microsoft powerpoint bsr presentation for sd wg revised by luckboy

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									Sustainable Development in China – a business perspective

Adam Lane BSR

About me

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We work with business to create a just and sustainable world

Industry Focus Areas
Research & Agriculture, Food, and Bev Innovation

Services
Sustainability Strategy & Integration Environmental Assessment and Strategy Human Rights Assessment and Strategy Materiality Analysis Sustainable Supply Chain Management Community Engagement Stakeholder Engagement Reporting and Communications 3

Consumer Products
Consulting Services

Energy
Member Network

Financial Services IT Media and Entertainment Mining and Minerals Pharma and Biotech

Cross-sector Collaboration

Transportation & Logistics Travel and Tourism

Corporate Responsibility and Sustainable Development

Global Sustainability Challenges
Understanding global trends in sustainability is a key step in preparing for the future. The following are significant challenges in China that have been emerging and will continue to grow.

1. Health
2. 3. 4. 5. 6. 7.

Human Rights Water Economic Well-Being Climate Biodiversity Education

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Challenge #1: Health
New and ongoing health threats further exacerbate need for stronger health systems
• Healthcare is not accessible or affordable to the poor. Doctors are motivated to give the wrong drugs in the wrong quantities. • Doctors are poorly trained and use out-ofdate techniques. No incentive to prevent health problems. • Children suffer from malnutrition and 7% are underweight. No health education. • New rural medical insurance scheme is helping but is 1-size fits all and reimbursable only. Can China afford socialized healthcare? • Quality of drugs still a problem. • Huge inequalities of healthcare (189/191) • New major health threats have arisen, including HIV, SARS, cancer, obesity, pollution (1m birth defects/yr), road accidents/safety.
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Challenge #2: Human Rights
In the absence of effective governance or justice systems, business and international bodies are increasingly needed to advance human rights
• Women have achieved significant equality in workplace and education, but still cultural biases, particularly for babies. • Migrant workers/families discriminated against and unable to access basic services. What about their labor rights? • Ethnic Minorities more disadvantaged but getting more support; what about culture? • Freedom of movement restricted (hukou) as is family planning (1-child policy), but both getting looser. • Impressive gains for some disadvantaged groups, e.g. disabled, orphans. Others still left out, e.g. mentally disabled • Interpretation of human rights in China: economic benefits vs lack of human rights?
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Challenge #3: Water
Freshwater resources are becoming scarcer or more polluted, leading to a global crisis in access to clean water
• Only 68% rural population has access to safe drinking water and 29% to adequate sanitation. Contamination a problem. • Beijing has 1/10th world average water supply. China has 20% population -7% water. • Low awareness and poor habits in sanitation =more diseases. • Droughts, Floods, Population movements, Industrial demand, Wastage are all problems. • Growing demand, less supply. Climate Change exacerbating the problem. China uses 7 to 10 times more water to per unit of GDP than developed countries. • Water prices are 70-80% lower than elsewhere. • Ag =60%, Ind =30%, HH =10%
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Challenge #4: Economic Well-being
The widening of economic gaps is posing increased opportunities and challenges for business in the developing world
• 2nd largest economy by pp (>$4trn); but 104th per capita (<$3,000). HDI= #81 • No provinces rated ‘global low development’ (<0.5) but varies from 0.89 in Shanghai to 0.59 in Tibet (30% difference). Gini coefficient >0.45 • Absolute poor <30m? Poor>200m? • 7th highest domestic savings as % GDP • 200m migrant workers. • Land reform the answer or the problem? • How to create and protect jobs? What about graduates or SOE reform? • Financing and job training limited. • Not yet market economy and unbalanced (infrastructure, trade)
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Challenge #5: Climate
The threat of dangerous climate change is increasingly becoming a reality, and prompts the need for drastic cuts in global emissions
7 times more energy needed per $GDP compared to Japan. Target to reduce energy intensity 20% 80% from coal now, 15% renewables by 2020? Climate Change will affect water disrupting drinking and agriculture (37% decrease over 50 yrs) and industry. Heat will affect crops and land (desertification) Population displacements from flooding. Government taking it seriously: Green Credit/IPOs, targets for officials, T1000 programs, SOE targets. 47% share of CERs in CDM market

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Challenge #6: Biodiversity
Despite greater conservation efforts, biodiversity loss is continuing at an alarming rate and increasing the risk of ecological catastrophe
• 27% of land is desert. Getting worse (overgrazing, over cultivation, firewood, water shortages) • Deforestation for land conversion a problem, despite planting 30bn trees. But what about planting grasses and biodiversity? • Increasing species extinction rate (e.g. Yangtze river dolphin) • Pollution affects waterways, urbanization affects animal migration and water tables • Loess Plateau: it is possible to rehabilitate large-scale damaged ecosystems and regain vital lost ecosystem functions to address food security, fresh water, habitat, poverty, income disparity and even climate change.

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Challenge #7: Education
In a future driven by globalization and information exchange, education is becoming even more critical to the success of business and economic development
• 35% rural children get early education. “99%” get 9 yr education; but often 50%. • Financial barriers, though government providing more funding. <50% attend High School. Quality is poor and teaching techniques out-of-date. • School mapping program’s problems. • Vocational training is not matched to demand and University education still improving; no focus on creativity. • High number of graduates but they lack skills and relevant knowledge. • Literacy rate high, but still problematic amongst some rural women.

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Other Challenges
Threats to social stability, growth and existing cultural norms are disrupting Chinese social fabric.

• Social stability • Nationalism • Technology and BBS/SMS/QQ • Unsustainable consumption • Corruption and Governance • Expectations of businesses as the problem, not the solution • Nascent Civil Society

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NGOs in China (1)
• Desperate need for NGOs to help provide feedback to society, because of lack of democracy and censored media • Massive problems in China and NGOs can be the tool for the ‘East’ to help the ‘West’ • Huge numbers of tiny spontaneously set-up NGOs • Many government organised NGOs and similar (academic) organisations doing research, providing funding • Unsupportive political environment (e.g. local politicians). Especially no trust between NGOs and Government • Unsupportive public; low awareness, low donations etc –though impact of earthquake….
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NGOs in China (2)
• No real legal framework • No accountability • Low professionalism (IT, staff [few qualified staff, low salaries, small pool of potential staff], transport, advocacy) publications • Often dependent on foreign income • Needs cooperation between business, NGOs, media, academics and government • Independence vs government influence problem • Also the lack of influence of the media…

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Sustainable Development in China
Lots of scary statistics… • 70% of cities have a water shortage, 60% rivers are polluted • 16 of the World’s 20 most polluted cities are in China • 1 new power“There can’t be a station every week • USA: 1 car for every 2 people. China: 1 for 70. sustainable world without • Desertification has increased from 1,500 -3,000km2 a year. Desert is moving 2km a year towards Beijing a sustainable China” • China has overtaken the US in use of 4 of World’s 5 basic commodities • 60% population lives in the countryside but contributes only 16% GDP
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A Sustainable Future in China requires…
• Greater incentives/punishments for companies – To obey the law – To benefit from new technologies/innovation • Greater incentives/control over, and from, local government – So local government implement national policies – So local government enforces local laws • Improved ‘markets’ and ‘systems’ – Aware & engaged public with changed behaviors – Responsive, supportive, financial markets • Governance and Collaboration – In businesses, across businesses and across sectors
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What is Corporate Responsibility?
Corporate Responsibility is…
• • • • • • • • • • Being energy efficient Publishing a sustainability report Employee volunteering Greening the supply chain Healthy working conditions Donating to philanthropic causes Having a social mission statement Partnering with nonprofits Socially responsible investing Enforcing a code of conduct

…but what’s behind all these activities?
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Corporate responsibility is aligning business with the world’s needs
Business has the potential to promote the wellbeing of the world through problem solving and wealth distribution. A just and sustainable world is indicated by the wellbeing of:

Business
Business can contribute to society by:
• • • •

Individual
Individual health, security and wellbeing

Developing solutions Innovating Creating financial wealth Allocating resources

Society
Societal health, security and wellbeing

Ecosystem
Healthy functioning ecosystems, natural resources and biodiversity

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Corporate leadership is solving problems through value creation
Corporate leadership is not just about “reducing risk” but using business and markets to deliver social and environmental solutions.

Social & Environmental Value

Philanthropy & Civil Activism
Non-market solutions for social/environmental needs

Corporate Responsibility
(Value Creation)

Market solutions for social/environmental needs

No Value
Failure to provide any value

Financial Only
Financial gains with little or no societal value

Market Value

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What impact on your business?
Risks and Opportunities • Operational – Supply Chain – Customers – Employees – Facilities • Reputational • Products/Services development/delivery

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What will you do about it?
• Meet minimum legal and ethical obligations – i.e. Provide jobs, pay taxes etc – i.e. labor, environmental, corruption laws etc • Understand the risks Sustainability has on your business • Understand that treating stakeholders well is good for business – Workers, customers, environment, local communities (philanthropy) etc • Develop profitable solutions to societal problems (win-win)
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Where to start?
• What are the biggest risks that face your business (vary by sector, location, size etc)? • What opportunities are there for your business? • How do you prioritize them? • What should you do? – On your own – Collaboratively… with who? • What are you able to do? – How will you do it? – How will you measure the benefits? • How can you be prepared internally for external changes (can you spot trends)?
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Thank You
Adam Lane alane@bsr.org www.bsr.org
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