Here’s What the Last 5 Years of Corporate Sustainability in China has Looked Like. What’s Next?
By: Xixi Chen
As a kid, one of my favorite things was a Moon Cake, which I'd get to eat during the Mid-Autumn Festival in China (taking place next week). It's a day of celebrating family reunion and harvest, where the entire country throws parties, comes together and gives homage to the full moon. I’ll always jump at the opportunity to eat a Moon Cake, but this time there’s something else worth celebrating this year: the progress being made on corporate sustainability in China.
This year marks the 5th year anniversary of expanding EDF Climate Corps into China. What started as 6 fellows in 5 companies, has grown to nearly 60 fellows into over 20 companies. With that we’ve seen tens of millions of dollars in potential savings from energy efficiency improvements. But before I jump into how corporate sustainability in China has advanced, let me tell you why we made the decision to expand there.
EDF Climate Corps: welcome to China
As the world’s two largest greenhouse gas emitters, China and the U.S. are receiving increased attention on their cooperative efforts to save energy and curtail climate pollution. EDF has set a goal to help China with its rising CO2 emissions. So we thought: what better way to do this than enlisting the help of bright, young, talented graduate students?
In the five years since we first brought EDF Climate Corps to China, I’ve watched as the scope and breadth of projects – by both multinational and Chinese-owned companies – has evolved alongside the nation’s sustainability efforts. I’ll show you how.
The evolution of corporate sustainability in China
In our first year, the companies we worked with were for the most part after one thing: energy audit projects in factory settings. It was about plucking the low-hanging energy fruit at one specific site (upgrading lighting or air compressor systems, etc.). And I should note, it was only multinational companies we were working with – headquartered in the U.S., with factories overseas.
Fast forward to today, while factory-based energy efficiency projects are still in our pipeline, they’re no longer the main focus. More companies are making larger sustainability goals, looking to pursue projects beyond energy efficiency.
I’ve identified a few trends in China’s corporate sustainability landscape:
- Improving energy efficiency and scaling solutions. Energy efficiency remains and important and effective way to reduce carbon footprints. But instead of one-off projects, it’s about scaling opportunities both across portfolios of factories and sharing with other companies in similar industries. The results bring enormous ROI, and give a competitive advantage to companies. Pacific Market International (PMI) hired an EDF Climate Corps fellow to improve the energy efficiency of one of its glass suppliers. The fellow developed an energy management strategy, which included recommendations to reduce energy use, such as optimizing washing and dying processes, that can be scaled across the entire manufacturing industry.
- Setting ambitious targets. More companies are concentrating their efforts around data collection, analysis, verification, and reporting. More data is critical for identifying reduction opportunities, managing suppliers and communicating sustainability efforts. This year, MAHLE hired an EDF Climate Corps fellow to build the framework for its first-ever sustainability report, which included specific energy reduction goals, covering categories such as: product innovation and development, energy saving and green production, employee care, and social responsibility.
- Complying with China’s environmental policies. In recent years, China’s political landscape around climate has become much more stringent, giving companies a choice: work with it, or be fined. Working with policies can reduce costs, avoid risk, demonstrate leadership, and attract stakeholders. This year, an EDF Climate Corps fellow recommended an environmental engagement plan for IKEA’s suppliers to mitigate regulatory risk – mainly around areas such as coal burning, GHG emissions, wastewater treatment, and solid waste – across its entire supply chain in China. We also hosted two webinars on environmental law interpretations and corporate compliance that garnered a lot of interest from our hosts (a recording for this year’s webinar can be found here for those that are interested in learning more).
- Adopting green supply chain initiatives. Companies are looking to reduce the emissions of their global supply chains, and they’re working with their suppliers to do so. This is true for both small and medium-sized manufactures, as well as multinationals. As part of its Project Gigaton (reducing GHG emissions in its supply chain by one gigaton), Walmart enlisted two EDF Climate Corps fellows in its Global Sourcing division to identify products that have the potential to reduce significant GHGs. Walmart now has a better understanding of what products need to be upgraded, how to reach its reduction goals and how to incentive more suppliers to participate in the effort.
As I enjoy my Moon Cake next week for this year's Mid-Autumn Festival, I'll be celebrating the long way we've come in corporate sustainability over these past five years. But, I'll also be thinking about the long road ahead of us.
