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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

Sprungli

Reference???

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.


Facts about China




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


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)


* 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%

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Year

Ra

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f U

rba

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ati

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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”.


Facts about China




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


Facts about China



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


Facts about China




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.

C

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”