Last month, the Sustainability Consortium (TSC) announced its expansion to China. Still in its infancy, the group has successfully stayed under the radar as it worked with its influential members and academic partners to evolve tools and methodologies for standardizing consumer products sustainability.
With research partners playing a critical role in its global ambitions, the group will partner with Nanjing University, one of China's Top 5 universities, to expand the scope and testing ground for its research. The consortium also appointed a new executive director.
Wei Dong Zhou will set the strategic direction of the consortium's projects in China. He will draw from more than 20 years of work in the CSR field, including stints with the Chinese government and BSR, along with private sector work related to sustainability management and strategy.
I caught up with Zhou for a preview of the consortium's immediate plans, his insight of China's state of sustainability and his plans to align his organization's ambitions with the economic targets of the country's private sector.
Aman Singh: Why did you decide to switch from a well-established group like BSR to a research-based -- and much younger -- organization like the consortium?
Wei Dong Zhou: The consortium provides a great platform for developing product-based sustainability. Also, TSC offers a new approach to use scientific methodology to develop useful tools for companies. This is a very tangible opportunity for business. I am also attracted by the idea of using the combination of academic research and private sector leverage to grow sustainability.
Singh: What can you tell us about the state of sustainability in China? And what opportunities do you see for the consortium?
Zhou: The consortium is entering China at a very good time. The Chinese government is new and busy with its 12th Five Year Plan, which involves several goals related to sustainability. Lots of these goals will require masterful collaboration between the government and Chinese business, making the need for a medium like TSC critical.
Also, the need for standardized measurement is significant, especially for China's widespread manufacturing sector. TSC's tools can be the perfect solution for Chinese manufacturers since a lot of their Western customers are already TSC members. It will be in both parties' benefit to implement these standards and begin measuring apples to apples. 0In other words, TSC meets a crucial marketing demand of China's manufacturing sector.
Then of course there is the lack of standardization. With companies currently using several different measurement systems and internal software, TSC's system will provide a great way to integrate these systems and help Chinese companies manage their sustainability performance.
Singh: Which sectors will you target for immediate collaboration?
Zhou: China's manufacturing output, as a percentage of global totals, looks something like this: We produce 65 percent of the world's fiber, 70 percent of the world's toys, 40 percent of apparel, 34 percent of the total garments imported by the U.S., and more than 100 million air conditioners and 65 million washing machines annually.
With that large of a manufacturing footprint, we will initially target the clothing and textile, electronics, toys and general merchandise industries for immediate partnerships. That is where TSC can have the most impact. Many of our members sell these products in the West. They want their Chinese manufacturers to tackle sustainability the "TSC way."
Singh: Is China's business sector, especially manufacturing, ready for standardized sustainability standards?
Zhou: Sustainability standards are at the beginning stages of development here in China. There are a few labeling programs, mostly initiated by government-affiliated agencies and industry associations, that companies have started to use but there is a clear lack of enforcement as well as consistency.
The public is starting to show concern about the credibility of these standards, however, particularly in food products -- like the recent melamine milk scandals and toxic capsule incident. Chinese consumers lack the necessary understanding and awareness to drive their purchasing decisions according to sustainability concerns.
At the same time, some large manufacturers are paying more attention to the sustainability of their products as a way of increasing their market competitiveness, reducing their risk-profile and reducing cost through efficiency. For TSC, standardization isn't about adding another layer to the process. It is a cost-effective way for companies to improve the sustainability of their products and a consistent way for them to communicate that to their business customers.
Singh: Since a large focus of TSC in China will be on decoding complex supply chains, what challenges do you anticipate ahead?
Zhou: A large challenge will be applying sustainability standards developed predominantly in the West in China. Our challenge will be to determine how TSC tools and systems can be localized to meet the needs and standards of the Chinese market. The partnership with Nanjing University will play a critical role in answering this question. They will also act as a neutral hub for us to connect with other stakeholders, particularly in the Chinese government.
Another challenge will be getting buy-in from the small and medium-size enterprise sector. How can we convince Chinese suppliers and manufacturers to buy into the concept of sustainability and offer practical tools and solutions to improve their performance? This will be challenging mainly because sustainability issues still remain a very ad hoc topic for small companies. We can overcome this by helping them become better businesses: cutting costs, reducing risks and building customer relationships.
My priority will be to convey our support to the Chinese suppliers of TSC members and international business. That is where TSC can play an instrumental role -- leveraging business incentives to encourage Chinese suppliers to lead with sustainability.
China bar code image by Digital Storm via Shutterstock.