
In conclusion, it is evident that both the corporation business had different policies on climate change for environmental safeguarding, but they had the end goals of environment conservation. For instance, China National Petroleum Corporation had the system of Greenhouse Gas Policy established to reduce the rate and level of carbon dioxide emission to the air. On the other hand, the Finance Corporation, the Agriculture Bank of China, had the great idea of reducing the growing number of environmental incidents and a clear and significant end goal of providing about $75 million to assist in environmental conservation. Therefore, I can conclude by recommending the government through environmental regulatory organs to keen and observant with environment conservation to save the future generation.
References
Monasterolo, I., Zheng, J.I., and Battiston, S., 2018. Climate Transition Risk and Development Finance: A Carbon Risk Assessment of China’s Overseas Energy Portfolios. China & World Economy, 26(6), pp.116-142.
Chu, C.I., Chatterjee, B., and Brown, A., 2013. The current status of greenhouse gas reporting by Chinese companies. Managerial Auditing Journal.
D’Orazio, P., and Popayan, L., 2019. Fostering green investments and tackling climate-related financial risks: which role for macroprudential policies? Ecological Economics, 160, pp.25-37.
Eccles, R.G., and Krzus, M.P., 2017. An analysis of oil & gas company disclosures from the perspective of the task force on climate-related financial disclosures. Available at SSRN 3091232.
Eccles, R.G., and Krzus, M.P., 2017. An analysis of oil & gas company disclosures from the perspective of the task force on climate-related financial disclosures. Available at SSRN 3091232.