A Look at China’s Corporate Carbon Accounting Platform

China’s commitments to peak carbon emissions by 2030 and achieve carbon neutrality by 2060 come with an enormous financing need. Estimates suggest the country must invest at least RMB 2-4 trillion (approximately US$275-$550 billion) per year in green and low-carbon projects to meet these goals​. Public funding alone can cover only about 10%-15% of this required investment​, leaving a large financing gap that private sector capital must fill. This makes the development of carbon-linked financial products and investment mechanisms a priority.

China’s sustainable finance market is already large and growing, with trillions in outstanding green loans and green bonds. Yet many companies — especially small- and medium-sized enterprises (SMEs)— still face difficulties in accessing green finance. SMEs often lack the necessary data for emissions disclosure, making it difficult for them to demonstrate reductions and qualify for green financial products. A survey conducted in 2023 found that around 60% of small and micro enterprises did not know how to measure their greenhouse gas emissions, reflecting significant gaps in technical capacity that hinder their access to green finance.

Financial institutions, for their part, struggle to incorporate climate factors into decision-making due to inconsistent and incomplete corporate carbon data. Without clear emissions data, they cannot accurately assess companies’ carbon performance or develop appropriate green financial products. The issue is further compounded in hard-to-abate industries like steel, cement and petrochemicals, as it’s difficult for financial institutions to define transition activities and recognize meaningful decarbonization efforts.

To bridge this gap, China has developed an innovative Corporate Carbon Accounting and Rating Platform, which leverages digital technologies to automatically capture and evaluate carbon performance of corporates in a way that financial institutions can easily understand. The platform has been piloted in at least six regions across China since 2021.

Here we offer an overview of the platform, breaking down how it can help scale China’s sustainable finance and enhance financial inclusion — particularly for SMEs and hard-to-abate industries — as well as potential opportunities to support its expansion.

What Is China’s Corporate Carbon Accounting and Rating Platform?

The Corporate Carbon Accounting and Rating Platform is a digital solution that automates the collection of corporate emissions data to help streamline carbon accounting and carbon performance evaluation. Its results are used to inform financial institutions in delivering finance with special terms linked to climate performance.

Here’s how it works:

1. Data acquisition: The platform dynamically collects corporate energy consumption data for operational emissions¹ along with economic activity data (such as output, value-added and tax revenue). Data is sourced from statistics managed by local government departments (such as taxation, environment and economics) and centralized in a government-backed data platform.
2. Carbon performance evaluation: Using an embedded carbon accounting model, the platform generates key indicators, such as carbon emission intensity per unit of output and emission reduction rates relative to a baseline year. These metrics are then translated into company ratings based on a structured rating methodology.
3. Application: The rating results are provided either as scores or color codes, which financial institutions can use to screen clients and charge differentiated loan interest rates to support their emissions-reduction activities. Currently, loans are the most commonly used financial instruments linked to the platform.

The platform is different from traditional corporate carbon rating approaches in a few key aspects.

First, it offers top-down data acquisition empowered by digital technology. Unlike the traditional bottom-up self-reporting approach to collect emission data from corporates, this platform sources data directly from local departments or energy management systems. This centralized data acquisition process helps generate timely and high-quality results.

In addition, it facilitates government involvement to drive synergies. Local governments play an active role in the initial construction of such a platform, facilitating direct data access through official endorsement. This government involvement also encourages broader participation from financial institutions and corporations, unlocking greater data availability and financial resources.

While the platform is initiated by local governments, its construction and operation are managed by public data management entities, such as State Grid Huzhou Electric Power Company, Quzhou Energy Big Data Center and Shenzhen Credit (a government-backed credit information platform). This means its coverage and ratings systems vary by city or region.

What Benefits Does the Platform Bring?

China’s platform is intended to help both enterprises and financial institutions unlock more opportunities for green finance. By streamlining carbon accounting, enhancing data accuracy and linking carbon performance to financial resources, the platform improves efficiency and helps businesses pursue decarbonization efforts — especially benefiting SMEs and businesses in hard-to-abate industries.

Specifically, it offers several novel benefits:

• Using ratings to provide simple language to financial institutions and facilitate transition finance: The platform translates carbon data into clear rating results, providing a common language within each city or region for assessing and comparing carbon performance between companies in the same sector. This helps financial institutions make informed decisions on green finance, especially in hard-to-abate industries.

   

  The platform also captures more detailed company-level carbon reduction information than is available in other green financing products, enabling banks to recognize credible transition activities easily. For example, Shandong leveraged the platform to launch the region’s first “transition loan” for the petrochemical sector.

   

• Lowering the cost of data acquisition, especially for SMEs: One of the advantages of the platform is to reduce costs of data acquisition for both enterprises and financial institutions, particularly for small businesses. By centralizing data collection and utilizing government resources, the platform allows financial institutions and companies to generate emissions results without incurring additional costs.

   

• Improving efficiency to access emissions data: By directly integrating real-time energy consumption data from local energy systems and tax records, the platform allows corporations to instantly access their carbon performance results. For financial institutions, reliable and readily available data improves efficiency in assessing corporate carbon performance, enabling more precise decision-making when offering green financial products.

   

• Incentivizing corporates to improve their carbon performance: The platform effectively links carbon performance ratings to tangible financial benefits, creating a clear incentive for companies to improve their carbon efficiency. For example, companies with better carbon ratings in pilot regions like Shenzhen, Guangzhou and Qinghai have access to lower-interest loans and preferential financial terms. This encourages businesses to invest in greener technologies and pursue carbon reduction strategies aligned with broader climate goals.

How Does the Platform Scale Green Finance? Examples from Quzhou, Huzhou and Shenzhen

China follows a “pilot-then-promote” approach to policy implementation, first testing in designated pilot zones before scaling new policies nationwide. Huzhou and Quzhou serve as national green finance pilot zones, while Shenzhen, as a pioneering hub of China’s reform and opening-up, continues to be at the forefront of green finance innovation and policy experimentation.

As of 2024, pilot practices with the new platform were implemented in six cities: Quzhou, Huzhou, Shenzhen, Zhaoqing, Qinghai and Guangzhou, and more are evolving. While the platform offers the same core function in each case (using digital data acquisition to calculate emissions and generate ratings), detailed approaches — such as rating criteria, data acquisition method, sectoral coverage, the operating entity and more — vary across regions. Among these, Quzhou, Huzhou and Shenzhen are the most representative.

Quzhou: A pioneer with broad sectoral coverage

Quzhou, the first city to launch this platform in 2021, covers a wide range of sectors, including industry, agriculture, energy, construction, transportation, residential life and forestry carbon sinks. As of August 2023, Quzhou’s carbon accounting and rating platform covered 2,766 industrial corporates, 1,000 agricultural entities, 98 energy corporates and 129 construction entities. The platform uses real-time energy data collection via devices installed at enterprises, with updates every 15 minutes.

Based on the rating methodology, corporates are labelled by different colors, influencing the credit granted from financial institutions. Commercial banks can access and utilize corporate carbon credit reports through the “Qu Rong Tong” (衢融通) platform, a multidimensional data platform built on provincial and municipal data-sharing systems. These reports include three key components: corporate energy consumption structure, carbon emission data and labeling results.

For example, in Qujiang Rural Commercial Bank’s “Carbon Finance Easy Loan” (碳融易贷) product (Figure 1), enterprises labelled as “Deep Green” receive an interest rate discount of 50 basis points (BP), while “Light Green” enterprises receive a 30BP reduction. In contrast, “Yellow” and “Red” enterprises face cautious support or are restricted from new credit access. These loans can support projects such as industrial equipment upgrades, energy efficiency improvements and sustainable agricultural practices.

Huzhou: Wider applications backed by a strong data-sharing mechanism

In Huzhou, the platform is widely recognized as the “Industrial Carbon Efficiency Code” and is now being scaled up to the provincial level. This code displays carbon emission results with their corresponding ratings (Figure 2). The platform in Huzhou covers 49,345 industrial enterprises above a designated size in Zhejiang Province. It is supported by a robust data sharing mechanism, which leverages Huzhou’s policies connecting key departments for energy and economic data integration.

Distinct from other pilot cities, the platform in Huzhou has a wider range of applications beyond green finance, extending to energy-saving services and energy trading. Huzhou Municipal Bureau of Economy and Information Technology, in collaboration with the grid company and third-party service providers, offer free energy-saving assessments and develop carbon-reduction plans for enterprises rated at Levels 4 and 5, and subsidize 10% of the costs for energy-saving and efficiency improvement projects. “In Huzhou, the primary goal of establishing this platform is not just monitoring, but actively guiding enterprises in their low-carbon transition,” said a representative from the Municipal Bureau of Economy and Information Technology.

Huzhou also pioneered a dedicated local policy supporting green electricity trading through its platform. The platform can automatically link a company’s green electricity procurement to its performance rating, which helps corporates improve their code level. By November 2024, Zhejiang had facilitated 3.3 billion kWh of green electricity trading.

As of February 2025, the platform had enabled RMB 30.318 billion (US$4.17 billion) in green loans and supported 210 firms in green electricity trading, helping to cut 1.4 million tons of carbon emissions. It had also supported 81 projects, such as industrial energy efficiency upgrades, renewable energy adoption and process optimization, reducing emissions by a further 64,000 tons. For example, a cement company in Huzhou replaced outdated production lines with a smart manufacturing system, lowering coal consumption per ton of cement by 10% annually through the loan provided.

Shenzhen: Empowering SMEs to access green financing

Launched in July 2024, Shenzhen’s carbon accounting and rating platform primarily serves SMEs, with 85% of the 50 pilot companies being small and medium-sized enterprises. Unlike Quzhou and Huzhou, Shenzhen uses digitalized tax data to capture relevant invoices, calculate carbon emissions and generate rating reports. The third-party provider, a consulting firm expert in carbon rating and sustainability, develops the carbon rating methodology; Shenzhen Credit² (深圳征信) operates the platform, providing access to invoice data and generating rating reports; while Shenzhen Green Exchange³ (深圳绿色交易所), Shenzhen’s official carbon trading platform, oversees the accounting process and ensures data accuracy through cross-validation. This highly efficient process enables users to download reports within five minutes, significantly reducing the previous weeks-long workload for carbon emissions accounting.

The rating report categorizes corporates into nine levels from AAA to CCC, with five indicators (energy efficiency, carbon emissions efficiency, energy-saving effect, emission reduction effect and industry efficiency) each scored out of 100. The report also presents the energy consumption structure and carbon emissions in the form of a pie chart and includes other emission information, such as annual emissions, carbon reduction, per capita emissions, annual energy consumption and energy savings, among others.

In Shenzhen’s first phase, the “Carbon Reduction Loan” product was promoted, with eight pilot banks using the ratings in credit approval, loan pricing and risk management. Companies with significant emission reductions receive differentiated benefits such as lower interest rates, longer terms and more favorable loan conditions, with maximum discounts of up to 30 BP. Banks can allocate funding to specific projects or general-purpose loans. For example, Postal Savings Bank Shenzhen Nanxin Branch issued a RMB 3 million (approximately US$412,000) loan to an environmental tech firm for wastewater treatment upgrades.

Carbon accounting platforms factsheet:

What Challenges Still Need to Be Addressed?

While China’s platform presents a promising solution for integrating carbon performance into financial decision-making, a few challenges emerged along with its implementation. These could become more prominent issues as it rolls out in more places.

Limited emissions coverage and data accessibility

A major limitation of the platform is its incomplete coverage of Scope 1 and Scope 2 emissions, with Scope 3 emissions currently excluded, which hinders alignment with international standards like the Greenhouse Gas (GHG) Protocol. The platform focuses mainly on energy consumption, failing to capture all relevant emissions sources such as fugitive emissions, outsourced logistics, and emissions from leased assets or company-owned vehicles. This results in an underestimation of a company’s carbon footprint and may lead to biased rating results. 

For example, in Huzhou, the platform only accounts for emissions from electricity, natural gas, coal and petroleum, neglecting mobile combustion and industrial process emissions. Companies that have more emissions from mobile combustion and industrial process will receive more favorable ratings compared with those don’t, even if they may not have better carbon performance.

Lack of a consistent rating methodology

The inconsistency in carbon rating methodologies across pilot regions presents another challenge for scaling the platform. Different regions use varying evaluation systems, criteria and thresholds, such as color-coded classifications (as in Quzhou’s four-color system) or financial credit-style ratings (as in Shenzhen’s AAA-CCC system), making it difficult to replicate elsewhere.

Although Shenzhen, Quzhou and Huzhou have led the way in publishing their accounting and rating methodologies, none of them are national standards, so the reliability and authoritativeness are yet to be proved. As a matter of fact, pilot banks in Shenzhen found the rating result of their clients were sometimes out of expectation, leading to the question of whether the methodology accurately reflects the carbon performance of corporates.

Insufficient financial and policy incentives to motivate participation

So far, the platform’s adoption has primarily been led by local governments in pilot regions. They convene expert groups, hire technology providers, fund the running of the platform, and sometimes provide moderate financial incentives to encourage voluntary participation from enterprises and financial institutions. For example, Shenzhen provides a RMB 500,000 (approximately US$68,800) subsidy to banks and financial institutions that achieve significant business growth through carbon accounting and rating platform innovations. However, banks and their clients aren’t always motivated to provide or authorize access to additional data for carbon rating purposes, as they may not see clear benefits of joining the scheme.

More incentives could help keep the platform running and growing. Such incentives could be leveraged from existing monetary, fiscal and industrial policies, such as interest rate discounts using PBOC’s carbon reduction lending facility, or tax credits originating from green industry policies. Expanded incentives could help sustain the platform’s financial viability and encourage broader adoption.

What’s Next?

Looking ahead, this platform could play a pivotal role in bridging finance and corporate decarbonization. It offers significant potential for broader applications, in areas such as energy savings diagnostics, government project screening, corporate climate disclosure, supply chain decarbonization and more, as more corporates get involved. Huzhou’s experience may be a good reference point for exploring applications in energy saving diagnostics and green electricity trading.

For now, pilot regions are continuously refining the platform based on their experiences. For instance, Shenzhen is currently evaluating the applicability of the methodology and plans to promote it as an industry standard. Additionally, the city aims to expand policy incentives and explore broader applications for the platform.

Other regions can seek to replicate the platform by leveraging digital technology and a robust rating methodology. Successful implementation will likely require active government involvement and policy support, including both financial and policy incentives.

^{1 Operational emissions (scope 1&2 emissions): such as natural gas used in company-owned boilers, fuel for company vehicles, and purchased electricity, etc.}

^{2 Shenzhen Credit: officially known as the Shenzhen Credit Service Platform, an official local credit reporting platform in Shenzhen, consolidating over 500 million government data records. It offers a range of credit reporting products — including corporate credit reports and enterprise profiles — to local banks. The platform plays a key role in financial credit reporting, governance, and public services.}

^{3 Shenzhen Green Exchange: Formerly known as the Shenzhen Emissions Exchange, it was established in 2010 as China’s first pilot carbon trading platform. Rebranded in 2024, it serves as Shenzhen’s designated trading platform for carbon allowances and credits, supporting market-based mechanisms for emissions reduction.}