Big brands drive change in China’s manufacturing hub

In just a few days I, along with EDF+Business’ Xixi Chen, will be traveling across China to talk with companies and students about corporate energy management. The trip comes one week after China’s “Golden Week”—the country’s eight-day-long national celebration. Each year, the holiday marks the largest week for tourism, bringing in over 700 million tourists at home and abroad to the nation’s streets and roughly $87 billion in revenue.

But while the streets are bustling, China’s industrial and manufacturing powerhouse comes to a standstill. This is a mandatory national holiday for all citizens, which means, for the entire week, almost everyone is off of work, businesses and factories are shut down, shipping lines are put on pause, and companies with suppliers in China are busy preparing for a week of silence.

In these seven days, it’s made clear how much of a driving force China is to the global supply chain. Whether it’s a Chinese-owned company or a multinational firm, businesses supply the goods and services we demand. But all this production leaves its mark on our planet—and it’s a big one.

Manager, EDF Climate Corps

Making China’s supply chains greener and more resilient

Currently, the energy and manufacturing sectors in China account for more than 80 percent of the country’s energy use and, with many Chinese firms failing to measure and manage their greenhouse gas (GHG) emissions, tracking and improving performance is a challenge. This means there’s a lot to tackle, but also plenty of opportunities to do so.

Heightened government restrictions on carbon emissions are making it ever more imperative for businesses to track and report their emissions footprint before new mandates come along. That’s why, although it’s been reported that only ten percent of Chinese firms carry out corporate social and environmental initiatives, large multinational companies like Walmart are looking beyond enterprise-wide GHG goals to address the emissions stemming from their supply chains, including many Chinese manufacturers.

Another mega-retailer, IKEA, has set an ambitious goal to phase out coal use throughout its supply chain as a way to reduce emissions and ensure long-term cooperation with suppliers. In addition to tracking coal use, four EDF Climate Corps fellows helped IKEA find cleaner alternative energy sources and encouraged the implementation of energy efficiency projects for its China-based suppliers. Many other multinational corporations are doing the same, because lowering the footprint of a supply chain helps manage uncertainty, reduce risk and enhance business value.

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We’re also beginning to see some Chinese-owned firms take a leadership position on carbon and energy management. AAC Technologies Holdings Inc., a leading micro-component solutions provider, is pioneering the so called “next-generation manufacturing” and is in the process of designing its new, enormous data center to be highly efficient. This summer, EDF Climate Corps fellow Qian Luo recommended that, by implementing a number of energy efficiency retrofits like upgrades to heat recovery, cooling systems and power distribution, the company will see huge energy and dollar savings, as well as increased reliability, the most essential requirement for a data center.

Corporate social responsibility meets policy

Fortunately for business, China’s climate targets are aligned at all policy levels, allowing for greater consistency and cooperation across the private and public sectors. With increased opportunities available through clean energy incentives, companies are increasingly setting and acting on ambitious GHG reduction goals of their own. The potential for scale here is vast: Businesses can leverage their size, not to mention capital, to drive meaningful change.

It’s an exciting time for sustainability leadership in China. The rise in clean energy investments are positioned to drive more job growth and economic opportunities, spurring a race for innovation that’s fueling competition and political action unlike anything we’re currently seeing in the U.S. But we have a long way to go, and corporate leadership is key.

To meet China’s GHG targets—and solve the climate crisis at large—more companies will have to set and act on ambitious sustainability commitments for both their own operations as well as their suppliers.

Follow Scott on Twitter, @scottwood_

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