| This research has two primary objectives. First, it aims to explore the role of accounting in measuring the cost of carbon reduction in Chinese companies, a pressing and important issue due to China's national emissions trading scheme (ETS) initiative (that is, the Chinese government's plan to establish a nationwide ETS market in 2017. Given the lack of research in the current literature, the methods to measure the cost of carbon reduction and the activities to be determined and then assigned as the cost of carbon reduction activity remain undecided. This study proposes an implementation framework to measure the cost of carbon reduction. With this framework, companies can make better decisions on carbon emissions reduction strategies, such as trading of carbon allowances and implementing a carbon management system. Also, the Chinese government will benefit from this analysis of global firms to arrive at better decisions on carbon pricing strategies for the planned ETS. To accomplish this research, we invited executives, managers, and officers of companies that had participated in the trial regional ETS to answer a postal questionnaire (two-and-half page and self-administered). Twenty-three companies in Chinese ETS trial cities participated in the study. Another 16 companies from carbon-intensive industries (but not located in the 7 trial cities) that will likely participate in the upcoming Chinese ETS were also invited to participate in the survey. The overarching objective of the survey was to enhance understanding of carbon emissions reduction initiatives and activities undertaken by Chinese firms to improve their carbon management performance. Based on the results of the postal survey, we conducted 9 in-depth interviews. The survey responses along with the interview data suggest that all senior executives recognise that carbon trading and carbon emissions are important to the required participation in ETS markets and recognise the need for a business response. |
