Tracing embodied CO₂ emissions and drivers in China's financial industry under inter-provincial trade

With the establishment of "Dual Carbon" targets and industrial restructuring in China, the transition from the secondary industry to the tertiary industry has facilitated the rapid development of the financial sector. However, the significant CO₂ emissions embodied within inter-provincial trade result in carbon leakage, posing challenges in assigning equitable carbon reduction responsibilities to the financial sectors across the 31 provinces of China. This study establishes a framework for evaluating CO₂ emissions of financial sectors through 134 samples of 60 listed financial enterprises in the 31 provinces, tracking the embodied CO₂ emissions within inter-provincial trade by using a multiregional input-output approach. The results reveal that the total CO₂ emissions of the financial sector in China surged from 4.591 to 12.423 Tg CO₂-eq between 2012 and 2020. The regions with the highest annual net CO₂ emissions are Anhui (0.244 Tg), Zhejiang (0.242 Tg), and Henan (0.211 Tg). The key factors influencing net CO₂ emissions are in the following order of importance: net CO₂ density, per capita added value of service industry, the proportion of finances in service industries, and population size. Based on the findings, this study provides policy implications: reducing net carbon intensity, enacting tailored carbon tax policies based on embodied CO₂ emissions, and fostering interdepartmental collaboration to address the impact of carbon leakage.