Nature Positive Role of the Automotive Sector China Deep dive

Companies should follow the mitigation hierarchy at site-level, in a landscape context, taking into consideration direct, indirect and cumulative impacts. They should first avoid impacts, then reduce impacts, restore, and finally, compensate85 for unavoidable residual impacts.86,87,88,89,90 Mitigation efforts should align with a “no net loss” or “biodiversity net gain” goal for each project.91 In recent years, leading Chinese automakers have taken actions in energy, water and waste management to mitigate impacts on nature from their operations. Meanwhile, government authorities have introduced various standards and technical documents to promote sustainable practices, such as pollution reduction in the automotive industry.92 To implement more comprehensive measures to avoid and reduce impacts from operations, China’s automotive industry can improve its capacity of conducting comprehensive assessments on nature and establish robust systems to optimize energy and water resource management. Conduct comprehensive biodiversity assessments and establish robust management Guided by domestic and international policies, leading Chinese automakers have already developed capabilities to track and manage standardized carbon-related data. Their ability to track and manage impacts on nature remains lacking, however. Efforts should be made to raise awareness and refine management approaches.To more effectively measure and track impacts on nature, it’s recommended here that automakers establish a complete biodiversity assessment and management system. By referring to guiding documents – such as the China National Biodiversity Conservation Strategy and Action Plan (2023-2030) and the Law of the People’s Republic of China on Environmental Impact Assessment – and drawing on assessment guidelines from international initiatives like the SBTN and frameworks proposed by the Taskforce on Nature-related Financial Disclosures (TNFD),93 automakers can assess and disclose impacts of their operations. While the majority of companies leading on nature assessments and disclosure are based in Europe (approximately 35% of TNFD adopters as of June 2024) and Japan (approximately 30%, versus 1.2% for China94), progress is being made. For example, to support the improvement of nature governance with qualitative data, Lotus Technology carried out a pilot project of natural capital accounting on aluminium in China, following the Natural Capital Protocol.95 X Peng has also publicly stated it has engaged a qualified agency to conduct ecological impact assessments, including on biodiversity and habitats, to identify impacts and risks and formulate measures to address them.96 Guidance and tools to improve biodiversity assessment and prioritization BOX 2 Various standards and guidelines exist to support companies. For example, the following resources outline the approach companies should take for biodiversity assessment and prioritization: –TNFD’s LEAP (locate, evaluate, assess and prepare) approach97 –SBTN’s technical guidance to assess98 and prioritize99The following tools and datasets are also available to support a more detailed assessment: –World Wide Fund for Nature’s (WWF) Biodiversity Risk Filter100 –The Integrated Biodiversity Assessment Tool (IBAT)101 –UN Biodiversity Lab spatial data102 –International Union for Conservation of Nature (IUCN) Global Ecosystem Typology 2.0103 –Global Forest Watch104 While the majority of companies leading on nature assessments and disclosure are based in Europe and Japan, progress is being made.3.1 Avoid and reduce impacts from operationsPriority action 1 27 Nature Positive: Role of the Automotive Sector – China Deep-dive