China is the world's factory, and thus it is imperative to work toward "greening" its companies, Business for Social Responsibility (BSR) director Wei Dong Zhou explained. The June 19 program, hosted jointly by the Canada Institute and the China Environment Forum, focused on green business initiatives in Guangdong Province, China's industrial powerhouse. Speakers You-Zhi Tang, Canada Cleantech Fund, and Jay M. Dietrich, IBM, discussed environmental efficiency strategies for businesses, and provided examples of Canadian and U.S. involvement in China. Opportunities to green industries and reduce energy usage are endless, said the speakers, but the effort requires an organized structure of checks and balances. Due to China's dire environmental situation, the country has increasingly encouraged "green business" ventures that have been supported by Canadian and U.S. corporations operating in China.

Can Red China Become Green?

Though China has often been criticized for its excessive pollution, the country is well on its way to becoming green, argued Wei Dong Zhou of BSR. He noted that BSR has more than 250 members worldwide, including IBM, Procter & Gamble, Nike, and Coca-Cola. The non-profit group assists businesses worldwide in making their Chinese factories more sustainable. BSR also mediates cross-sector relationships that bring together producers, retailers, and transporters to strategize ways to mitigate their collective impact on the environment.

Several green initiatives have been implemented in the past three years in South China, Zhou said. Once considered less important than revenue figures, the collection of accurate environmental data is now the standard for many Chinese businesses. To support this effort, BSR launched the China Climate Change Training Initiative (CCCTI) to train and equip Chinese industry managers to evaluate and report on data that measure carbon in the supply chain. Several large companies such as Levi's, Nike, and Best Buy have joined the CCCTI mission and those that successfully implemented its energy programs have reduced energy usage anywhere from 20 to 50 percent.

The newest program of BSR is the South China Energy Conservation Community, which aims to reduce the usage of the top 100 energy consuming companies in Guangdong by 20 percent by 2011. Zhou stated that he believes that this goal is in reach if companies are innovative, have forward-thinking leadership, and create green-focused corporate culture. Some Chinese companies are already quickly becoming leaders in green technology and culture, including Broad Air, BYD, and Green Fountain.

Canada's Place in Green China

In the next five years China will be the world's largest market for cleantech products—products and services that promote clean forms of energy production—said You-Zhi Tang. As a partner, board member, and advisor for more than a dozen companies in the cleantech industry, the Guangdong native is one of the leaders of green technology in Canada. He noted several challenges for Canada and China to expand their business and environmental relationship. Besides basic geographical and cultural differences, Canadian companies are much smaller than Chinese companies. Thus for Canada to have a stronger voice in China and foster increased collaboration, Tang suggested that individual Canadian companies join together "like a fist" in order to make a more sizeable impact in China.

A second challenge for Canadian companies is that they tend to be more risk averse, while Chinese businesses tend to jump at opportunities. This difference becomes especially apparent when looking at the two countries' responses to new technologies. As Tang explained, "[Canada] can wait, China can't." These contrasts in corporate culture have made Chinese-Canadian business collaboration more difficult, though some Canadian companies have been successful in China's emerging green industry by targeting niche markets such as thermal energy.

Though Guangdong is often said to be at the forefront of China's environmental initiatives, Tang suggested that the province could do much more in the environmental realm. For example, China has shown preference toward implementing Cleaner Production (CP) programs that focus primarily on pollution prevention. Tang suggested that such programs are the wrong approach to greening business in China since CP strategies only address current environmental problems, rather than look forward to innovations in efficiency.

Dietrich highlighted the difficulties of making sure that corporate green programs and strategies are put into practice at the factory level in China. In order to ensure Chinese factory managers comply with green initiatives, corporations must create clear standards, perform follow-up reviews, and issue consequences if managers fail to comply. He noted that IBM uses the detailed Global Management System, established in 1971, which clearly defines the company's environmental standards and requires factories to submit checklists on their adherence to these standards. Additionally, IBM energy managers visit and perform yearly audits on factories to ensure that they are implementing energy reduction strategies. This follow-up process is also a way for IBM to constantly generate new green projects; by visiting the factories, managers are clearly able to see where improvements can be made. He argued that there are plenty of opportunities for corporations to green their businesses if they desire to do so, and that spending money on environmental programs will eventually generate returns.

Drafted by Laura Pedro, Program Intern, Canada Institute
202-691-4302
David Biette, Director, Canada Institute
202-691-4133