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Alibaba pledges carbon neutrality by 2030

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On 17th December, Alibaba Group pledged to reach carbon neutrality in its own operations and slash emissions across its supply chains and transportation networks by 2030 amid a global push to tackle climate change.

By working with merchants and consumers, Alibaba said it would cut carbon emissions by 1.5 gigatons across its digital ecosystem by 2035, making it the first major platform operator to set such a target.

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This goal requires Alibaba to go beyond the common corporate practice of simply offsetting carbon emissions by buying carbon credits from trading markets. To hit its self-imposed deadlines, the group will need to apply its technical prowess to boost efficiency and collaborate with stakeholders across its platform.

“We aspire to be a force for positive change in society and to assume even greater responsibility within the Alibaba digital ecosystem,” said Daniel Zhang, Chairman and CEO of Alibaba Group, during a livestream to investors in December.

Source: Alibaba Group

The Chinese government pledged in September 2020 to reach peak carbon dioxide emissions by 2030 and strive to achieve carbon neutrality by 2060. Alibaba plans to play its part in the global effort by leveraging energy-saving and efficiency-improving technology, as well as upping the proportion of renewables in its electricity consumption. The group will adopt a multi-pronged approach, including carbon reduction, offsetting, and actively removing greenhouse gases (GHG) from the atmosphere.

China’s largest e-commerce company plans to halve its carbon intensity, which is the emission rate relative to activity, along its supply chain by 2030, from 5.294 million metric tons of carbon dioxide equivalent in 2020.

Alibaba based its formula for decarbonisation on the widely used framework devised by the Greenhouse Gas Protocol.

Its pledge to reach carbon neutrality by 2030 maps to the Greenhouse Gas Protocol’s Scope 1, direct emissions generated by the company’s own operations; Scope 2 includes indirect emissions from purchased electricity and heating; Scope 3 emissions occur in the supply chain, including from goods and services, from the end-use of products sold, commuting and business travel.

Alibaba has gone beyond the guidelines outlined by the Greenhouse Gas Protocol and came up with the term “Scope 3+” to explain how it will cut its carbon emissions by 1.5 gigatons across its digital ecosystem by 2035.

Source: Alibaba Group

In the pursuit of decarbonisation, Alibaba is deploying its enterprise digitalisation services, such as cloud computing and data intelligence and more sustainable logistics services. Enterprises migrating to the cloud shrink their carbon footprint by 84 percent on average, according to consultants at Accenture. The group’s cloud computing unit, Alibaba Cloud, also plans to hit carbon neutrality by 2030.

Alibaba is already promoting consumption of green products, encouraging consumers to adopt eco-friendly transportation, and nurturing a second-hand marketplace.

Chiming with the public’s greater demand for environmental, social and corporate governance (ESG) accountability and transparency by corporations, Alibaba will provide annual updates on its progress towards carbon neutrality, verified by accredited auditors.

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In terms of governance, Alibaba has set up a sustainability committee at the board level that will meet at least once annually to guide the group along its ESG roadmap. Alibaba has also set up a sustainability steering committee responsible for ESG-related strategic planning, goal setting and management. An ESG cross-business action group, comprising representatives from each of the group’s business units, will be responsible for putting the goals into action on a day-to-day basis.