Water Pollution in China: How Can Business Help?

Workshop at Nanjing UniversityJanuary 15, 2010

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Overview

1. How is BSR involved?2. Why companies care about water pollution3. Current approaches in China

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We work with business to create a just and sustainable world

We have worked in more than 70 countries from six offices in Asia, Europe, and North America

San FranciscoBeijingGuangzhouHong KongNew YorkParis

Languages & Dialects Spoken:

CantoneseDutchEnglishFrenchGermanGuaraniHindiItalian

JapaneseKannadaLaoMandarinPortugueseRussianShona

SpanishSwedishTagalogTaiwaneseThaiUrduVietnamese

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Member Network: over 250 companies from a broad range of industries

Sample corporate members include:

Alcatel-LucentAramex InternationalBank of New York MellonCisco SystemsCitigroupThe Coca-Cola CompanyDuke EnergyFord Motor CompanyGEIBM

Pfizer Royal Dutch ShellSAPSodexo GroupSony CorporationStarbucks Coffee CompanyTime WarnerWal-Mart StoresThe Walt Disney CompanyWells Fargo & Company

IKEAKraft FoodsJohn Wiley & SonsLevi Strauss & Co.Marks & SpencerMcDonald’s CorporationMcGraw-HillMicrosoftNikeNovartis

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The BSR Approach

MemberNetwork

Cross-sector Collaboration

ConsultingServices

Research & Innovation

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Why Companies Care aboutWater Pollution

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Brand is everything

“Gap, Levi Strauss factory pollution exposed in Africa”

Photo: http://news.sky.com/skynews/Home/World-News/Gap-And-Levi-Promise-Action-After-Manufacturing-Operations-Exposed-As-Causing-Pollution-In-Africa/Article/200908115351904

“Coca-Cola, Pepsi on Beijing’s worst polluter list”--AFP, 19 August 2009

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“China’s waterways pay price in textile boom”

--Wall Street Journal, August 26, 2007

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It costs money

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Water Management = Risk Management

• Competition with community needs• Brand damage by association with

suppliers’ impact on freshwater resources

Reputation

• Suspension of discharge or supply permit

• Price increases driven by scarcity

Regulation

• Disruption from lack of availability• Reallocation to other needs during

drought

Physical

ImpactRisk

Source: JP Morgan. 2008. Watching Water: A Guide to Evaluating Corporate Risks in a Thirsty World. Available at http://www.jpmorgan.com

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It’s the right thing to do

• Clean, safe water is vital for ecosystem and human health

• Increased transparency and sustainability reporting is shining a light on many environmental impacts that companies hadn’t paid attention to

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Water issues are not going away

• Competing demands from industry, residents, agriculture, recreation are only going to increase

• The right to use water is going to become more and valuable, and more and more political

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What are Companies Doing in China?

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Risk Assessments

• Water footprints• Supply chain assessment

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Supply Chains -- Compliance

• Expanded environmental compliance programs• External verification of supplier performance by

audit firms, NGOs• Shared standards for supplier water quality

guidelines• Monitoring – Web H2O• Detailed Code of Conduct requirements

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Dedicated to responsible practices around water use and wastewater discharge in supply chains using industry-developed guidelines.

1 Clear and consistent expectations for the environmental performance of mills and laundries regarding wastewater

2 Standards are reviewed by environmental and textile industry experts to ensure adequacy and technical feasibility

3 Standards designed to allow individual companies to implement a water effluent treatment program that fits their business objectives

Member CompaniesColdwater Creek, Inc.Gap Inc.H&M Hennes & Mauritz ABJC Penney CompanyLL BeanLevi Strauss & Co.NIKE, Inc.Nordstrom, Inc.Timberland

Sustainable Water Group

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Parameter 2006 2007 2008Sampling

Temperature

pH

Traditional Parameters:

Total Suspended Solids Biochemical Oxygen Demand Chemical Oxygen Demand Chemical Constituents:

Antimony

Arsenic

Cadmium

Chromium

Cobalt

Copper

Cyanide

Lead

Mercury

Nickel

Zinc

Color

Foam:

Domestic Sewage:

BSR-AWQWG WATER QUALITY GUIDELINES & TESTING STANDARDS

WebH2O: Online Environmental Database Tool

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Supply Chains -- Support

• Intensive in-person help to improve wastewater management technology and processes

• Training for wastewater managers (CTI)• Occasional encouragement• Tie incentives (production orders) to

performance on water issues

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Development of education and training programs in water and wastewater management.

• Providing water management training for factory managers.

• Include topics such as: regulatory environment, risks and opportunities, financial expectations, and problem-solving approaches.

Water Resource Management Training

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Community Engagement

• Coca-Cola:– partnership with WWF to protect Yangtze River basin– rainwater harvesting in 12 villages in NW China– partnership with UNDP, MWR, MOFCOM, to improve

water access and sanitation• Pepsi:

– grants on Safe Water and efficiency– partnership with All China Women’s Federation on

safe drinking water• Lots of interest (primarily from beverage

companies), but not much experience

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Main challenges to supply chain work

• Regulatory environment• Limited NGO / civil society pressure• Highly technical issue• Long-term horizon often necessary for

investment – in most industries, neither customer nor supplier have this

• Many of worst polluters are not in MNC top tier supplier base

• Not a component of purchasing decisions

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Thank you!

Laura Ediger: lediger@bsr.org