Presentation Pack

Corporate responsibility and business success in China

Structure
Sustainable development Facts about China Sustainable development in China

Business role and responsibilities

Business implementation

Getting started

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

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?

Human activity = impacts

Global 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 landscape

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)

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 world
Populations 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 pollution
Land Pollution: Agriculture + industrial activities + waste generation
- Intensive use of chemical fertilizers - Intensive land exploitation
Global Consumption of Fertilizers
160000
Ktons of NPK nutrient

120000

x 4.5 in 40 years
80000 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 responsibilities

Globalization 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 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 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

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.

Key for success in sustainable development

Maintain 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

Structure
Sustainable development Facts about China Sustainable development in China

Business role and responsibilities

Business implementation

Facts about China

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
Population (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 have

been lifted out of poverty.

Population

Every year, 10 million more people join the job market.

* Ref: The Economist, UNDP and UNFPA

Size matters
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.
* Ref: The Economist, UNDP and UNFPA

Increasing energy needs: Coal

74% 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

Pollution
CO2 emissions, global warming

Health and Safety conditions

Efficiency

Strain on resources
Coal prices on the rise

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 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 capacity

800 700 600 500 400 300 200 100 0 2005 2020 Nuclear Hydroelectricity Coal Renewables

Energy efficiency
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)
* Ref: UNIDO

Depletion of natural resources

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: UNID

Depletion of natural resources

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 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 resources

Mineral deposits
China 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 1.2 billion metric tons (2000) to 2.2 billion (2030) US$ 120 billion would be required to modernize mines & install clean combustion systems (IEA)

Proven coal reserves

USA ex-USSR China Rest of the World

Reserves = 334.5 billion metric tons (only 3rd in the world)

Pollution of natural resources: air pollution

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

CITY

PARTICLES (g/m3) [1995]

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

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

WHO STANDARDS NEW YORK BEIJING STOCKHOLM

< 90 .. 377 9

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
* Ref: The Economist, + UNIDO

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 stateowned enterprise reform
Rate of Urbanisation
80% 70% 60% 50% 40% 30% 20% 10% 0%

These trends are causing a growing

urban poor class.

1980

1990

2000

2010

2020

2030

2040

Year

2050

Structure
Sustainable development Facts about China Sustainable development in China

Business role and responsibilities

Business implementation

Recent headlines

Vancover sun

05.04.2005

Xinhua News Agency 31.03.2005

China seizes the nuclear option

Ethical Corporation 19.11.2004 | South China Morning Post | 04.03.2005

Current SD issues in China

Population growth and change in social demands Limited natural resources
Social distinctions and poverty Urbanization Health, safety Labor rights

Fast economic growth

Which sustainable development issues could result from the tension between these 3 conditions ?

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

Striking a balance
Ecological Economic Growth Equity

Imbalance

Balance

How to: Main Drivers:

Population Size & Growth Globalization Cultural shifts Provide employment opportunities Maintain economic growth Remain a competitive business environment Reduce income inequalities

Yet also
Sustaining the environment Improving social aspects

Call to action.
Same issues apply to all countries; their significance in China is the rate and magnitude at which they create imbalances

Resources and efforts from all stakeholders are required to correct the imbalances; Failing to act immediately only worsens the severity of the required solutions

Implementation is everyones responsibility = NGOs, business and government

Legislation
Central government recognizes the need for action.

Programs initiated to counter Chinas SD challenges:

Agenda 21
Millennium Development Goals Xiaokang (1980) & Tenth Five-Year Plan (2001)

Government
Key Government Organizations with EHS Responsibilities
NPC State Council

SEPA

MII

SDRC

AQSIQ

MOFCOM

Key: (chart showing approximation of hierarchy) SAC NPC: National Peoples Congress SEPA: State Environmental Protection Administration MII: Ministry of Information Industry AQSIQ: Administration for Quality Supervision, Inspection and Quarantine MOFCOM: Ministry of Commerce SAC: Standardization Administration of China (within AQSIQ) SDRC: State Development Reform Commission ( or NDRC)

National Peoples Congress

Chinas 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

Do you know about Chinese environmental legislation? I

Which of the following products must meet energy consumption standards in China? Air conditioners Irons Refrigerators Rice cookers All of them have to meet legal TV

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 products degree of efficiency.

Do you know about Chinese environmental legislation? II

Are Chinese companies required to submit reports on their energy consumption?

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

Do you know about Chinese environmental legislation? III

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?

The hazardous waste identification approach applies to liquid as well as solid waste.
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.

Do you know about Chinese environmental legislation? IV

Is it legal to import waste into China?

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.

Initiative taken in China - Sustaining natural resources

Land and soil
Actions and programs

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 Chinas 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

Structure
Sustainable development Facts about China Sustainable development in China

Business role and responsibilities

Implementation

The business environment

Term of office for head of state Life of major consumer items Life of energy production capital stock Time to change beliefs and habits Lock-in caused by urban design
Years 0 50 100 150 200

Conflicting time scales

Business demands

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

In summary: Why is SD in China so important for businesses?

Chinas 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 sustainable development

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.

Improving business performance

Short term

Demand from the emerging world = huge market opportunities

Consider local needs and conditions

Cleaner & more efficient production = better industrial efficiency and costeffectiveness

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 companys 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!)

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.

Example: Cleaner production

Efficient use of water, energy, raw materials Starting at the source (not end-of-pipe)

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

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

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

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

Structure
Sustainable development Facts about China Sustainable development in China

Business role and responsibilities

Business implementation

Evolution of tools
Sustainability

Sustainable Livelihoods
CSR
Env. Footprint Responsible Entrepreneurship Factor X

Government Agenda Business Agenda

Our Common Future

Agenda 21

Eco-efficiency Cleaner Production

Compliance
ICCEHS Auditing Charter EMS Sustainability Standards Strategy

Time

Implementing sustainable development

Assess the situation Measure success Implement Develop a strategy

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?

Alternative model: The Sigma Guidelines provide a systematic model of sustainability management (www.projectsigma.com).

Assessing: General checklist

Does your company:

Benefits to be gained from incorporating sustainable development into business management practices

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.)

Questions for the board

Assessing: CSR checklist

Assessing: eco-efficiency checklist

Assessing: eco-efficiency checklist

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 indexs 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 Banks Basic resources Chemicals Cyclical goods & services Energy Food & Beverage Health care Industrial goods & services Insurance Non-cyclical goods & services Toyota Westpac Banking Group Alcan DSM Royal Philips Electronics Statoil Unilever Novozymes 3M Swiss RE Procter & Gamble

Utilities

Severn Trent

Developing: Your companys place in society

Your company is a stakeholder in many shared societal processes Impacts Local Economies

Pollutes Shared Environments

Supports Workers and Families

Provides Goods & Services

Your Company

Uses Communal Resources

Consumes Limited Resources

Influences Government

Provides Health Care & Education

T
WRI

 One practical way of measuring the environmental

performance of business

Developing: eco-efficiency

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

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

Developing: Environmental Management System approach

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, environmental and economic feasibility Select best options Option implementation Monitoring and evaluation Sustain and continue

The recognized need for Cleaner Production

1.Planning and Organization 2.Assessment 3.Feasibility Analysis 4.Implementation

Sustain & Continue

Successfully implemented Cleaner Production projects

Benefits of an environmentally sound business practice (e.g. EMS)

Increases productivity Reduces production costs Produces safer and better products Reduces levels of pollution and risk Improves workers safety and health Complies with Environmental Management Systems (ISO
14000) Recognition from business partners Link-up with international markets Improves company image

Implementation of EMS in all aspects of business will make a company more profitable and competitive

Implementing: Chronos -- the WBCSDs e-learning tutorial

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

Implementing: GHG Protocol

The GHG Protocols 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)

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 GRIs 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).

Measuring (codes, frameworks, guidelines): Global Compact

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

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.

Case in Point Stakeholder dialogue to partnerships: Degussa

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.

Case in Point Stakeholder dialogue to partnerships: ABB

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.

Case in Point Energy recovery facilities: CH2M HILL

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

Case in Point Local and global standards: Lafarge

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.

Case in Point Introducing EMS: Automobile Company in Anhui

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.
From Greening Chinese Business by Ulrich Steger, Fang Zhaoben and Lu Wei

Case in Point Responsible care auditing: BASF

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.

Case in Point Global standards: DSM

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.

Case in Point Sustainable 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.

Case in Point: Fuyang Chemical General Works

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.

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

There will be no sustainable world without a sustainable China