Battery giant CATL rewards suppliers who cut emissions

BEIJING: Contemporary Amperex Technology Co. Ltd., the world's largest producer of electric-vehicle batteries, is rewarding suppliers that cut emissions as it attempts to rein in its climate footprint.

The manufacturer, which sells to customers including Tesla Inc., Volkswagen AG and Ford Motor Co., is aiming to be carbon neutral across its core operations this year, and achieve the same status throughout its supply chains by 2035.

"Our suppliers are working hard. We have some incentives to buy more from them if they meet the ESG target better, and technological advances can help them out," CATL's billionaire founder and chairman Robin Zeng said in an interview.

CATL's scope 3 - or supply chain - emissions accounted for roughly 95% of the group's total of 118.3 million tons of carbon dioxide equivalent in 2024, according to the company's latest ESG report published last month.

Direct emissions at CATL's battery production bases rose roughly 5% last year on 2023, as output jumped almost a third.

Adoption of lithium-ion batteries in vehicles and power grids is helping to lower emissions in the transport and energy sectors, though suppliers are under pressure to minimize their own environmental and climate impacts - particularly from raw materials and energy-intensive manufacturing.

Production in China, which dominates the battery sector, typically has higher emissions intensity than in other regions, McKinsey & Co. said in a 2023 report.

CATL staff are providing "some technological help" to suppliers to assist with work on decarbonization, Zeng said in the Tuesday interview in Hong Kong.

"People may think that working in this way may add some costs in the short run," he said. "It's not the case."

The producer's efforts last year included categorizing the carbon footprint of more than 130 suppliers producing raw materials and components, including copper foil, graphite and aluminum casings, CATL said in its ESG report.