Presentation Pack

1
Presentation Pack
Corporate responsibility and business success in
China
2
Structure
Sustainable development Facts about
China Sustainable development in China Business
role and responsibilities Business implementation
3
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 context?
• What would be your definition of sustainable
  development?
• How important is sustainable development
• To you?
• To your company?

definition "de-f-'ni-shn
Q
4
Human activity impacts
Global Warming
Ozone Depletion
Water, Air, Land Pollution
Reduction of Biodiversity
Resource Depletion
Population Increase Economic Growth
5
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

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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

7
Context Demography

• 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

8
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
9
Land pollution

• Land Pollution
• Agriculture industrial activities waste
  generation
• Intensive use of chemical fertilizers
• Intensive land exploitation

x 4.5 in 40 years
10
Air pollution

• - Main environmental threat to human health
• - SO2 and NO2 emissions ? Acid rain

CITY PARTICLES (µg/m3) 1995 SO2 (µg/m3) 1998 NO2 (µg/m3) 1998
WHO STANDARDS lt 90 lt 50 lt 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
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The Greenhouse Effect
12
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

13
Roles and responsibilities
Globalization goes together with the emergence of
a growing number of stakeholders (more demanding
and powerful)
PRESERVE PEACE STABILITY SEEK GLOBAL LONG-TERM
SOLUTIONS POWER TO RULE, INCITE, TAX
Institutions
DEMAND MORE TRANSPARENCY, INFORMATION AND ETHICS
INCLUDE SOCIAL ENVIRONMENTAL PERFORMANCE IN
BUSINESS NOTATION POWER TO PROVIDE FUNDS
Investors
DEMAND TO BE CONSULTED AND ASSOCIATED POWER TO
INFORM AND DENOUNCE (MEDIA, INTERNET, JUSTICE, )
NGOs
Individuals
SEEK QUALITY OF LIFE AND SECURITY DEMAND FREE
CHOICE POWER TO VOTE, DENOUNCE, BOYCOTT
Businesses
CONTRIBUTE SERVICES, PRODUCTS AND TECHNOLOGY TO
SOCIETY BALANCE ECONOMIC PROFITS WITH THE
LONG_-ERM SUSTAINABILITY OF THE BUSINESS
14
Increased awareness
1948 Declaration of human rights 1961 WWF,
amnesty international 1970s Environmental
movements 1980s 1984 Bhopal 1986 Chernobyl
1989 Exxon Valdez 2002 Enron, WorldCom
15
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.
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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
Health Safety, equity
Economic growth
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Structure
Sustainable development Facts about
China Sustainable development in China Business
role and responsibilities Business implementation
18
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
  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
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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
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Increasing energy needs Coal
Lack of jobs in western China
74 of electricity produced in coal plants
Coal reserves mainly in western China
Shortage of electricity production capacity
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
Health and Safety conditions
Efficiency
Pollution
Strain on resources
CO2 emissions, global warming
Coal prices on the rise
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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.
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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.

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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.

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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
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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 UNIDO

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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 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 (gt 600.000)
• Ref UNIDO

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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)

Reserves 334.5 billion metric tons (only 3rd
in the world)
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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 (µg/m3) 1995 SO2 (µg/m3) 1998 NO2 (µg/m3) 1998
WHO STANDARDS lt 90 lt 50 lt 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
Ref The Economist, UNIDO
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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.

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Structure
Sustainable development Facts about
China Sustainable development in China Business
role and responsibilities Business implementation
31
Recent headlines
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Current SD issues in China
Population growth and change in social demands

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

Limited natural resources
Fast economic growth
Q
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Striking a balance
Good lasting SD practice
Ecological
Economic Growth
Equity
Imbalance
Balance

• How to
• Provide employment opportunities
• Maintain economic growth
• Remain a competitive business environment
• Reduce income inequalities
• Yet also
• Sustaining the environment
• Improving social aspects

• Main Drivers
• Population Size Growth
• Globalization
• Cultural shifts

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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
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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)

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Government
Key Government Organizations with EHS
Responsibilities
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)
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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

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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

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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
• TV

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.
Q
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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

Q
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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.

Q
42
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.

Q
43
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

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Structure
Sustainable development Facts about
China Sustainable development in China Business
role and responsibilities Implementation
45
The business environment
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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

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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

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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.

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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 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!)

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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.

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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

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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

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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

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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
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Structure
Sustainable development Facts about
China Sustainable development in China Business
role and responsibilities Business implementation
56
Evolution of tools
Sustainable Livelihoods
CSR
Economic Instruments
Env. Footprint
Co-regulatory Agreements
Responsible Entrepreneurship
Command Control Legislation
Sustainability
Factor X
Agenda 21
Eco-efficiency
Our Common Future
Cleaner Production
Government Agenda
Compliance
Business Agenda
SustainabilityStrategy
EMS Standards
EHSAuditing
ICC-Charter
Time
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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
 Alternative model The Sigma Guidelines provide
a systematic model of sustainability management
(www.projectsigma.com).
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Assessing General checklist
Benefits to be gained from incorporating
sustainable development into business management
practices

• 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
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Questions for the board
Assessing CSR checklist
Q
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Assessing eco-efficiency checklist
Assessing eco-efficiency checklist
Q
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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 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

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Developing Your companys place in society
Your company is a stakeholder in many shared
societal processes
Your Company
WRI
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Developing eco-efficiency

• 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

• 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

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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)

Sustain Continue

• Evaluate options on
• Technical, environmental
• and economic feasibility
• Select best options

• Option implementation
• Monitoring and evaluation
• Sustain and continue

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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
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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

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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)

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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).

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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

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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.

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Case in PointStakeholder 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.
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Case in PointStakeholder 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.
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Case in PointEnergy 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

C
74
Case in PointLocal 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.
C
75
Case in PointIntroducing 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.
C
From Greening Chinese Business by Ulrich
Steger, Fang Zhaoben and Lu Wei
76
Case in PointResponsible 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.
C
77
Case in PointGlobal 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.
C
78
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.

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79
Case in PointFuyang 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.
C
From the China-Canada Cooperation Project in
Cleaner ProductionPicking Low-hanging Fruit
The Strategic Role of CP in China by M.
Osterman, LL.L.CEA
80
There will be no sustainable world without a
sustainable China