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Walter Ge from New Ventures China launches the English Language Impact report on Green SMEs in China, the first report of its kind. Drawing heavily on New Ventures China’s eight years of practical experience working with green SMEs to strengthen their business models and source investment, the Report: * Develops an exploratory method to evaluate the financial, environmental and social performance of green SMEs, and provides a snapshot of the performance of a survey sample of SMEs against these criteria; * Evaluates the contribution that green SMEs have made to China’s economic transformation; * Highlights challenges to the development of green SMEs and identifies areas where SMEs can be better supported in order to achieve their full financial, environmental and social potential; * Explores ways in which SMEs can realize “environmentally friendly development” and “resource-saving” development, in line with government policy.
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New Ventures China: Proving Environmental Entrepreneurship Can Work
Identify & Select Environmental
CompaniesAcceleration Access
New Ventures China
New Ventures has supported
over 500 environmental SMEs in China
since 2003
Government and public
Market
Investors
1
2
3
Key Findings Key Findings4
Table of ContentTable of Content
Status Quo of Green SMEs in China
Impact Performance Indicators System
Analysis on Sample Green SMES
5 Next Steps
1. Status Quo of Green SMEs in China1. Status Quo of Green SMEs in China
“十二五规划”— 12项环境生态相关指标
1.1 Green economic laws and policies
Policy
1.2 A power engine for economic transformation
Development of Energy Efficiency and Conservation Sector
Driven by policies and funding
Booming of the green industry
Golden age for green SMEs
Year 2006 2007 2009 2010 2011 2015
Total industry output (RMB billion)
8.2 21.6 58.7 83.6 125 ?
Source: 2011 Annual Report of China’s Energy-Saving Service Industry
1. Status Quo of Green SMEs in China 1. Status Quo of Green SMEs in China
1.3 potential and impact of green SMEs not well recognized
•Potential of green SMEs in energy efficiency and emissions
reduction not well received by the government
•Lack of proper measuring indicators
The overall sector remains under-developed
•weak in management
•poor access to information
1. Status Quo of Green SMEs in China 1. Status Quo of Green SMEs in China
2. Impact Performance Indicators System2. Impact Performance Indicators System
2.1 4 major issues studied
2. Impact Performance Indicators System2. Impact Performance Indicators System
Deliver positive impact on improving the natural environment through innovative technologies, products, and/or business models
2.2 Definition on green SMEs
· Renewable energy · Energy efficiency and conservation · Water resources management · Pollution prevention and waste management · Environmentally friendly new materials and processes · Sustainable land use · Biodiversity protection · Other related green fields
2. Impact Performance Indicators System2. Impact Performance Indicators System
2.3 methodology
Economic performance
Strategies and management
Social performance
Environmental performance
Based on triple-Based on triple-bottom line principlebottom line principlerecords green SMEs' "double green" attributes
FeaturesFeatures ::MeasurableMeasurableComparableComparableParticipativeParticipative
2. Impact Performance Indicators System2. Impact Performance Indicators System
2.4 Impact indicators frameworkFirst-Level Indicators Second-Level Indicators Third-Level Indicators
Strategy & Management
Value proposition Environmental protection and social contribution objectives defined in the strategies
Management policies Growth and operations model
Business Models Products, customers, markets and competitive advantages
Performance Economic Basic financial and financing indicators over the most recent three years
Environmental Environmental performance created by technologies and products
Companies’ internal environmental management
Social External: various social contributions Internal: job creation, work environment
3. Data Analysis of Sample Green SMEs3. Data Analysis of Sample Green SMEs
3.1 Basic Information
Company size Sector distribution
Revenue Distribution in 2010 (RMB million) Industry Sector Distribution
3. Data Analysis of Sample Green SMEs3. Data Analysis of Sample Green SMEs
3.1 Basic Information
Average Age of Sample Companies by Sector (Year)
3. Data Analysis of Sample Green SMEs3. Data Analysis of Sample Green SMEs
3.2 Consideration of “Sustainable Development” in trategy
Product Features Operations Management
Environmental Management and
Response
R&D
Marketing & Sales
Energy
Water
Resource Utilization
Social reputation
Response to challenges
3. Data Analysis of Sample Green SMEs3. Data Analysis of Sample Green SMEs
3.3 Economic Performance
2008-2010: Total asset growth rate—204%
Revenue growth rate—315%
Pre-tax profit growth rate—94%
3. Data Analysis of Sample Green SMEs3. Data Analysis of Sample Green SMEs
3.3 Economic Performance
Growth Rates of Major Financial Metrics by Sector
SectorsNumber of Businesses
3-year Growth Rates (2008-2010)
Total Asset Revenue Pre-Tax Profit
Renewable Energy 13 303% 189% 96.7%
Energy Efficiency and Conservation
15 242% 559%80.1%
Water Resources Management
7 44% 78%19.4%
Pollution Prevention and Waste Management
11 195% 434% 202.1%
3. Data Analysis of Sample Green SMEs3. Data Analysis of Sample Green SMEs
3.3 Economic Performance
External financing by sample company size
Company Size Equity Investment % Bank Loans % Government
Funds %
Micro Enterprise6 35% 1 4% 6 25%
Small Enterprise2 12% 5 22% 5 21%
Medium Enterprise9 53% 17 74% 13 54%
Total17 100% 23 100% 24 100%
3. Data Analysis of Sample Green SMEs3. Data Analysis of Sample Green SMEs
3.3 Economic Performance
Company Size Subsidies % of total Grants % of total Tax
Benefits % of total
Micro Enterprise
4 20% 2 12% 3 19%
Small Enterprise
6 30% 5 29% 4 25%
Medium Enterprise
10 50% 10 59% 9 56%
Total 20 100% 17 100% 16 100%
Distribution of Government Support Funds by Company Size
3. Data Analysis of Sample Green SMEs3. Data Analysis of Sample Green SMEs
3.4 Environmental Performance (contribution)
•Energy saved was approximately 680 thousand tons of coal equivalent, and emissions reduced were 1.77 million tons of CO2 equivalent;
•1.14 million tons of solid waste were disposed;
•80.50 million tons of sewage were disposed;
•20.8 thousand cubic meters of wood were saved;
•Approximately 7.2 million mu of land were sustainably used;
•The biodiversity of 7 million mu of forest was protected.
3. Data Analysis of Sample Green SMEs3. Data Analysis of Sample Green SMEs
3.4 Environmental Performance (internal operations)
Green operations:
Carbon Emission
Water resource management
Energy efficiency management
Resource utilization efficiency
3. Data Analysis of Sample Green SMEs3. Data Analysis of Sample Green SMEs
3.5 Social contribution
Job creation Decent work
Total : 5685
Average : 102
Full time : 5128
Part time : 557
Wages
career development
work safety
occupational health
• embedded “green genes” for sustainable development
• Financing difficulties are more serious
• Information asymmetry
• green SMEs enjoy rapid growth.
• Different policies lead to different levels of development.
• high barrier for applying for government funds and subsidies
• great potential for contributing to green development
• creating employment opportunities
Policy Driven
Environmental & social
contributions
4. Key Findings4. Key Findings
Green Genes &
Challenges
Improve Impact Indicators
Working with the information center of MIIT
Green SMEs
Impact Role
Model
InitiativeIndicators Government
databaseInitiatives
5. Next Steps5. Next Steps
• To select companies with unique
technologies/solutions to address serious environmental and social problems
• To select entrepreneurs with humanistic care and acute awareness of sustainability
• To select industry/sector-leading companies or those with a potential to lead, which could exert greater and wider impact as role models long-term
New Ventures China: Creating Environmental & Social Impact via Role Models
Pictured above: The Forbes China Magazine cover story featuring Yang and Sinen En-Tech
Impact Role Model: Sinen en-Tech
•Exclusive developer and provider of high-temperature condensed water recovery technology, reducing energy intensity and water usage
•Pioneer in energy performance contracting (EPC) business model in China
Impacts and Potentials:•On company level;•On industry level;•Beyond industry level
Pictured above: Landwasher water-free flushing toilet on Beijing Olympic sites
Impact Role Model: Landwasher
•The Landwasher water-free flushing toilet reuses the urine deposited by users to flush toilet and saves precious water resources.
Impacts and Potentials:•On rural villages•On residential buildings