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Presentation PackCorporate responsibility and business success in China

StructureSustainable development Facts about China Sustainable development in China

Business role and responsibilitiesBusiness implementation

Getting started

Sustainable development meets the needs of the present without compromising the ability of future generations to meet their needsBrundtland Commission, Our common future, 1987

Who has previously heard about sustainability? In what What would be your definition of sustainable development? "de-f&-'ni-sh&n How important is sustainable development: To you? To your company?

definition

context?

Q

Human activity = impactsGlobal Warming Ozone Depletion

Water, Air, & Land Pollution

Reduction of Biodiversity

Resource Depletion

Population Increase & Economic Growth

Sustainable development covers many topics Demography Wealth Nutrition Health Education Consumption Energy Pollution Emissions and waste generation Efficiency Ecosystems Climate change

Agriculture Human rights Water Urbanization Mobility Communications Labor Democracy Accountability Privatization Biodiversity

A changing global landscapeIn a world of instant communications, whistle blowers, inquisitive media, and googling, citizens and communities routinely put firms under the microscope. Tapscott and Ticoll (2003)

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

Context: Demography 8 7 6 5 4 3 2 1 0 1995 2030 Developing world Industrialized countries

Today: 6 billion human beings on Earth

2030: population will reach 8 billion, of which 7 billion will live in the developing worldPopulations will increasingly move towards cities, creating megalopolises

100% 80% 60% 40% 20% 0% 1950 2000 2030 Rural Urban

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 pollutionLand Pollution: Agriculture + industrial activities + waste generation- Intensive use of chemical fertilizers - Intensive land exploitationGlobal Consumption of Fertilizers160000Ktons of NPK nutrient

120000

x 4.5 in 40 years80000 40000

0 1960

1970

1980 Year

1990

2000

Fertilizer consumed

Air pollution- Main environmental threat to human health - SO2 and NO2 emissions Acid rain

CITY

PARTICLES(g/m3) [1995]

SO2(g/m3) [1998] < 50 14 26 90 33 18 3

NO2(g/m3) [1998] < 50 57 79 122 39 68 20

WHO STANDARDS PARIS NEW YORK BEIJING BOMBAY TOKYO STOCKHOLM

< 90 14 .. 377 240 49 9

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 responsibilitiesGlobalization goes together with the emergence of a growing number of stakeholders (more demanding and powerful)

Institutions Investors NGOs Individuals Businesses

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 NOTATIONPOWER TO PROVIDE FUNDS DEMAND TO BE CONSULTED AND ASSOCIATED POWER TO INFORM AND DENOUNCE (MEDIA, INTERNET, JUSTICE, )

SEEK QUALITY OF LIFE AND SECURITYDEMAND FREE CHOICE POWER TO VOTE, DENOUNCE, BOYCOTT CONTRIBUTE SERVICES, PRODUCTS AND TECHNOLOGY TO SOCIETY BALANCE ECONOMIC PROFITS WITH THE LONG_-ERM SUSTAINABILITY OF THE BUSINESS

Increased awareness

VALDEZ

1948: 1961: 1970s: 1980s: 2002:

Declaration of human rights WWF, amnesty international Environmental movements 1984: Bhopal; 1986: Chernobyl; 1989: Exxon Valdez Enron, WorldCom

Global frameworks and initiatives

SarbOxThe 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 developmentMaintain 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

StructureSustainable development Facts about China Sustainable development in China

Business role and responsibilitiesBusiness implementation

Facts about China China's population is 1.31 billion people. GDP is US$ 1.41 trillion and expected to grow 8% in2004.

It already accounts for 13% of world output. Largest recipient of foreign direct investment. China produces 2/3 of all photocopiers, microwavePopulation (Mill.) Population growth Population growth (%)

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 havebeen lifted out of poverty.

Population

Every year, 10 million more people join the job market.* Ref: The Economist, UNDP and UNFPA

Size matters60% of the population still lives in the countrysidebut.

At present there is only one car for every 70people in China, against one car for every two Americans, but.

The Chinese government estimates that there are500,000 HIV positive individuals in China, or a prevalence rate of less than 0.2% but.* Ref: The Economist, UNDP and UNFPA

Increasing energy needs: Coal74% of electricity produced in coal plants Shortage of electricity production capacity Lack of jobs in western China Coal reserves mainly in western China 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

PollutionCO2 emissions, global warming

Health and Safety conditions

Efficiency

Strain on resourcesCoal prices on the rise

Increasing energy needs: OilChina 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.

MobilityChina 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 capacityCurrent 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 must build the equivalent of one nuclear plant every 15 days for the next 15 years.GW

Electricity production capacity800 700 600 500 400 300 200 100 0 2005 2020 Nuclear Hydroelectricity Coal Renewables

Energy efficiencyLess 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 efficiencyby 25%)

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

Depletion of natural resourcesLand degradation and desertificationThe use of chemical fertilizers in China is two timeshigher 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 Chinaevery year, reaching into Korea and Japan, and sometimes even crossing the Pacific Ocean and arriving at west American shores

* Ref: UNID

Depletion of natural resourcesWater 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 Pollution Inefficiency Irrigation, that accounts for 60% of use of water, suffers from leakages and losses of great magnitude 60% of rivers and 90% of urban underground water are highly polluted 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 resourcesMineral depositsChina is already the worlds largest consumer of many commodities, such as steel, copper, coal and cement. Its increased needs account for much of the 50% rise in the worlds commodity prices over the past three years. Coal Largest producer and consumer in the world, and Consumption expected to rise further from 1