Buying green can drive China's climate action

The world's climate policy ambition increased and strengthened in 2025 and "the direction of change remains firmly pointed toward transition."

This is the headline finding from our Oxford Climate Policy Monitor 2025 Annual Review.

The monitor tracks climate-related laws and regulations across 37 jurisdictions, including all of the G20 nations. Together these places are behind 85% of global emissions and 87% of global GDP. Only the United States saw policy rollback at the federal level last year, the review found.

In recent years, the engine of climate policy has shifted south and east. Assessed Latin American and African countries have, on average, more ambitious rules for companies on climate impact disclosure than do countries in Europe or North America.

For its part, China, the world's largest carbon emitter, introduced comprehensive rules on climate disclosure and prudential regulation in 2025. By April 2026, hundreds of large listed companies on its stock exchanges had to report on their annual climate impacts for the first time.

Given the progress China has made on its rules, its challenge may gradually be shifting from ambition to implementation. Though the report does acknowledge that countries must drive up their rules' ambition to align with the Paris climate agreement goals.

Here we discuss the value of public procurement to China's clean transition. That is, how the buying of low-carbon goods and services can incentivise green industry, lower pollution and drive long-term resilience.

China's climate rules are taking shape

As well as the need to ratchet up ambition, there is much room for progress on how climate rules are operationalised across the globe. Such "implementation" remains insufficient to prevent the growing risk of climate impacts, such as record-breaking heatwaves and wildfires.

China's climate rules track or exceed the average global ambition on climate-related information disclosures, carbon credits and methane abatement, finds the monitor's dataset finds.

The monitor identified a Shanghai Stock Exchange document as a leading policy. Titled Guidelines No. 14, it mandates companies on major indices (SSE 180 and STAR 50) to disclose their emissions, climate risks and transition targets, along with those listed simultaneously in mainland and overseas markets.

Moreover, China emerges as a relative leader on methane abatement by addressing agricultural emissions as well as having a national target. By contrast, some jurisdictions around the world, such as Poland and the European Union, do not currently have specific policies addressing methane emissions from farming.

The need to climate-proof public procurement

One area ripe for improvement, both globally and in China, is public procurement.

When governments around the world purchase goods, engineering and services, they involve around 15% of global emissions. The Oxford study found limited progress since 2020 on sustainable procurement across countries, leaving great untapped potential to address climate change.

China's public procurement topped CNY 3 trillion (about USD 500 billion) in 2024, according to its finance ministry. We note that China already has a leading green procurement scheme for building materials at city-level. This could potentially be expanded to cover other procurement sectors.

However, China has not yet integrated life-cycle costing rules into its procurement policies. This would require officials to consider whole-of-life emissions impacts rather than just the initial purchase price. Also, China currently lacks rules regarding the greening of suppliers, such as requiring bidders for government contracts to have their own net-zero targets or transition plans.

Green procurement could leverage China's purchasing power to drive significant progress towards climate goals, in line with strategic goals to conserve resources and boost the economy. China could further utilise procurement as a key demand-side policy to achieve its goals of carbon peaking and neutrality. At the same time, Chinese companies have potential to improve their ESG performance, as academic studies have found.

China is in the process of overhauling its public procurement framework with draft revisions to the Government Procurement Law. This could be an opportunity to review best practices and leadership from other jurisdictions, and implement procurement policies with economic and resource-saving benefits in key sectors.

In terms of leading global practices, Canada requires large contract suppliers to disclose their greenhouse gas emissions and set science-based reduction targets, as well as prioritising the purchase of zero-emission vehicles and clean electricity. Meanwhile, Brazil recently passed rules integrating sustainable performance parameters into highway contracts, considering not only construction but also long-term maintenance and operations.

The case of procurement shows that climate policies can provide win-win economic benefits: driving long-term resilience by reducing climate, pollution and other environmental costs. Though it may carry an initial premium, sustainable procurement can pay for itself over time through substantial energy and resource cost savings.

The Oxford Climate Policy Monitor shows that climate policies are moving ahead globally as part of a long-term low carbon transition, despite backsliding in Washington. With the impacts of climate change becoming more and more evident, faster implementation is needed to close the gap between targets and reality.

It is also clear that global cooperation will be needed to address the challenges ahead, as the impacts and drivers of climate change do not respect national boundaries. In addressing this unprecedented challenge, China's cooperation with other jurisdictions on these fronts will be important. As will the governance of Chinese overseas investment, where regulation is only just beginning.

This article is also published on Dialogue Earth. illuminem Voices is a democratic space presenting the opinions of leading Sustainability Thought Leaders, their views do not necessarily represent those of illuminem.

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