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Corporate responsibility and business success in China
Presentation Pack
Sustainable development
Facts about China
Sustainable development in China
Business role and responsibilities
Business implementation
Structure
Getting started
def·i·ni·tion
"de-f&-'ni-sh&n
Who has previously heard about sustainability? In what
context?
What would be your definition of sustainable development?
How important is sustainable development:
To you?
To your company?
Q
“Sustainable development meets the needs of the
present without compromising the ability of future generations
to meet their needs”
Brundtland Commission, “Our common future”, 1987
Global Warming
Water, Air, & Land Pollution
Resource Depletion
OzoneDepletion
Reductionof Biodiversity
PopulationIncrease &
Economic Growth
Human activity = impacts
Agriculture
Human rights
Water
Urbanization
Mobility
Communications
Labor
Democracy
Accountability
Privatization
Biodiversity
Demography
Wealth
Nutrition
Health
Education
Consumption
Energy
Pollution
Emissions and waste generation
Efficiency
Ecosystems
Climate change
Sustainable development covers many topics
Issues include:
• Communications – CNN world
• 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
“In a world of instant communications, whistle blowers, inquisitive media, and googling, citizens and communities routinely put firms under the microscope.” Tapscott and Ticoll (2003)
A changing global landscape
0
1
2
3
4
5
6
7
8
1995 2030
Developingworld
Industrializedcountries
0%
20%
40%
60%
80%
100%
1950 2000 2030
RuralUrban
Today: 6 billion human beings on
Earth
2030: population will reach 8 billion,
of which 7 billion will live in the
developing world
Populations will increasingly move
towards cities, creating
megalopolises
Context: Demography
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
Context: Natural resource needs
Global Consumption of Fertilizers
0
40000
80000
120000
160000
1960 1970 1980 1990 2000
Year
Kto
ns o
f NP
K n
utri
ent
Fertilizer consumed
Land Pollution: Agriculture + industrial activities + waste generation - Intensive use of chemical fertilizers- Intensive land exploitation
x 4.5 in 40 years
Land pollution
CITY PARTICLES
(μg/m3) [1995]
SO2
(μg/m3) [1998]
NO2
(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
- Main environmental threat to human health- SO2 and NO2 emissions Acid rain
Air pollution
The Greenhouse Effect
The continuous decrease in animal and plant populations results in a loss of genetic diversity
Global biological diversity is decreasing, due to direct and indirect human activity: hunting, loss of natural habitat (deforestation, desertification), etc.
Biodiversity
Globalization goes together with the emergence of a growing number of stakeholders (more demanding and powerful)
Individuals
NGOs
Institutions
Investors
PRESERVE PEACE & STABILITY
SEEK GLOBAL LONG-TERM SOLUTIONS
POWER TO RULE, INCITE, TAX
DEMAND MORE TRANSPARENCY, INFORMATION AND ETHICS; INCLUDE SOCIAL & ENVIRONMENTAL PERFORMANCE IN BUSINESS NOTATION
POWER TO PROVIDE FUNDS
DEMAND TO BE CONSULTED AND ASSOCIATED
POWER TO INFORM AND DENOUNCE
(MEDIA, INTERNET, JUSTICE, …)
SEEK QUALITY OF LIFE AND SECURITY
DEMAND FREE CHOICE
POWER TO VOTE, DENOUNCE, BOYCOTT
Roles and responsibilities
BusinessesCONTRIBUTE SERVICES, PRODUCTS AND TECHNOLOGY TO SOCIETY
BALANCE ECONOMIC PROFITS WITH THE LONG_-ERM SUSTAINABILITY OF THE BUSINESS
VALDEZ
1948: Declaration of human rights1961: WWF, amnesty international1970s: Environmental movements1980s: 1984: Bhopal; 1986: Chernobyl; 1989: Exxon Valdez…2002: Enron, WorldCom…
Increased awareness
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.
Global frameworks and initiatives
Key for success in sustainable development
Profit
Planet
People
Natural resources & energy
Health & Safety, equityEconomic growth
Maintain the balance between economic growth, environment, and social aspects by:
An integrated approach for business operations;
Partnerships among stakeholders;
A Cross-disciplinary approach.
Sustainable development
Facts about China
Sustainable development in China
Business role and responsibilities
Business implementation
Structure
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 cameras and around 2/5 personal computers.
In the last two decades, almost 200 million people have been lifted out of poverty.
Every year, 10 million more people join the job market.
* Ref: The Economist, UNDP and UNFPA
Po
pu
lati
on
(M
ill.
)
Po
pu
lati
on
gro
wth
(%
)
Population growth
Population
Facts about China
* Ref: The Economist, UNDP and UNFPA
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….
Size matters
Shortage of electricity production capacity
74% of electricity produced in coal plants
Lack of jobs in western China
Coal reserves mainly in western China
Energy shortage prevents shutdown / modernization of old coal plants
New coal plants built in urgency
Pollution Health and Safety conditions
Efficiency
Strain on resources
Limited implementation of standards: Pollution, safety & health & health issues
Safety of workers in mines
Coal prices on the riseCO2 emissions, global warming
Strain on rail transport
Increasing energy needs: Coal
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
Electricity production capacity
0
100
200
300
400
500
600
700
800
2005 2020
GW
Nuclear
Hydroelectricity
Coal
Renewables
• 2005 forecast: to meet its 2020 economic objectives, China must build the equivalent of one nuclear plant every 15 days for the next 15 years.
* Ref: UNIDO
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)
Energy efficiency
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 km2/yr
2003: 3,000 km2/yr
Sandstorms from the Gobi desert hit Northern China
every year, reaching into Korea and Japan, and
sometimes even crossing the Pacific Ocean and arriving
at west American shores
* Ref: UNIDO
Depletion of natural resources
• 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
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
Depletion of natural resources
Reserves = 334.5 billion metric tons (“only” 3rd in the world)
Proven coal reserves
USA
ex-USSR
China
Rest of the World
Mineral depositsChina 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,
and…
• Consumption expected to rise further from 1.2 billion metric tons (2000) to 2.2 billion (2030)
• US$ 120 billion would be required to modernize mines & install clean combustion systems (IEA)
Depletion of natural resources
* Ref: The Economist, + UNIDO
CITY PARTICLES
(μg/m3) [1995]
SO2
(μg/m3) [1998]
NO2
(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
• 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
Pollution of natural resources: air pollution
0%
10%
20%
30%
40%
50%
60%
70%
80%
19
80
19
90
20
00
20
10
20
20
20
30
20
40
20
50
Year
Ra
te o
f U
rba
nis
ati
on
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
“urban poor class”.
Sustainable development
Facts about China
Sustainable development in China
Business role and responsibilities
Business implementation
Structure
China seizes the nuclear option
South China Morning Post | 04.03.2005
China wrestles with 'massive' environmental degradationVancover sun
05.04.2005China launches
"green storm"
against forest
destructionXinhua News Agency
31.03.2005
Overwork in China claims another life and a foreign MNC is to blame
Ethical Corporation | 19.11.2004
Recent headlines
Current SD issues in China
Population growth
and change in social demands
Limited natural
resources
Fast economic
growth
Social distinctions and poverty• Urbanization• Health, safety • Labor rights
Depletion of natural resources• Land degradation / desertification• Environmental pollution (e.g. water, air)• Water supply & treatment
Regional distinctions in infrastructure• Urbanization• Energy generation & utilization• Waste: solid, liquid, hazardous
Which
sustainable
development
issues could
result from
the tension
between
these 3
conditions ?
Q
Economic Growth
Ecological
Equity
Imbalance
GoodGoodlasting SD lasting SD practicepractice
Balance
Striking a balance
Main Drivers:• Population Size & Growth• Globalization• Cultural shifts
How to:• Provide employment opportunities• Maintain economic growth• Remain a competitive business environment• Reduce income inequalities
Yet also…• Sustaining the environment• Improving social aspects
Resources and efforts from all stakeholders are required to correct the imbalances;
Failing to act immediately only worsens the severity of the required solutions
Same issues apply to all countries; their significance in China is the rate and magnitude at
which they create imbalances
Call to action….
= NGO’s, business and government
Implementation is everyone’s responsibility
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
NPC
State Council
SEPA MII SDRC MOFCOMAQSIQ
SACKey: (chart showing approximation of hierarchy)NPC: National People’s CongressSEPA: State Environmental Protection AdministrationMII: Ministry of Information IndustryAQSIQ: Administration for Quality Supervision, Inspection and QuarantineMOFCOM: Ministry of CommerceSAC: Standardization Administration of China (within AQSIQ)SDRC: State Development Reform Commission ( or NDRC)
Key Government Organizations with EHS Responsibilities
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”
Which of the following products must meet energy consumption standards in China? •Air conditioners•Irons•Refrigerators•Rice cookers•TV
Q
Do you know about Chinese environmental legislation? I
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- The China energy standards referenced to determine the product’s degree of efficiency.
Are Chinese companies required to submit reports on their energy consumption?
Q
Do you know about Chinese environmental legislation? II
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 efficiency…
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?
Q
Do you know about Chinese environmental legislation? III
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
submitted to legal control.
The hazardous waste identification approach applies to liquid as well as solid waste.
Is it legal to import waste into China?
Q
Do you know about Chinese environmental legislation? IV
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.
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
Land and soil
Actions and programs
Initiative taken in China - Sustaining natural resources
Sustainable development
Facts about China
Sustainable development in China
Business role and responsibilities
Implementation
Structure
The business environment
Conflicting time scales
0 50 100 150 200
Lock-in caused byurban design
Time to change beliefs and habits
Life of energy production capital stock
Term of officefor head of state
Life of major consumer items
Years
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
Business demands
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 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.
The business case for sustainable development
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!)
Improving business performance
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.
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
Efficient use of water, energy, raw materials
Starting “at the source” (not end-of-pipe)
C
Example: Cleaner production
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
Shorter product life span
Rapid developments
Conflicting demands from stakeholders
External environmental value in $$$
Meeting international standards opens
export opportunities
Access to capital: investors
increasingly concerned with SD
Poverty alleviation creates opportunity
to expand business to unserved or
underserved population
Efficient use of resources = cost
savings
Efficient products = premium values
Sustainable development
Facts about China
Sustainable development in China
Business role and responsibilities
Business implementation
Structure
TimeBusiness Agenda
Compliance
Cleaner Production
Eco-efficiency
Responsible Entrepreneurship
EHSAuditing
ICC-Charter
EMSStandards
SustainabilityStrategy
Government Agenda
Our Common
Future
Agenda 21
Factor X
Env. Footprint
Co
mm
and
& C
on
trol
Leg
islation
Su
stai
nab
ilit
y
Co
-regu
latory
Ag
reemen
ts
Econom
ic
Instruments
Evolution of tools
CSR
Sustainable Livelihoods
Implementing sustainable development
Has your company taken any SD
initiatives?
Can you identify any gaps?
What can you do as an individual, as
a team, function or company, to
contribute to limit use of energy,
water and other resources?
What resources will enable you to
achieve this? Can you identify any
barriers?
Assess the situation
Develop a strategy
Measure success
Implement
T Alternative model: The Sigma Guidelines provide a systematic model of
sustainability management (www.projectsigma.com).
Assessing: General checklist
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, investors, NGOs, etc.) Q
Benefits to be gained from incorporating
sustainable development into
business management practices
Questions for the board
Q
Assessing: CSR checklist
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
Energy Statoil
Food & Beverage Unilever
Health care Novozymes
Industrial goods & services 3M
Insurance Swiss RE
Non-cyclical goods & services Procter & Gamble
Utilities Severn Trent
Influences Government
Provides HealthCare & Education
Impacts LocalEconomies
Uses CommunalResources
Supports Workersand Families
ConsumesLimited Resources
Provides Goods& Services
Pollutes SharedEnvironments
Your Company
Your company is a stakeholder in many shared societal processes
WRI
Developing: Your company’s place in society
T
Developing: eco-efficiency
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
• Re-linking growth of welfare with the use of nature
• Improving both economic and ecological efficiency T
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
Developing: Environmental Management System approach
The recognized need for Cleaner Production
1.Planning and Organization
2.Assessment
3.Feasibility Analysis
4.Implementation
Successfully implemented Cleaner Production projects
Sustain & Continue
Obtain management commitment
Organize project team Identify barriers &
solutions Set objectives Pre-assess Identify sources (where) Analyse causes (why) Generate possible options
(how) Evaluate options on:
Technical, environmentaland economic feasibility
Select best options
Option implementation Monitoring and
evaluation Sustain and continue
T
Benefits of an environmentally sound business practice (e.g. EMS)
Increases productivityReduces production costsProduces safer and better productsReduces levels of pollution and riskImproves worker’s safety and healthComplies with Environmental Management Systems (ISO
14000) Recognition from business partnersLink-up with international marketsImproves company image
Implementation of EMS in all aspects of business will make a company more profitable and competitive T
• 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: Chronos -- the WBCSD’s e-learning tutorial
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
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):Global Compact
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.
T
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 PointStakeholder dialogue to partnerships: Degussa
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 PointStakeholder dialogue to partnerships: ABB
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 PointEnergy recovery facilities: CH2M HILL
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 PointLocal and global standards: Lafarge
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”.
CFrom “Greening Chinese Business” by Ulrich Steger, Fang Zhaoben and Lu Wei
Case in PointIntroducing EMS: Automobile Company in Anhui
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 PointResponsible care auditing: BASF
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“Global” standards: DSM
Case in PointSustainable 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.
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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
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.
C
Case in Point:Fuyang Chemical General Works
“There will be no sustainable world without a sustainable China”