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Corporate responsibility and business success in China Presentation Pack.

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1 Corporate responsibility and business success in China Presentation Pack

2 Sustainable development Facts about China Sustainable development in China Business role and responsibilities Business implementation Structure

3 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

4 Global Warming Water, Air, & Land Pollution Resource Depletion Ozone Depletion Reduction of Biodiversity Population Increase & Economic Growth Human activity = impacts

5 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

6 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

7 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

8 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

9 Land Pollution: Agriculture + industrial activities + waste generation - Intensive use of chemical fertilizers - Intensive land exploitation x 4.5 in 40 years Land pollution

10 CITY PARTICLES (μg/m3) [1995] SO2 (μg/m3) [1998] NO2 (μg/m3) [1998] WHO STANDARDS< 90< 50 PARIS14 57 NEW YORK BEIJING BOMBAY TOKYO STOCKHOLM Main environmental threat to human health - SO 2 and NO 2 emissions Acid rain Air pollution

11 The Greenhouse Effect

12 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


14 VALDEZ 1948: Declaration of human rights 1961: WWF, amnesty international 1970s: Environmental movements 1980s: 1984: Bhopal; 1986: Chernobyl; 1989: Exxon Valdez… 2002: Enron, WorldCom… Increased awareness

15 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

16 Key for success in sustainable development Profit Planet People Natural resources & energy Health & Safety, equity Economic 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.

17 Sustainable development Facts about China Sustainable development in China Business role and responsibilities Business implementation Structure

18 China's population is 1.31 billion people. GDP is US$ 1.41 trillion and expected to grow 8% in 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 Population (Mill.) Population growth (%) Population growth Population Facts about China

19 * 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

20 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 rise CO 2 emissions, global warming Strain on rail transport Increasing energy needs: Coal

21 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 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.

22 Mobility China is expected to become the world's third largest automaker by 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.

23 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.

24 * 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) 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

25 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 km 2 /yr 2003: 3,000 km 2 /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

26 AvailabilityIrrigation, that accounts for 60% of use of water, suffers from leakages and losses of great magnitude Pollution60% of rivers and 90% of urban underground water are highly polluted InefficiencyIndustrial output needs on average about 7 times more water than more sustainable economies Requirements30 bln US$ required to solve urban water management in all cities (> ) * 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 Depletion of natural resources

27 Reserves = billion metric tons (only 3 rd in the world) 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) Depletion of natural resources

28 * Ref: The Economist, + UNIDO CITY PARTICLES (μg/m3) [1995] SO2 (μg/m3) [1998] NO2 (μg/m3) [1998] WHO STANDARDS< 90< 50 NEW YORK BEIJING STOCKHOLM9320 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 SO 2 emissions from coal combustion China focus acid rain as a serious problem A growing volume of traffic results in growing NO x 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

29 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.

30 Sustainable development Facts about China Sustainable development in China Business role and responsibilities Business implementation Structure

31 China seizes the nuclear option South China Morning Post | China wrestles with 'massive' environmental degradation Vancover sun China launches "green storm" against forest destruction Xinhua News Agency Overwork in China claims another life and a foreign MNC is to blame Ethical Corporation | Recent headlines

32 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

33 Economic Growth Ecological Equity Imbalance Good lasting SD practice 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

34 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…. = NGOs, business and government Implementation is everyones responsibility

35 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)

36 Government NPC State Council SEPAMIISDRCAQSIQ SAC MOFCOM Key: (chart showing approximation of hierarchy) 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) Key Government Organizations with EHS Responsibilities

37 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

38 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

39 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 products degree of efficiency.

40 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…

41 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.

42 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.

43 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 and to redevelop desertificated areas from 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

44 Sustainable development Facts about China Sustainable development in China Business role and responsibilities Implementation Structure

45 The business environment Conflicting time scales Lock-in caused by urban design Time to change beliefs and habits Life of energy production capital stock Term of office for head of state Life of major consumer items Years

46 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

47 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

48 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

49 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 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!) Improving business performance

50 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.

51 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

52 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

53 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

54 Summary of business roles and opportunities ChallengeOpportunity 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

55 Sustainable development Facts about China Sustainable development in China Business role and responsibilities Business implementation Structure

56 Time Business Agenda Compliance Cleaner Production Eco-efficiency Responsible Entrepreneurship EHS Auditing ICC- Charter EMS Standards Sustainability Strategy Government Agenda Our Common Future Agenda 21 Factor X Env. Footprint Command & Control Legislation Sustainability Co-regulatory Agreements Economic Instruments Evolution of tools CSR Sustainable Livelihoods

57 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 (

58 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

59 Questions for the board Q Assessing: CSR checklist

60 Assessing: eco-efficiency checklist Assessing: eco-efficiency checklist Q

61 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 AutomobilesToyota BanksWestpac Banking Group Basic resourcesAlcan ChemicalsDSM Cyclical goods & servicesRoyal Philips Electronics EnergyStatoil Food & BeverageUnilever Health careNovozymes Industrial goods & services3M InsuranceSwiss RE Non-cyclical goods & servicesProcter & Gamble UtilitiesSevern Trent

62 Influences Government Provides Health Care & Education Impacts Local Economies Uses Communal Resources Supports Workers and Families Consumes Limited Resources Provides Goods & Services Pollutes Shared Environments Your Company Your company is a stakeholder in many shared societal processes WRI Developing: Your companys place in society T

63 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

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

65 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 T

66 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 T Implementing: Chronos -- the WBCSDs e-learning tutorial

67 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) T

68 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.) ( T

69 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. T Measuring (codes, frameworks, guidelines): Global Compact

70 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

71 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 ( ). 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 Point Stakeholder dialogue to partnerships: Degussa

72 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 Point Stakeholder dialogue to partnerships: ABB

73 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 Point Energy recovery facilities: CH2M HILL

74 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 Point Local and global standards: Lafarge

75 Summary: This Chinese automobile company first started production in 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 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. C From Greening Chinese Business by Ulrich Steger, Fang Zhaoben and Lu Wei Case in Point Introducing EMS: Automobile Company in Anhui

76 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 Point Responsible care auditing: BASF

77 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

78 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. C

79 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

80 There will be no sustainable world without a sustainable China

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