BSR, china, CSR, CSRwire, Disclosure & Transparency, Environment, ESG, human rights, manufacturing, nanjing university, ngo, nonprofit, supply chain, Sustainability, sustainability, sustainability measurement, sustainability standards, the sustainability consortium, tsc, wei dong zhou
Last week, The Sustainability Consortium [TSC] announced its expansion to China.
Still in its infancy years, the group has successfully stayed under the radar as it worked with its influential member base and academic partners to evolve the tools and methodologies it seeks to create with the hope of standardizing consumer products sustainability.
With research partners playing a critical role in its global ambitions, the group has decided to partner with Nanjing University, one of the top five universities in China, to expand the scope and the testing ground for its research. The Consortium also announced the appointment of a new executive director.
Wei Dong Zhou, who will be responsible for setting the strategic direction of the Consortium’s projects in China, has worked in the field of CSR and sustainability across multiple sectors for over 20 years, including stints with the Chinese government, Business for Social Responsibility [BSR], nonprofit organizations, as well as managing CSR and sustainability strategy for the private sector.
I caught up with the new director to get a preview of the Consortium’s immediate plans, insights into the state of sustainability in China as well as how he plans to align his organization’s ambitions with the economic targets of the Chinese private sector.
Why did you decide to switch from a well-established group like BSR to a research-based – and much younger – organization like the Consortium?
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.
What can you tell us about the state of sustainability in China? And what opportunities do you see for the Consortium?
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.
In other words, TSC meets a crucial marketing demand of China’s manufacturing sector.
Then, of course, there is the lack of standardization. With companies using several different measurement systems and internal software currently, TSC’s system will provide a great way to integrate these systems and help Chinese companies manage their sustainability performance.
Which sectors will you be targeting for immediate collaboration?
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 over 100 million air conditioners and 65 million washing machines annually.
With that large 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.”
Earlier this year, we published a series with The Conference Board on the state of the NGO sector in China. The findings were alarming. They pointed to a sector in disarray, a misplaced emphasis on public perception and growing pains for the business community. How do you plan on navigating that in coming months?
NGOs, unfortunately, are still in their early years in China, partially because of limited funding opportunities and government restrictions. Most NGOs in China, for example, still cannot register as non-profit organization due to the complex approval process.
But there are some NGOs – IPE, SEE, Earth Village, and Friend of Nature – that have been active in environment protection, philanthropy and social justice. International NGOs are also playing active roles in areas like women’s health, bio-diversity, HIV-AIDS, nature conservation and human rights.
We want to learn from their successes. This means demonstrating how our work on product sustainability can support China’s new Five Year Plan and help Chinese manufacturers cut costs, reduce business risks and improve relationships with their business customers.
What about the private sector?
The private sector has played a much more important role in the growth of the Chinese economy, contributing nearly 60 percent of GDP, 50 percent of gross taxation and creating 80 percent of the employment opportunities in 2012.
This is particularly true for industries like textiles, electronics, toys and general merchandise. The leaders within these industries are, therefore, active collaborators and prioritize stakeholder engagement. This is a huge market for us to develop localized tools and systems that standardize sustainability performance while meeting the needs of Chinese business. By helping these companies cut costs, reduce business risks and improve relationships with their business customers, we will help them grow.
Another sector that has been rapidly growing ever since the Sichuan Earthquake four years ago is private foundations. Already, there are 1,900 private foundations across the country versus 1,350 public foundations. The cumulative impact and creditability of these private foundations is growing much more quickly and credibly than their public counterparts primarily because they are more transparent about their activities.
But these represent a much longer-term target for us as they remain in development phase despite their rapid growth.
Is China’s business sector, especially manufacturing, ready for standardized sustainability standards?
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.
Since a large focus of TSC in China will be on decoding complex supply chains, what challenges do you anticipate ahead?
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 [SME]. 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.
Originally written for and published on CSRwire’s Commentary section Talkback on August 26, 2013.