Here’s what the last 5 years of corporate sustainability in China has looked like. What’s next?

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?

Manager, EDF+Business

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:

  1. 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.
  2. 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.
  3. 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).
  4. 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.


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Breathless in China: Walmart, sustainability and why you should care

Photo: Walmart China

I am just back from a week in Beijing, where Environmental Defense Fund was part of Walmart’s announcement of a new goal to reduce greenhouse gas emissions in its China supply chain. Had I not been there in person, I’m not sure I could have accurately comprehended how essential that this goal – a 50 million metric ton (MMT) reduction by 2030 – must be followed by swift implementation.

That’s because every day in Beijing felt like the worst day in San Francisco, my home, when last year’s horrific wildfires made our eyes and lungs burn. “Normal” in Beijing means not being able to see down to the end of the block, and sharing the crowded streets with commuters, parents and children all covered by facemasks.

Read more

Environmental innovation will transform business as usual

As the Trump administration rolls back environmental protections that could harm human health for decades, it’s increasingly up to businesses to lead the way, charting the course to a future that includes both a thriving economy and a thriving planet.

Leading the way requires first setting ambitious, public targets like the over 340 companies taking science-based climate action and 90 that have approved science-based targets; collaborating with partners across the value chain for maximum scale and impact – Walmart’s Project Gigaton, a collaborative effort to reduce 1 billion tons for emissions, is a powerful example; and, supporting smart climate and energy policy

BSR’s new sustainability framework closely echoes these leadership approaches and recommends that companies create resilient business strategies that align with sustainability goals. GreenBiz’s 2018 State of Green Business report further supports these and other requirements for sustainability leadership, adding that businesses need to improve reporting on climate risk, impact, and progress towards goals. The We Mean Business coalition adds further calls to action for companies: join the low carbon technology partnerships initiative, grow the market for sustainable fuels and electric vehicles, and take proactive steps to end deforestation by 2020.

Yet currently missing from all of this corporate sustainability leadership guidance is a call for companies to accelerate environmental innovation and deployment of next generation technology – sensors, AI, data analytics and visualization, and digital collaboration – to solve our most pressing environmental challenges.

Read more

Upping the ante on corporate climate leadership – by a gigaton

With the Trump Administration pulling back on federal climate action, I am heartened to see that U.S. businesses are starting to assert their leadership role in the fight for a cleaner, safer world. Bold leadership is an essential factor for business today — and no company is delivering on this more than Walmart.

The world's largest retailer recently announced Project Gigaton, arguably one of the most ambitious efforts to reduce climate pollution by any U.S. corporation.

With Project Gigaton, Walmart and its suppliers are committing to a ‘moon shot’ goal – removing a gigaton of greenhouse gas emissions from the company's global supply chain by 2030. That's more than the annual emissions of Germany. It's the equivalent of taking 211 million cars off the road every year. In a word, it’s transformational.

Breaking the mold together, then and now

Fred Krupp, President, Environmental Defense Fund

Eleven years ago, I traveled to the top of Mount Washington with then Walmart CEO Lee Scott, and we talked about the company's vast potential to drive environmental progress. Since then, an amazing ripple effect has spread across the entire retail sector. Working together, EDF, Walmart and others have gathered commitments for optimized fertilizer use on 23 million acres of U.S. farmland; eradicated 36 million metric tons of greenhouse gas emissions across the retail supply chain; and improved the health and safety of hundreds of thousands of everyday products like shampoo and laundry detergent. This work is invisible to most, but massive on an environmental scale, and nothing less than trailblazing for how business leadership and legacy is measured.

For the last quarter century Environmental Defense Fund has proven the power of business-NGO partnerships to create wins for both business and the environment. Walmart’s willingness to challenge itself and its supply chain to do better has meshed perfectly with EDF’s pragmatic approach to forging innovative solutions.

Back in 2005, it was uncommon business news when Walmart announced aspirational goals to be supplied 100 percent by renewable energy, to create zero waste, and to sell products that sustain our resources and environment. Neither Walmart nor EDF knew how we’d achieve those goals, but we set off on the journey together and found success along the way.

Walmart is in it for the long haul

For leading brands like Walmart and their suppliers, long-term economics will always outweigh short-term politics. Staying the course on sustainability is motivated by competitiveness, innovation, job creation and consumer demand. Smart business leaders understand that a thriving economy depends on a thriving environment. This is not an either/or choice. By 2050, we will have 9.5 billion global consumers, all demanding more food, goods and services. The commitment to Project Gigaton signals Walmart’s readiness to plan accordingly.

The Project Gigaton challenge is massive, but by working collaboratively, our confidence for success is high. The modern supply chain is responsible for 60% of all greenhouse gas emissions, 80% of all water use and 66% of all tropical deforestation.  This is not a goal that Walmart can do alone. It takes committed collaboration: of NGOs, partners, and an extensive network of suppliers – many leading brands in their own right – to drive reductions from factories to farms to forests, fleets and beyond.

Creating long-term prosperity for business and the environment requires long-term commitment from both business and NGOs. Together, EDF and Walmart have already climbed one mountain, and now we are ready to ascend even steeper peaks. The planet is counting on us.


Follow Fred on Twitter, @FredKrupp


 

Corporate America’s “moon shot”: Walmart’s Project Gigaton

 

At a time when leadership from the federal government is decidedly lacking, the launch of Walmart’s Project Gigaton is a cause for celebration. It is proof that companies can step up to advance solutions that will help business, people and nature thrive.

Just like Walmart itself, this is big.

The world’s largest retailer has launched an initiative to remove 1 gigaton (that’s 1 billion tons — billion with a “b”) of greenhouse gas emissions (GHG) from its supply chain by 2030. To put that in perspective, that is the equivalent of removing the annual emissions of Germany — the world’s fourth-largest economy — from the atmosphere. This audacious goal is impressive; it’s corporate America’s “moon shot,” and it shows real leadership.

Why? Because, according to The Sustainability Consortium, the modern supply chain is responsible for 60 percent of all greenhouse gas emissions, 80 percent of all water use and 66 percent of all tropical deforestation. And with the global population projected to swell to 9.5 billion consumers by 2050, it is clear there is not just a crucial opportunity for businesses to meet growing global demand, there is also a real need to protect the planet. Embracing sustainable practices is no longer an option for business. It is an imperative. The planet needs fast action at a massive scale.

So do forward-looking CEOs. Shareholders are rewarding resiliency when companies climate-proof their global operations. And customers, especially millennials, expect sustainability to be baked into the things they buy. In short, business is looking to drive bottom-line value, including growth, with sustainability.

Elizabeth Sturcken, Managing Director, EDF+Business

Which explains the significant Project Gigaton commitments being made by companies like Unilever (20 million metric tons of GHG reduction) and Land O’ Lakes (20 million acres sustainably farmed) and commitments made in the past six months by Apple, Amazon, Google, PepsiCo, Smithfield Foods and others.

Execution and delivery

But setting goals is just the first step. The execution and delivery must follow to complete this journey.

Which brings me back to this moon shot: Walmart cannot do this alone. Project Gigaton will take a village — in this case, the tens of thousands of companies that make up Walmart’s global supplier network — to make this goal a reality. And that’s a good thing: Eliminating GHG emissions at this scale will reverberate across entire sectors and industries. It will be the change to “business as usual” that’s long overdue.

That’s all fine and well, rhetorically. But what if you’re a CEO or CSR exec who’s facing the hard reality of “Where do I start”?

Some new research by Environmental Defense Fund starts to sketch out a roadmap to success — and illustrates the need for supply-chain partners to get on the bus. While we’re just at the beginning of a deep dive into the sustainability of the U.S. retail supply chain, our initial findings show two things:  the complexity and emission hotspots of box chain retailers and three clear, initial areas of focus:

  1. The supply chain is the largest source of emissions. If there was any doubt left, put it to rest: 80 percent of retail emissions occur in the supply chain; 12 percent are associated with the use and disposal of products and 8 percent come directly from retail operations — mostly buildings and facilities.
  2. Grocery is a huge hotspot and opportunity. Are you a retailer? Food company? Agricultural service provider? Farmer? Nearly half — 48 percent — of supply-chain greenhouse gas emissions come from the grocery category, which encompasses everything from fresh meat, veggies and dairy, to bakery, dry goods, beverages, snacks and frozen products. Together, these and other products emits 1.7 gigatons of GHGs (there’s that billion thing again). In other words, food production — and food waste — is definitely a place to make your numbers — and to make a difference. (Talk about low-hanging fruit!)
  3. Electricity is the biggest activity that contributes to emissions. From factories to farmhouses, whether powering a business or refrigerating an item at home, using electricity is the largest activity that produces emissions for consumer packaged goods production. Think about that: by tackling electricity use, whether from conservation or renewable energy, business leaders can not only run a more efficient operation, they can also engage their customers on which products to buy and how to best use them. That’s good business.

For those who have been paying attention to these issues for decades, these big opportunities won’t come as a surprise. But they help sharpen the focus for supply-chain professionals searching to answer the question of where to put effort and investment to get the most emissions-reduction results. Scale and speed are necessary. Knowing where to focus is critical. The EDF research is in the early stages and we plan to release the full results later this year.

In the meantime, kudos to Walmart. As suppliers make commitments for Project Gigaton that will drive reductions from factories to farms to forests to fleets, it will become imperative to identify hotspots to enable the largest impact. That’s exactly what drives innovation and the environmental impact we need.

The supply chain may be complicated, but the rewards are well worth it: thriving companies, thriving communities and a thriving planet.

Jump on the Project Gigaton moon shot. It’s leaving the launching pad, with or without you.


Follow Elizabeth on Twitter, @esturcken


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