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Presentation Pack

Corporate responsibility and business


success in China
Structure

Sustainable development
Facts about China
Sustainable development in China
Business role and responsibilities
Business implementation
“Sustainable development
meets the needs of the
present without compromising
the ability of future generations
Getting started to meet their needs”
Brundtland Commission, “Our common
future”, 1987

Who has previously heard about sustainability? In what


context?
def·i·ni·tion
What would be your definition of sustainable development?
"de-f&-'ni-sh&n How important is sustainable development:
To you?
To your company?

Q
Human activity = impacts

Ozone
Global Warming
Depletion

Water, Air, & Reduction


Land Pollution of Biodiversity

Population
Resource
Increase &
Depletion
Economic Growth
Sustainable development covers many topics
 Demography  Agriculture
 Wealth  Human rights
 Nutrition  Water
 Health  Urbanization
 Education  Mobility
 Consumption  Communications
 Energy  Labor
 Pollution  Democracy
 Emissions and waste generation  Accountability
 Efficiency  Privatization
 Ecosystems  Biodiversity
 Climate change
A changing global landscape
“In a world of instant
communications, whistle
blowers, inquisitive media, and
Issues include: googling, citizens and
communities routinely put firms
• Communications – CNN world under the microscope.”
Tapscott and Ticoll (2003)
• Changing expecations of consumers
• Valuation – including intangibles and knowledge
• Free movement of goods and services
• Finite nature of resources – carrying capacity
• Changing demographics – haves and have nots
• Changing role of business and government
Context: Demography

 Today: 6 billion human beings on Earth


8
7
6  2030: population will reach 8 billion, of
5 Developing
4 w o rld which 7 billion will live in the developing
Ind ustrialized
3
cou ntries world
2
1
0
1995 2030  Populations will increasingly move towards
cities, creating megalopolises
100%

80%

60%

40% Rural
Urban
20%

0%
1950 2000 2030
Context: Natural resource needs

Poverty eradication &


population growth lead to a
rising demand for materials
and natural resources

OIL, GAS, URANIUM, MINERALS, CLEAN, WATER …


are finite and limited resources, and could become
rare in the near future
Land pollution

Land Pollution:
Agriculture + industrial activities + waste generation
- Intensive use of chemical fertilizers
- Intensive land exploitation

Global Consumption of Fertilizers


160000

120000
Ktons of NPK nutrient

80000
x 4.5 in 40 years
40000

0
1960 1970 1980 1990 2000
Ye a r Fertilizer consum ed
Air pollution

- Main environmental threat to human health


- SO2 and NO2 emissions  Acid rain

CITY PARTICLES SO2 NO2

(μg/m3) [1995] (μg/m3) [1998] (μg/m3) [1998]

WHO STANDARDS < 90 < 50 < 50

PARIS 14 14 57

NEW YORK .. 26 79

BEIJING 377 90 122

BOMBAY 240 33 39

TOKYO 49 18 68

STOCKHOLM 9 3 20
The Greenhouse Effect
Biodiversity

 Global biological diversity is decreasing, due


to direct and indirect human activity: hunting,
loss of natural habitat (deforestation,
desertification), etc.

 The continuous decrease in animal and


plant populations results in a loss of genetic
diversity
Roles and responsibilities
Globalization goes together with the emergence of a growing
number of stakeholders (more demanding and powerful)

PRESERVE PEACE & STABILITY


Institutions SEEK GLOBAL LONG-TERM SOLUTIONS
POWER TO RULE, INCITE, TAX

DEMAND MORE TRANSPARENCY, INFORMATION AND ETHICS; INCLUDE


Investors SOCIAL & ENVIRONMENTAL PERFORMANCE IN BUSINESS NOTATION
POWER TO PROVIDE FUNDS

DEMAND TO BE CONSULTED AND ASSOCIATED

NGOs POWER TO INFORM AND DENOUNCE


(MEDIA, INTERNET, JUSTICE, …)

SEEK QUALITY OF LIFE AND SECURITY


Individuals DEMAND FREE CHOICE
POWER TO VOTE, DENOUNCE, BOYCOTT

CONTRIBUTE SERVICES, PRODUCTS AND TECHNOLOGY TO SOCIETY


Businesses BALANCE ECONOMIC PROFITS WITH THE LONG_-ERM SUSTAINABILITY OF
THE BUSINESS
Increased awareness

VALDEZ

1948: Declaration of human rights


1961: WWF, amnesty international
1970s: Environmental movements
1980s: 1984: Bhopal; 1986: Chernobyl; 1989: Exxon Valdez…
2002: Enron, WorldCom…
Global frameworks and initiatives

SarbOx
The search for solutions is happening on a global scale and is being led by both
public institutions and as part of private initiatives. Solutions include new legislation,
stakeholder partnerships, voluntary agreements, codes of conduct, multilateral
agreements, interdependent actions, etc.
Key for success in sustainable development
 Maintain the balance between economic growth, environment, and social aspects by:

 An integrated approach for business operations;


 Partnerships among stakeholders;
 A Cross-disciplinary approach.

Natural resources & energy

Planet

Health & Safety, equity


People Profit Economic growth
Structure

Sustainable development
Facts about China
Sustainable development in China
Business role and responsibilities
Business implementation
Facts about China
 China's population is 1.31 billion people.
 GDP is US$ 1.41 trillion and expected to grow 8% in
2004.

 It already accounts for 13% of world output.


 Largest recipient of foreign direct investment.
 China produces 2/3 of all photocopiers, microwave
ovens, DVD players and shoes, over 1/2 of all digital
Population growth (%)

Population growth
cameras and around 2/5 personal computers.
Population (Mill.)

 In the last two decades, almost 200 million people have


Population
been lifted out of poverty.

 Every year, 10 million more people join the job market.


* Ref: The Economist, UNDP and UNFPA
Size matters

60% of the population still lives in the countryside


but….

At present there is only one car for every 70


people in China, against one car for every two
Americans, but….

The Chinese government estimates that there are


500,000 HIV positive individuals in China, or a
prevalence rate of less than 0.2% but….

* Ref: The Economist, UNDP and UNFPA


Increasing energy needs: Coal
74% of electricity produced Lack of jobs in western China
in coal plants Coal reserves mainly in
Shortage of electricity western China
production capacity Strain on rail transport
Safety of workers in mines

New coal plants built in urgency


Energy shortage prevents shutdown /
modernization of old coal plants
Limited implementation of standards:
Pollution, safety & health & health issues

Health and Safety Efficiency


Pollution
conditions
Strain on resources
CO2 emissions,
global warming Coal prices on the rise
Increasing energy needs: Oil

China is the second largest consumer of oil after the


USA, and accounts for two-fifths of the increase in
global consumption since 2000.

China occupies the second place among the major


greenhouse gas emitters worldwide (13.5%).
China only has 1.7% of worldwide oil reserves.
Expected % of needs to be imported:
50% in 2010; 85% in 2030.
Mobility

China is expected to become the


world's third largest automaker
by 2010.

• Oil consumption for mobility has risen


sharply, contributing to making China
dependant on importing oil.
• Air pollution in the big cities is on the
rise.
Electricity production capacity
Current issues
•Electricity demand increased 16.5% in 2003
•Shortage of production capacity in 2003
• At its peak : 40 GW
• Average : 15 GW
•Direct impact on the economy, as 70% of electricity is consumed by industry
• 2005 forecast: to meet its 2020
economic objectives, China Electricity production capacity
must build the equivalent of one 800

nuclear plant every 15 days for 700


600
the next 15 years. 500
Nuclear
Hydroelectricity
GW

400
Coal
300 Renewables
200
100
0
2005 2020
Energy efficiency
Less than 10% of new buildings are made according to existing
isolation standards

Energy growth is increasing faster


than GDP (=
“power elasticity co-efficient”)

2005-2020 Government objectives :


- Increase GDP four-fold
- Increase electricity production capacity
two-fold (Objective to improve energy efficiency
by 25%)

Power elasticity co-efficient should be less than 1.0 (opposite to current trend)
* Ref: UNIDO
Depletion of natural resources

Land degradation and desertification


The use of chemical fertilizers in China is two times
higher than in other countries

Continuous expansion of desert = “desertification”


1950s – 1970s: 1,500 km /yr 2

2003: 3,000 km /yr 2

Sandstorms from the Gobi desert hit Northern China


every year, reaching into Korea and Japan, and
sometimes even crossing the Pacific Ocean and arrivin
at west American shores
* Ref: UNID
Depletion of natural resources

Water pollution and consumption


• Water availability in China is between 4 and 5
times less than world average
• Presently 70% of cities have water shortages

• Availability Irrigation, that accounts for 60% of use of water, suffers


from leakages and losses of great magnitude
• Pollution 60% of rivers and 90% of urban underground water are
highly polluted
• Inefficiency Industrial output needs on average about 7 times more
water than more sustainable economies
• Requirements 30 bln US$ required to solve urban water management in
all cities (> 600.000)
* Ref: UNIDO
Depletion of natural resources
Mineral deposits
China is already the world’s largest consumer of many
commodities, such as steel, copper, coal and cement. Its
increased needs account for much of the 50% rise in the
world’s commodity prices over the past three years.

Coal
• Largest producer and consumer in the world, Proven coal reserves

and…
• Consumption expected to rise further from
1.2 billion metric tons (2000) to 2.2 billion USA
ex-USSR
(2030) China
Rest of the World
• US$ 120 billion would be required to
modernize mines & install clean combustion
systems (IEA)
Reserves = 334.5 billion metric tons
(“only” 3rd in the world)
Pollution of natural resources: air pollution

• Caused by high SO2 emissions from coal combustion China


focus acid rain as a serious problem
• A growing volume of traffic results in growing NOx emissions
• China is responsible for 36% of worldwide pollutant emissions
• Respiratory and heart diseases related to air pollution are the
leading cause of death in China

CITY PARTICLES SO2 NO2

(μg/m3) [1995] (μg/m3) [1998] (μg/m3) [1998]

WHO STANDARDS < 90 < 50 < 50

NEW YORK .. 26 79

BEIJING 377 90 122

STOCKHOLM 9 3 20

Out of the 20 most polluted cities in the world, 16 are in China.Estimated annual health costs due to air pollution is 44 bln
RMB
* Ref: The Economist, + UNIDO
Urbanization and poverty
 Rural poverty:
- while 60% of the population lives in rural areas, they contribute to only
16% of GDP
- income ratio urban-rural estimated at 3 to 1

 Urbanization: rate of migrant workers approx. 8 million people each year


 Cities are facing problems in delivering infrastructure and services
 Slums may start to appear in cities
 Increased urban unemployment and loss of social security tied to state-
owned enterprise reform
 These trends are causing a growing
Rate of Urbanisation

80%
70%
60%
“urban poor class”.
50%
40%
30%
20%
10%
0%
Structure

Sustainable development
Facts about China
Sustainable development in China
Business role and responsibilities
Business implementation
Recent headlines
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19.11.2004 e | 04.03.2005
Current SD issues in China
Population
growth Social distinctions and poverty
and change • Urbanization
in social Which • Health, safety
demands • Labor rights
sustainable
development
Depletion of natural resources
Limited issues could
natural • Land degradation / desertification
result from
resources • Environmental pollution (e.g. water, air)
the tension • Water supply & treatment
between
these 3 Regional distinctions in infrastructure
Fast
economic conditions ? • Urbanization
growth • Energy generation & utilization

Q
• Waste: solid, liquid, hazardous
Striking a balance

Ecological Good
lasting SD
Economic practice
Growth
Equity

Imbalance Balance
How to:
• Provide employment opportunities
Main Drivers: • Maintain economic growth
• Population Size & Growth • Remain a competitive business
• Globalization environment
• Cultural shifts • Reduce income inequalities
Yet also…
• Sustaining the environment
• Improving social aspects
Call to action….
Same issues apply to all countries;
their significance in China is the rate and magnitude at
which they create imbalances

Resources and efforts from all stakeholders


are required to correct the imbalances;
Failing to act immediately
only worsens the severity of the required solutions

Implementation is everyone’s responsibility


= NGO’s, business and government
Legislation

Central government recognizes the need for action.

Programs initiated to counter China’s SD challenges:

 Agenda 21

 Millennium Development Goals

 Xiaokang (1980) & Tenth Five-Year Plan (2001)


Government
Key Government Organizations with EHS Responsibilities

NPC

State Council

SEPA MII SDRC AQSIQ MOFCOM

Key: (chart showing approximation of hierarchy) SAC


NPC: National People’s Congress
SEPA: State Environmental Protection Administration
MII: Ministry of Information Industry
AQSIQ: Administration for Quality Supervision, Inspection and Quarantine
MOFCOM: Ministry of Commerce
SAC: Standardization Administration of China (within AQSIQ)
SDRC: State Development Reform Commission ( or NDRC)
National People’s Congress

 China’s Clean Production Promotion Law (CPPL)


Enacted June 29, 2002, effective January 1, 2003
Statute providing legislative authority for a wide range of
materials restriction and related initiatives in China
“Clean production” defined in law to include
“fundamental reduction of pollution from sources,
enhancement of resource utilization, reduction in or
prevention of pollution during production and in the use
of services and products through continual design
improvements, use of cleaner energy resources and raw
materials, adoption of advanced technologies, and
improvement in management to reduce or eliminate
harm to human health and environment
 This directive is the foundation of new regulations
Environmental Regulatory Status
 Legal standards similar or equal to EU legislative and policy initiatives:

 Restriction on Hazardous Substances (RoHS) Directive


 Waste in Electrical & Electronic Equipment (WEEE) Directives
 REACH proposal on Chemicals
 Eco-design of energy-using products (EuP)

 Prevention and Control of Environmental Pollution Caused by Solid Waste –


drafting work recently commenced to amend existing law and include:

 Control of hazardous wastes


 Provisions reflecting regulatory concepts such as “extended producer responsibility”
Do you know about Chinese environmental
legislation? I
Which of the following products must meet
energy consumption standards in China?
•Air conditioners
•Irons
•Refrigerators
•Rice cookers
•TV All of them have to meet legal
standards!
From 1 March 2005, manufacturers of energy
consuming products will even have to join
labels to their products including:
- The name & brand of the producer
- The degree of energy efficiency
- The energy consumption volume

Q
- The China energy standards referenced to
determine the product’s degree of efficiency.
Do you know about Chinese environmental
legislation? II
Are Chinese companies required to submit
reports on their energy consumption?

Of course they are!!!

Much more than a simple statement on their level of consumption,


companies exhibiting significant energy consumption are required to
periodically submit their energy efficiency and the implemented saving
measures to the relevant authorities.

Thus progress in energy efficiency is a legal requirement in China.

The import of backward energy intensive technology is illegal… before 2008 the law will be
reinforced by incentives and disincentives towards businesses in order to promote energy

Q
efficiency…
Do you know about Chinese environmental
legislation? III
The approach to hazardous solid waste identification is defined by the law as the
prevention and control of environmental pollution by solid waste.

What about liquid waste?

The hazardous waste identification approach applies to


liquid as well as solid waste.
Main aspects of the law are the following :
- entities engaged in the business of collecting, storing and disposing
hazardous waste shall apply for licenses;
- Government may impose discharge fees on those responsible for the
waste discharge that do not comply with relevant environmental laws;
- Hazardous wastes are listed in an exhaustive catalogue;
- Changing the land use of a previously waste dedicated area is

Q
submitted to legal control.
Do you know about Chinese environmental
legislation? IV

Is it legal to import waste into China?

Waste import is basically forbidden (or at least highly


restricted), except when it can be used as raw material.

Movements of waste are strictly monitored and controlled. This is true for
trans-boundary waste shipment, as well as for waste movements
between Chinese provinces.

Q
Initiative taken in China - Sustaining natural
resources
Land and soil
Actions and programs

Success and Targets


• China has afforested around 46.7 million hectares since 1950, this is about 26% of total
woodland
• The afforested area is planned to reach 110 million hectares in 2050, around 28% of China’s
total area
• China has initiated a program to stop desertification between now and 2010, to start
reducing desertificated areas from 2010-2030 and to redevelop desertificated areas from
2030-2050
• In some regions soil erosion has been stopped by redeveloping farmland into woodland
* Ref: UNIDO
Structure

Sustainable development
Facts about China
Sustainable development in China
Business role and responsibilities
Implementation
The business environment

Conflicting Term of office


time scales for head of state

Life of major
consumer items

Life of energy production


capital stock

Time to change beliefs


and habits

Lock-in caused by
urban design

Years 0 50 100 150 200


Business demands
 Doing Business in a networked world

 Information, knowledge, people and goods move around the globe as never before.
 Beyond compliance, businesses need to meet international agreements & standards

 Investors & international market - increasing demand for sound SD practices


 Trends : accountability and transparency
 Companies face increasing and partly conflicting demands from stakeholders:

 Shareholders - high returns

 Customers - affordable and high-quality products

 Public pressure groups - more environmental protection and social engagement

 Trends – accountability and transparency

 Employees – safe and healthy workplace with fair compensation


In summary:
Why is SD in China so important for businesses?

 China’s environmental impact affects the whole world

 Great business opportunities for both Chinese and foreign companies


 Major economic growth in China: large country of (potential) consumers
 Economy open to both foreign and local investors
 High quality and availability of labor force
 Investors increasingly demand sound SD practices
 Sound SD practices as a criterion in selection of suppliers
 Sound SD practice is becoming a “license-to-export”
 Compliance with global environmental regulations required
 Olympics scheduled in Beijing in 2008

 Opportunity to show the world that Chinese business practice includes sound environmental and social management
The business case for sustainable
development

•The business case for sustainability is a concept


promoting corporate sustainability based on economic logic.

•It points to opportunities companies have to create economic


value by means of improving
• environmental performance
e.g. increase eco-efficiency, reducing pollution
• social performance
e.g. engage in community development
beyond compliance.
Improving business performance
Short term
 Demand from the emerging world = huge market opportunities
 Consider local needs and conditions
 Cleaner & more efficient production = better industrial efficiency and cost-
effectiveness
 More efficient/eco-friendly products = Less use of resources and energy and less
waste generation = cost effective for the business and for consumers
 Transparency, social standards, codes of conduct are part of the company‘s image
 SD policy is taken into account more and more by investment groups and financial
analysts = providing the company more financial access
(Even stock exchanges are joining the Global Compact!)
From risk to opportunity

Longer term
 Sustainable use of finite resources

 Minimizing environmental impacts of business operations

 Enhance stability in the communities where the business


operates

 The reduction of regional inequities on a global scale


is necessary to preserve the stability that business
needs to make profit.
Example: Cleaner production

Efficient use of water, energy, raw materials


Starting “at the source” (not end-of-pipe)

 Cost savings on water, energy, raw materials,


directly add to bottom-line result
 Improved efficiency = reduced waste/leakage
 Technology leadership
 Contribution to solve environmental issues
 Positive company reputation

C
Example: Eco-efficient products
More efficient and eco-friendly products
Example: Energy Star products (the US)
Blue Angel (Germany)

 Preferred by consumers = lower running cost


of equipments & tax breaks = lower cost in
the life cycle = company can place a price
premium = higher profits
 Technology leadership and brand recognition
 Contribution to solve environmental issues
 Less concern for the waste if using less toxic
materials = more appealing products

C
Example: Health & safety
Healthy, happy
employees
& neighbors

 Reduced medical costs for employees


 Fewer lost working days
 More efficient workforce
 Happy, healthy consumers
 Positive company reputation
Access to highly qualified human capital

C
Summary of business roles and opportunities
Challenge Opportunity
 Conflicting time scale  Meeting international standards opens
export opportunities
Shorter product life span
 Access to capital: investors increasingly
Rapid developments concerned with SD
 Conflicting demands from stakeholders  Poverty alleviation creates opportunity to
 External environmental value in $$$ expand business to unserved or
underserved population

 Efficient use of resources = cost savings


 Efficient products = premium values
Structure

Sustainable development
Facts about China
Sustainable development in China
Business role and responsibilities
Business implementation
Sustainable
Evolution of tools Livelihoods

Ec trum
Ins
Comm islation

CSR

Co-r eement

on en
Sustainability

A gr

o m ts
egu
Env.
Leg

ic
and &

lato
Footprint Responsible
Entrepreneurship
ry
Factor X
Contr

Agenda 21
ol

Our Eco-efficiency
Common
Future
Government Cleaner Production
Agenda
Compliance
Business EHS ICC- EMS Sustainability
Time
Agenda Auditing Charter Standards Strategy
Implementing sustainable development
 Has your company taken any SD
initiatives?
Assess the  Can you identify any gaps?
situation
 What can you do as an individual, as
Measure Develop a a team, function or company, to
success strategy contribute to limit use of energy,
water and other resources?
Implement
 What resources will enable you to
achieve this? Can you identify any
barriers?

Alternative model: The Sigma Guidelines provide a systematic model of

T
sustainability management (www.projectsigma.com).
Benefits to be gained
from incorporating
sustainable
development into
Assessing: General checklist business management
practices
Does your company:

 Use energy and water


 Use natural resources and supplies
 Generate waste
 Discharge water, emit air containing chemical substances
 Produce products that use energy and/or water, or emit pollution
 Need to comply with environmental legal requirements
 Have international business practices
 Provide service/goods to international markets/companies
 Aim to enhance its public image/reputation and increase company brand value
 Have concerned stakeholders (government, consumers, businesses, employees,

Q
investors, NGOs, etc.)
Questions for the board

Assessing:
CSR checklist

Q
Assessing:
eco-efficiency checklist Assessing:
eco-efficiency
checklist

Q
Assessing: Dow Jones Sustainability Index
 The Dow Jones Sustainability Index was the first index to try to assess the ability of businesses to creates long-term shareholder value
by embracing opportunities and managing risks deriving from economic, environmental and social developments.

 Its methodology looks for the “best in class” in specific sectors. It is forward looking and aims to capture not simply end-of-pipe
performance but the drivers and enablers which set sustainability leaders apart in their ability to achieve long-term shareholder value.

 The index’s methodology appears to work in identifying future value potential: The DJSI has outperformed the base index over the past
three years.

 12 out of 18 World Market Sector Leaders are WBCSD members


Automobiles Toyota
Banks Westpac Banking Group
Basic resources Alcan
Chemicals DSM
Cyclical goods & services Royal Philips Electronics
EnergyStatoil
Food & Beverage Unilever
Health care Novozymes
Industrial goods & services 3M
Insurance Swiss RE
Non-cyclical goods & services Procter & Gamble
UtilitiesSevern Trent
Developing: Your company’s place in society
Your company is a stakeholder in many shared societal processes

Impacts Local
Economies
Pollutes Shared Supports Workers
Environments and Families

Provides Goods Your Uses Communal


& Services Company Resources

Consumes Provides Health


Limited Resources Care & Education
Influences
Government

T
WRI
Developing:
eco-efficiency
 One practical way of measuring the environmental
performance of business
 Applicable to every area of activity within a
company or the entire value chain of a product
or service
• Should be an integral part of overall
business strategy
 Principle: Doing more with less
 Combination of environmental and economic performance
 OECD definition:
 The efficiency with which ecological resources are used to meet human needs
 Higher eco-efficiency requires:
• Providing more value with less environmental impact

T
• Re-linking growth of welfare with the use of nature
• Improving both economic and ecological efficiency
Developing: Environmental Management System approach
 Obtain management
commitment The recognized need
 Organize project team for Cleaner Production
 Identify barriers &
solutions
1.Planning and
 Set objectives Organization

 Pre-assess
Identify sources (where)
 Analyse causes (why) 2.Assessment Sustain
 Generate possible options
(how) & Continue
 Evaluate options on: 3.Feasibility
Technical, environmental Analysis
and economic feasibility
 Select best options 4.Implementation
 Option implementation

T
 Monitoring and Successfully implemented
evaluation Cleaner Production projects
 Sustain and continue
Benefits of an environmentally sound business
practice (e.g. EMS)

Increases productivity
Reduces production costs
Produces safer and better products
Reduces levels of pollution and risk
Improves worker’s safety and health
Complies with Environmental Management Systems (ISO
14000)  Recognition from business partners
Link-up with international markets
Improves company image
Implementation of EMS in all aspects
of business will make a company more
profitable and competitive
T
Implementing:
Chronos -- the WBCSD’s e-learning tutorial

• Chronos® is an electronic tutorial designed to increase


business interest in, and action on, sustainable development
• Developed in partnership with the Cambridge University
Programme for Industry
• Aims to encourage employees in a wide range of companies
and sectors to reflect on personal experiences, explore
situations, and hone problem-solving skills
www.sdchronos.org
T
Implementing:
GHG Protocol
 The GHG Protocol’s mission is to develop internationally accepted greenhouse gas
(GHG) accounting and reporting standards for business and to promote their broad
adoption.

 The GHG Protocol Initiative comprises two separate but linked standards:

GHG Protocol Corporate Accounting and Reporting Standard which provides a


step-by-step guide for companies to use in quantifying and reporting their GHG
emissions)

GHG Protocol Project Quantification Standard forthcoming, a guide for


quantifying reductions from GHG mitigation projects)

T
Measuring (codes, frameworks, guidelines):
Global Reporting Initiative
 The Global Reporting Initiative (GRI) Sustainability Guidelines are the first attempt to
develop a generalized set of sustainability indicators for organizations.

 It has become the main point of reference for companies that produce sustainability
reports, although only a minority are able to claim their reports are “in accordance”
with the Guidelines.

 The Guidelines’ development is influenced by companies through a structured


dialogue process and the GRI’s multi-stakeholder governance process.

 The GRI has well developed linkages with other standards within an emerging “global
architecture”. (e.g. AA1000 Assurance Standard, UN Global Compact, etc.)

 (www.globalreporting.org).

T
Measuring (codes, frameworks, guidelines):
Global Compact
 This international partnership brings together UN agencies, business, civil
society and public sector organizations. Membership is based on a highlevel
commitment to its ten principles, derived from key UN and international
declarations on labor, human rights, and the environment.

 The principles themselves are not new, but by bringing internationally accepted
standards together and framing them as business commitments, the UN Global
Compact has set a principle-based global benchmark form corporate citizenship.

 It is seen as one of the most significant institutions working to align business and
sustainable development. But while more than 1,200 companies have signed up,
including 200 large multinationals, very few major US companies have joined.

 www.unglobalcompact.org

T
Measuring (codes, frameworks, guidelines):
OECD Guidelines for Multinational Enterprises
 The OECD Guidelines for Multinational Enterprises are the closest
thing we have to an comprehensive global corporate code of
conduct. It is a key reference point of international norms for
business.

 While the Guidelines are non-binding on businesses, adhering


governments are committed to promoting them and to making them
influential among companies operating in or from their territories.

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Case in Point
Stakeholder dialogue to partnerships: Degussa

Summary: Degussa AG with support from DEG (a German investment and


development company), in a public-private partnership, conducted a series of
training events in Beijing for employees of Chinese paper mills on how to
optimize wastewater circuits (2004-2005).

Drivers/Benefits: To help paper mills reduce their amount of wastewater.

Results so far: One paper mill implementing zero-effluent technology; several


mills short-listed as “Nations Model Clean Production Enterprise”.

Key success factors: Expert knowledge, working in a public-private partnership,


drive of participants to transfer training into practice.

C
Case in Point
Stakeholder dialogue to partnerships: ABB
Summary: ABB, with the Alliance for Global Sustainability, devised the China
Energy Technology Program (CETP), an extensive partnership program bringing
together a diverse group of participants to assess the relative costs and
environmental performance of different strategies for meeting power demand in
China.

Drivers/Benefits: To identify the true costs of electrical power generation and use
and develop cost-effective and efficient solutions for the future, to bring significant
environmental benefits, not just to China, but globally.

Key success factors: Active involvement and participation of academia, industry


and the stakeholders involved.

C
Case in Point
Energy recovery facilities: CH2M HILL

Summary: CH2M HILL was hired to assist the State Environmental Protection Agency of
China to advise on technical and economic feasibility and construction requirements for
energy recovery facilities at municipal waste landfills.

Drivers/Benefits: Promote better waste management practices, rewarded with economic


benefits from selling recovered methane as fuel.

Challenges: Institutional barriers to progress; communication & translation problems, funding


difficulties

Key success factors: Commitment from all; quality communication and translation; careful
choice of the host country lead agency

C
Case in Point
Local and global standards: Lafarge
Summary: Lafarge and DuJiangYan Building Materials Co., joint venture
agreement to construct a new cement plant in ChengDu, Sichuan province, in
line with latest technology, quality and safety standards.
Drivers/Benefits: For Lafarge -- establishment of substantial & profitable
position in region, where an accelerated infrastructure development program
fuels increase in demand for high quality cement;
for Chinese government -- strategic importance for regional economic
development & to reduce persistent supply/demand gap in the region.
Challenges: Quality control during construction, cultural differences,
implementing safety practices, Song relics on site, heavy rains.
Key success factors: Financial strength and technical support; strong
management team; good working relations between Chinese and foreign
partners; Government support; listening to the different parties.

C
Case in Point
Introducing EMS: Automobile Company in Anhui
Summary: This Chinese automobile company first started production in 1968.
It went from a loss-making venture with revenue of less than 3 million RMB in
1990 to one of the most important Chinese automobile producers with 5 wholly
owned subsidiaries and revenues of 26 billion RMB in 2000.

Drivers/Benefits: Systemization of processes & operations and introduction of


EMS increased efficiency and quality, timely delivery to customers, reduced
waste, improved company image.

Challenges: Culture change within the company needed; long-term process.

Key success factors: Strong management vision, employee commitment,


good cooperation with local government, starting from “at-the-source”
principles as opposed to “end-of-pipe”.

From “Greening Chinese Business” by Ulrich


Steger, Fang Zhaoben and Lu Wei C
Case in Point
Responsible care auditing: BASF
Summary: BASF systematically conducts Responsible Care (RC) audits of its
service suppliers; RC = a voluntary improvement process of the chemical industry,
dealing with Environment, Health and Safety (EHS).

Drivers/Benefits: The systematic method provides a tool to evaluate supplier site


risks, in order to select the best alliance partner and to deliver a contribution to
society and the environment; contributes to positive company reputation.

Challenges: Investment in time and effort from both auditing company and service
supplier.

Key success factors: Systematic, realistic method and timescale, using principle of
risk = EHS performance x hazard potential; good collaboration between service
provider and (potential) customer.

C
Case in Point
“Global” standards: DSM
Summary: Jinling-DSM Resins is a Chinese-Dutch joint venture producing resins
in Nanjing. Employment conditions of its 17 temporary workers were improved to a
level in between those of surrounding temporary workers and employees.

Drivers/Benefits: Achieving the optimum, realistic balance between international


standards and local circumstances.

Challenges: Building on the inheritance of a non-greenfield operation; different


cultural perceptions of appropriate employment conditions for temporary and
permanent workers.

Key success factors: Open discussion between management and employees;


finding the optimum mix between foreign views and local culture and habits.

C
Case in Point
Sustainable use of waste: Novozymes
Summary: Novozymes supplies treated wastewater and converted biomass from
its production processes free of charge to TEDA to be used for irrigation and as
biological fertilizer (NovoGro).
Drivers/Benefits: Sustainable use of wastes, reduced consumption of limited
resource, support for eco-industry, responsible neighbor and good company
reputation
Challenges: Infrastructure for storage and transportation of treated wastewater,
composting and expanded application of NovoGro to ensure more sustainable
use.
Key success factors: Close cooperation with TEDA, advanced waste treatment
technology, experience in the production and application of NovoGro from Europe
and US.

C
Case in Point:
Fuyang Chemical General Works
Summary: Chinese fertilizer plant, in collaboration with Chinese authorities and
CIDA implemented Cleaner Production, starting with zero- and low-cost
measures and continuing by implementing medium cost measures.
Drivers/Benefits: Enabled reduction of product losses, efficient use of raw
materials and energy, reduced emissions, reduced waste, healthier working
environment, increased revenues, improved company reputation.
Challenges: Collaboration between parties with different experience levels,
overcome initial investment requirements for medium cost measures.
Key success factors: Management commitment & employee participation,
tackling zero- and low-cost elements first, partnership with Chinese government,
training & sharing of information, stimulating gender equity.

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From the China-Canada Cooperation Project in Cleaner Production
“Picking Low-hanging Fruit: The Strategic Role of CP in China” by
M. Osterman, LL.L.CEA
“There will be no sustainable world
without a sustainable China”

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