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World Environment Day – how to be sustainable and save money in China

‘I’d love to save the planet, but the health of my business comes first.’

If that is your response to the proposition of taking sustainability seriously,

you’re not alone. However, lowering your company’s carbon footprint, reducing

waste and encouraging sustainable good practice among your workforce and

suppliers can reap significant economic benefits. Added to that, with

governments pushing hard to hit sustainability targets, it means businesses can align themselves with some very good PR, not to mention financial rewards. With World Environment Day (WED) fast approaching on June 5th, sustainability and corporate social responsibility (CSR) are firmly on the agenda for many businesses in China. For their part, the Chinese government is investing in a green future and companies that fall in line with their initiatives will benefit from the increased spend. Let’s look at how you can make your business more environmentally friendly without threatening your bottom line.



5 steps to sustainable success

Sustainability, like charity, should begin at home with the way you run your business, but the most effective sustainability strategies involve a certain degree of outreach. These six steps will enable you to make your business more environmentally friendly and to reap the benefits from contributing to the social and economic prosperity of China.



1. Lower consumption:

The less you consume, the lower your costs. Items like paper and toner ink can be used in smaller quantities by making more use of digital applications and going paperless. The same is true of more fundamental consumables like water and energy. Look at ways of cutting the amount of energy you consume (and pollution you create) in heating/cooling, lighting and powering machinery. Encourage employees to turn things off when they’re not in use. That includes taps. And look at your supply chain: could you source items more locally to reduce the environmental impact of transportation.

2. Reduce waste:

Educate your employees to raise consciousness about keeping waste to a minimum. High waste items include paper, food and plastic packaging. Implement a culture of recycling and repurposing by making your employees aware of the impact of waste. You could offer a monthly reward for the employee or department that produces the least waste pro rata. Waste creates cost for your business and for the wider society. By working to reduce waste, you will inevitably reduce consumption as well.

3. Switch to renewables:

Renewable energy is high on the government agenda in China. According to the International Energy Agency, new solar photovoltaic capacity grew by 50 percent in 2016. China alone accounted for nearly half that expansion. In the wind energy sector, China installed a staggering 23.4 gigawatt of new capacity in 2016, according to the Global Wind Energy Council. It's no surprise, then, that the country can boast several projects and facilities that are grand in both ambition and scale.

4. Share assets and knowledge:

The drive for sustainability is bringing about a change in tactics among business leaders. Competition is being replaced with collaboration, as companies recognize the benefits in sharing assets and working together to implement sustainability programs. If you have an asset that needs to be kept running 24 hours a day, even when your business is not working, why not offer it to another business after hours so those resources aren’t wasted? Similarly, by working in collaboration and sharing knowledge, you can make sustainability programs more efficient and cost-effective.

5. Spread the word:

Don’t hide your sustainable light under a bushel. Taking your programs out into the community will not only widen the benefit of your initiatives, it will greatly enhance your company’s reputation as well. Communication plays a major part in any sustainability program, helping to bring your employees, clients and suppliers along with you, promoting the wider cause of sustainability and raising awareness of your good work. That sort of PR is priceless, and you can get it while saving money.



China government incentives

China’s 13th 5-year-plan (FYP) reinforces the Chinese government’s desire to address China’s severe environmental degradation and build its clean energy, green manufacturing, and environmental service sectors. Environment-related targets account for 10 out of the 25 targets laid out in the 13th FYP, and all 10 are binding targets that must be met by 2020. Targets establish caps for energy use and ambitious goals for city air quality, carbon dioxide intensity, and reduction of soil and water contamination. The Chinese government will support the growth of its energy-saving and environmental protection industries into globally competitive firms. Industries singled out for support include:

 

-          new energy vehicles,

-          soil remediation, and

-          advanced energy-saving technologies and equipment.


The 13th Five-year plan is also attempting to retool China’s heavy industry by pushing for green construction and green mining and mobilizing domestic and international investment toward green industries, pollution and climate change mitigation efforts, and environmentally friendly projects through green financing.



Green Financing

Calling something a ‘win-win’ is one of Beijing’s favorite phrases, and whether it is derided as a slogan for China’s external relations or is explained as a core principle in China’s foreign policy approach. Finding situations where everybody wins is not easy, especially at the global level, but with green finance, China has come close to the fulfilling the true meaning of the term.

The People’s Bank of China and other central authorities announced Guidelines for Establishing the Green Financial System. The ten guidelines rely explicitly on public-private partnerships to find the USD$600 billion that has been estimated is needed each year if China is to meet its 2030 environmental commitments. The central government can only contribute 15% of the amount.



Yes, you should care about sustainability and Chinese companies have started caring as well…

China is one of the biggest polluters in the world, its economic growth over the last 40 years coming at a huge cost to the natural environment. But the nation is aggressively stepping up efforts to steer its economy away from the traditional, high-pollution, manufacturing industries towards consumer-led growth. This model would put sustainable, environmentally friendly sectors such as health care, insurance and consumer technology at the forefront of growth. However, there are, yet, no strict regulations governing how much information a company must divulge about its environmental, social and governance (ESG) efforts. They are basically free to decide how much they reveal. But now signs are emerging that some of the more modern, forward-thinking Chinese companies, which choose to disclose their ESG data, have been producing higher returns than their peers. Chinese companies ranked in the top ten percentiles according to their ESG-disclosure score gained 33 per cent in the past year, according to Bloomberg data. Chinese investors are becoming more interested in these companies, which are participating in the country’s “new economy” and staying in line with policy goals.

2018 is set to be a year where further incentives are rolled out. This drive towards redefining CSR in China is set to establish sustainable development projects and a greater focus on humanitarian, social and environmental activities. We live in a world that is increasingly aware of environmental issues. The Chinese government is building an economy that protects the environment and protects the economy. It’s time all businesses followed suit.

As China and global business communities approach World Environment Day, the spotlight will be on those companies that have excelled in their CSR activities and done the most for the environment. With that spotlight will come significant boosts to those businesses’ long-term brand image, with more demand coming in as a result.

Whether your interest in CSR is driven by long-term growth and profitability or by pure altruism, the fundamental truth is that good ethics and good business go hand in hand. The newly emerging culture in China and wider business community has provided an ideal landscape for building a business that is competitive, socially responsible and part of a better future for our planet.

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DISCLAIMER: All information in this article is verified to the best of our ability and is assumed to be correct at time of release; however, Woodburn Accountants & Advisors does not accept responsibility for any losses arising from reliance on the information provided within. The information provided is for general guidance and does not replace specialized advice.

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