BSR 2009: The State of Sustainability in 'The World's Workshop'

BSR 2009: The State of Sustainability in 'The World's Workshop'

[Editor's Note: This article is part of GreenBiz.com's coverage of the 2009 Business for Social Responsibility conference. To read all our coverage, visit GreenBiz.com/BSR2009.]

China holds an undeniably important role in the global discussion about the environment, as well as the role that business can play in addressing global warming.

Not only does the country have the world's largest population and fastest-growing economy, but it is also the source of a huge number of multinational companies' supply chains -- and the largest source of global greenhouse gas emissions.

At the 2009 Business for Social Responsibility conference, an hour-long session was devoted to the topic of sustainability in China. I sat down with Wei Dong Zhou, BSR's China director, to find out more details.

"With Deng Xiaoping, no one was talking about [sustainability]," Zhou said, with government leaders instead following the mantra that "'development is the only way for growth in China.'"

That has been changing for the past few years, especially since 2007, Zhou explained. "In the early 2000s, peopled talked about CSR as mostly being pushed through multinational companies' codes of conduct," Zhou said. "At that time there was a lot of debate and argument about whether CSR is good for China or bad for China." Zhou said that the Chinese government even considered filing claims against supplier codes of conduct as possible barriers to trade.

But as of now, the country has definitely begun embracing environmental, social and labor best practices, although of course there is still plenty of room for improvement.

One example Zhou offered was the Chinese National Textile Council's CSC-9000 standard, a set of guidelines for following social, labor, and environmental best practices in the country's textile industries.

Other signposts of note on China's way to sustainability include the development of a DJSI-like sustainability index for the Shanghai and Shenzen stock exchanges -- in Shanghai all 100 companies that make the list are required to publish their CSR activities every year; in 2008, there were 290 sustainability reports filed in China.

Which is not to say, obviously, that all is well and good in China. Zhou laid out a handful of challenges that the country currently faces in its sustainability goals:

1. Population. Having 1.3 billion people poses any number of problems. Zhou paraphrased the Chinese Prime Minister Wen Jiabao's statement in a 2003 interview with the Washington Post thusly: "Any small problem, if you multiply it by 1.3 billion, it becomes a huge problem. Any big achievement you have in China, if divided by 1.3 billion people, it's so small as to be nothing."

2. Urbanization and its use of resources. Much of the Chinese population is moving to cities, which creates any number of social and health problems, as well as concentrates resource use in a country whose supply already falls short of its demand for resources: Zhou said that 70 percent of the country's rivers are polluted, and only one-fourth of the population currently has access to safe drinking water.

3. Pollution. The country's fast growth -- its average GDP increase was 9 percent per year in the last 20 years (compared with 1 to 4 percent growth in the U.S. over the last seven years) -- is highly resource intensive, and the rise of a Chinese middle class and its increased consumption will be one of the world's biggest challenges in the coming years.

The Chinese government has been one of the guiding forces in the push toward sustainable operations, and having an authoritarian government in place can be both a good thing and a bad thing.

Zhou compared Chinese progress on environmental issues in the last few years to India's -- the world's second largest country by population, and a democracy -- as an example of the good side of the Chinese government.

"Why is China growing so differently? It's because the system is different," Zhou said. "China can make big changes over two years, pass lots of laws, build fast trains or airports -- big huge projects can be done. In India it takes 5 years to debate," he added with a laugh.

But there is still an overarching challenge with governing a country so large -- one that cropped up in another panel at BSR 2009, covering supply chains.

Zhou said that environmental and CSR regulations can feel like they're being delivered by helicopter -- that the government passes these mandates, but there is very little transparency and at times and in some regions very little follow through.

{related_content} BSR's Chinese operations -- the group now has three offices in China, in Shanghai, Guangzhou, and Hong Kong -- conduct regular trainings with Chinese firms to help spread the word about the benefits of CSR initiatives, whether from cost savings through energy efficiency and waste reduction initiatives to productivity boosts through good labor practices.

But what can businesses with supply chains in China do to make sure their own suppliers are living up to the company's CSR goals, and how can companies help promote CSR practices in general to Chinese partners?

Although Zhou believes that many companies now believe the CSR has positive benefits for their bottom lines, he still tells companies that codes of conduct are primarily a good tool for pushing the bad companies more so than encouraging good companies.

"Companies having a code of conduct [for supplier contracts] is a good idea," Zhou said, "but companies can't rely on that as the sole solution."

To read BSR's session notes on Zhou's panel discussion, "The State of Sustainability in China," visit www.bsr.org/session-summaries. For all of GreenBiz.com's coverage of the 2009 BSR conference, visit GreenBiz.com/BSR2009.

China Flag CC-licensed by Flickr user Philip Jägenstedt.