Looking At China Through The Lens Of Sustainability — Part I
February 22nd, 2007
Good session today! Lots of good questions. Through our guests, I thought we accomplished our goal of learning how to better critically think about and spot sustainability issues at the macro 10,000 feet level.
What were some of your helpful takeaways from today’s session? What made you rethink some things about sustainability, the US, China, etc.?
Here’s the Center for Clean Air Policy website and CCAP’s posted report (”Developing Country Green House Gas Emissions Mitigation Analysis” — addresses in part the George Will Op-Ed piece that Patrick asked about in today’s session), which Mike Jencks suggested you take a look at, and the website to the California Renewable Energy Center that Neil Lahey also suggested you peruse.
Mike Jencks (attorney at law), Kate Lancaster (Cal Poly Professor of Accounting), Neil Lahey (Owner/CEO www.deventec.com) and Rob Pena (Cal Poly Professor of Architecture) … great job. Thank you for your time!
Entry Filed under: Pre-Departure, Beijing, China, Misc.
14 Comments Add your own
1. Rob Pena | February 22nd, 2007 at 3:47 pm
I really enjoyed today’s panel and I enjoyed preparing for it. It was an awareness raising study for me.
Below are my notes in the form of of bullet points and references that you’re welcome to use and pass along to your students if you care to. - Rob.
CHINA PANEL
Orfalea College of Business
2/22/07
Climate Change
• Since the Industrial Revolution the earth has warmed 1.4 degrees F
• 1 degree F is in the pipeline due to what’s already there
• 1 degree F is in the pipeline due to current infrastructure
• To avoid catastrophic climate change and the resulting rises in sea level, droughts, and severe weather events, we must reduce greenhouse gas emissions by 40-60% below 1990 levels by 2050. This means getting to 1990 levels by 2030 and continue to decline.
• Business-as-usual would have us at 120% of today’s CO2 levels in 2050
• We can’t start in 10 years – we have to start now
Buildings in the US:
• 48% of US energy use: 40% operations + 8% embodied
• CO2 emissions: buildings twice Industry sector and growing (industry is nearly flat in its rate of growth @ 320mmt/yr; transportation = 510mmt/yr; architecture – 700mmt/yr; year = 2000)
• 76% electrical generation is to operate buildings
• Business as usual: energy consumption (overall) in US to rise 37% between 2000 and 2020.
• Buildings last a long time – bad design decisions are felt for the next 50 years.
• In 2035, ¾ of the built environment will be either new or renovated. This transformation represents a historic opportunity for the architecture and building community to reverse the most significant crisis of modern time, climate change.
China - Energy
• Worldwide, over the next 20 years the floor space equivalent to the world’s current building stock will be constructed, 70% of that in China and India.
• In the next 20 years China will be building (the equivalent) of a new Shanghai each year.
• China is a red-hot proving ground for architectural and urban-planning concepts. There’s a lot of opportunity to effect the “iconography” of China’s architecture.
• 10th 5-year plan (2000-05): 10% reduction in SO2, yet air pollution levels rose 27% in that time.
• 11th 5-year plan (20005-10): 20% more efficient in energy consumption for every 1% GDP; 10% reduction in pollution;
• As part of this latest 5-year plan, the construction ministry issued a new edict requiring that by last June 2006 all new construction be 50% more energy efficient – but there are few mechanisms for enforcement.
• China has 11 “green city” projects under construction (i.e. Chongming Island up the Yangtze Delta from Shanghai – eco-tourism, farming, wind and solar energy) and 140 green building projects. Few believe they’ll meet international green standards.
• Edicts handed down from Beijing are often ignored by grassroots and provinical officials, who mouth the leadership’s slogans but carry on making money as rapidly as possible and as dirtily as suits them.
• Politicians concerned with social stability need to create 9 million jobs a year to keep the growing population employed and manufacturing remains the base of the economy, much of it in such energy-thirst sectors as steel and aluminum.
• Image is more important than green
• Construction industry is in a hurry – lots of inertia
• To power China’s growing appetite for energy, they will need to build the equivalent of two 600 megawatt coal-fired power plant a week.
• In 2004 the increase in energy use from new Chinese air conditioners alone exceeded the entire generating capacity of the Three Gorges Dam.
• China was a net exporter of oil in 1992
• China now imports more than 40% of its needs.
• One of the world’s biggest energy consumers, it aims to get 10% of its energy from renewables by 2020.
• Estimates are that China has the potential to generate 1 million megawatts of power from wind (current power generating capacity = 440,700 MW)
• Rob Watson: “Their land is barren, the water undrinkable and the government needs to begin providing for an immense and newly wealthy population. The result is that China will drive the alternative energy market and help make it a reality.”
• Enacted “Law on Renewable Energy” that encourages alternative energy use through renewable purchases and financial incentives.
China - Pollution
• When a country’s economy grows for 10% per year for some 3 decades – based on low-cost labor and lax environmental laws – it can start to think that the laws of nature don’t apply.
• China has 20 of the 30 most air polluted cities in the world, and this is primarily due to burning coal for electricity.
• China may be reaching its environmental limits: the Chinese miracle could become an eco-nightmare.
• Annual estimate of premature deaths due to air pollution = 358,000.
• Free fall from an airplane. It feels like flying for about the first 5 miles. Its not the fall that kills you – it’s the sudden stop at the end, and China may be reaching that sudden stop. When you stress a system to a certain point, it just stops working.
• China can’t do what the west did: grow now, clean up later. Because of the pace of growth, later will be too late.
• Illuminated skyscrapers are a symbol of progress – it will be difficult to rein-in consumption when economic development at any cost has been the rule for the last 30 years.
China - California
• California’s air pollution is increasingly made in China, and China’s environmental solutions are increasingly made in California, according to Thomas Friedman.
• Pollution from cars, power plants and dust storms (deforestation) in California is coming from China.
• California: nearly half the national average per capita use of electricity due to our states efficiency standards for buildings, cars and appliances; 1/3 red states, and 2/3 of other blue states.
• If China could be persuaded to follow California’s model – strong energy standards and supportive government policies to nurture the widespread deployment of clean technologies – everyone could benefit.
China - Narrative
• How will the world accommodate itself to the rising powers of China and India?
• How will America manage the economic opportunities and challenges the pose?
• Asia may be the most optimistic place on the planet. More people have come out of poverty faster here than anywhere else in the world.
• Will China be used as a scapegoat or as a sputnik? Will we use it as an excuse to avoid doing the hard things because it’s all just China’s fault, or as an excuse to rally the country, as we did when the Soviets launched Sputnik, to make the kind of comprehensive changes in health care, portability of pensions, entitlements, lifelong learning, to give the middle class the best tools possible to thrive.
Check out these articles for more information:
New York Times - The Green Leap Forward
New York Times - Bring in the Green Cat
New York Times - China: Scapegoat Or Sputnik
Appliance Design - China Faces Uphill Energy-Saving Drive
New York Times - Go West, Old Men
EcoRech International - Asia Sees Sense in Going Green As Oil Prices Remain High and Pad Import Bills
Christian Science Monitor - A ‘Green’ Building Rises Amid Beijing Smog
Institutional Investor - Green Sun Over China
Wall Street Journal - Greener and Higher
Edward Mazria - It’s the Architecture, Stupid!
2. Erik | February 22nd, 2007 at 4:10 pm
The sustainability concept is both a global concept and a local concept. In today’s San Luis Tribune there is a brief article discussing the SLO Chamber of Commerce’s new committee on sustainability. Some of the SLO old-timers will recognize some of the names on the committee as being well respected businessmen in our community.
3. Chris Carr | February 22nd, 2007 at 5:11 pm
Rob and Erik,
This is great stuff. Thanks for sharing.
4. Ashley Smith | February 22nd, 2007 at 5:44 pm
Dr. Lancaster mentioned today that Wal-Mart was going green. I was rather skeptical about this seeing as though Wal-Mart just had a federal class action lawsuit filed against them for discriminating against female employees and had recently been fined for violating pollution laws. I figured Wal-Mart was just trying to repair its tarnished image. Then I found this article The Green Machine. It talks about Wal-Marts specific environmental goals, how Rob Walton decided to turn Wal-Mart green (which Dr. Lancaster also mentioned), and it talks about all the skepticism around the topic. Wal-Mart could be doing this for the money, to save its image, or to truly help the environment. By the end of the article I realized it doesn’t really matter why Wal-Mart is doing it. The most important thing is that the world’s largest retailer is doing it at all. The influence this will have on the rest of the world is going to be immense.
5. Chris Carr | February 22nd, 2007 at 6:05 pm
“By the end of the article I realized it doesn’t really matter why Wal-Mart is doing it. The most important thing is that the world’s largest retailer is doing it at all.”
Ashley,
Great comment. Amen. I agree. Sometimes in business we (and the critics of business) can miss the forest through the trees.
The below adage that I remember one of my aunt’s saying over and over when I was a kid would seem to apply to WalMart’s sustainability push and how WalMart can never seem to appease some of its critics:
“No good deed goes unpunished”!
February 23 Update: See today’s Wall Street Journal article, Wal-Mart Pushes for Diversity at Suppliers, that reiterates how Wal-Mart is requiring its suppliers to adopt new technology and embrace environmental initiatives, but primarily addresses Wal-Mart’s related push to prod its suppliers to hire more women and minorities on their staffs. I my view I think they have a real shot at making a difference on the environmental front, but, on the hiring (AND RETENTION!!) of women and minorities, I think that will prove to be much more difficult for them to successfully socially engineer.
6. Ryan Maaskamp | February 24th, 2007 at 12:15 pm
Thursdays’ China meeting was an insightful and diversified view on sustainability. I see how it can positively impact many aspects of business, including profitability. Going along with Prof. Carr’s logic: it might not be a perfect process at the moment, but it is important to get started and teach future business leaders how it could impact their lives. I thought the diversified panel approach was more effective than having an environmentalist preaching sustainability. This approach created a way to see the practical use and implementation of the process. Of course it always helps to have a knowledgeable panel, I would love to have them back to discuss other topics concerning China’s business environment.
7. Meghan Girvin | February 24th, 2007 at 3:01 pm
I thought this session was very informative and encouraged me to think about issues I have not before. One question that was asked was especially interesting to me. Is China seen as more of a threat to or opportunity for sustainability? This was a very insightful question and the answer that the panel gave made me think about the possibilities in China. Right now it seems as though China is a threat because of the large amount of coal they burn and just the sheer number of people in China creating waste. However, China is developing rapidly and if they begin that development with sustainability in mind, it may become a leader in sustainability. There is so much room for growth in China and if that growth is made in a sustainable way huge advances could be made. This article from the Rocky Mountain Institute suggests that China is open to developing in a sustainable fashion and plans on doing so. If these plans are put into action I believe China will create more opportunities for sustainability and will become less of a threat to it.
8. Chris Carr | February 24th, 2007 at 6:56 pm
Ryan and Meghan,
Good input and comments.
I thought a panel would be a good change up from what we have been doing. I also felt t the different perspectives with panelists coming from different fields worked well.
9. Steven Rodger | February 25th, 2007 at 10:29 pm
I enjoyed this lecture, as it was first class discussions I’ve heard in our MBA program (outside Dr. Lancaster’s class) regarding sustainability in business. While it seems many companies may be jumping on the bandwagon of ‘sustainability’ riding the benefits, as eco-friendly customers demand more green products, does it really matter what their reasoning is? The fact that a store like Wall-Mart is starting to ‘lighten their step’ on the environment is extremely positive and promising, whether it be for saving further lawsuits or for feeling guilty about not being so responsible during their past growth. Despite common belief, there are more and more ways to become more green as a business without sacrificing profits and growth. For those of you who have read the book for Accounting Raising the Bar, you will know what I’m talking about. Sometimes taking the white road can be more rewarding and profitable, versus always follow the red road which most businesses are modeled after.
Since there was a limited time for questions after the lecture I did not have time to ask these… During our visit to China, are we planning to visit any green businesses? Seeing that many business students often have limited knowledge about sustainability, and while it is becoming a more mainstream issue in most companies, are there any proposed future courses at Cal Poly’s MBA program with a focus on Sustainable Business?
10. Chris Carr | February 26th, 2007 at 5:36 pm
Steve,
Thanks for checking in. Good question. Remember you are dealing with an attorney here, where words and their meaning are critical!
Before I can answer, I would need you to define what YOU mean by a “green business”? This can be broad or narrow. Everybody has a different definition. My definition may be very different than yours. Also give me/us some examples of such firms that you consider green and WHY you consider them to be “green.”
11. Steven Rodger | February 27th, 2007 at 12:22 am
Thanks Dr. Carr,
By green or sustainable business I mean a company which takes into consideration how environmental and human rights impact business practices. It would be a business which operates in a socially responsible manner, while protecting the environment, creating products or working with processes that cause the least harm ecologically. A company that evaluates raw materials, invests in innovative technologies, and regulates their wastes. A business to inspire solutions to the environmental crisis the world is facing rather than ignoring them and just focusing on profit in the short term….Basically, in a nutshell, a socially responsible venture, which has a smaller ecological footprint. When I think of China, I think of the opposite of this. I’d like to be proved wrong. At the same time, I’m sure there are some companies which are attempting to build sustainability into their business, to be able to operate in future generations.
Some companies with these values which come to mind include: Patagonia, Evergreen Solar, Ben & Jerry’s, Cliff Bar, ect . Also in China, Beijing Organic Food Co. Ltd. I Hope this clears up my question.
12. Chris Carr | February 27th, 2007 at 2:33 pm
Hi Steve.
Thanks for the addendum.
We both have the same definition.
Re: some of firms we visit in China, you will find that it’s like firms in the USA — success being “green” is a matter of degree and perspective, some firms do it pretty well while others do not, some have it in their mission statement and really live by it and others use it as window dressing, etc.
As an example, some credible people argue that even the well respected firms you note above have some problems and need to greatly improve on the “being green front”; while others argue that we need to look at the big picture and that these firms overall do a pretty good job (or are at least trying to and they are asking themselves the tough questions).
As another example, many manufacturing firms one visits in China will show you their safety and environmental protection certificates, and they are truly very proud of them (e.g., ISO 9000 certification). Yet could they be doing more, at least by “western” standards? Sure and of course.
One thing I caution you to keep in mind and remember — China is a developing country, and you will see what, exactly, that means when we get there. It is trying to attain the same standard of living as the US (or get closer to it) and in a way much like the US went about it less than a century ago.
If you apply current western standards and values re: green issues to the developing world, you are in for some serious heartburn that will keep you up at night. One of the values of this trip is that you WILL see this, first hand, whereas many people only read about it or watch CNN or CNBC TV reports on it. Not the same thing at all, not does that latter have nearly the same impact on a person.
But, you also have a choice — you can choose to either let it totally depress you, or, you can choose to decide not to let the heartburn set in too deep and think about how you can make a difference and/or jump in with your MBA skills and training to help these societies do it right/better, whether you go there to do so full-time, or you help from right here in the US (think of Neil Lahey and Devontec as a great example — China and firms there will one day not be just his supplier, but his market too!).
13. Steven Rodger | February 27th, 2007 at 4:13 pm
Getting depressed about the situation helps no one. Rather it does seem like there this is an opportune time to learn from the mistakes which the US and other developed countries have made, and help China try to avoid them. I believe visiting factories will be an enlightening experience, and I’m looking forward to seeing how Chinese businesses are run. Since they are a developing country perhaps it’s not too late to guide them down the correct path?
In regards to how some companies using being “green” as a window dressing, I believe most people can see through it. As more people become more environmentally conscious they will be able to see through the meager eco-efforts of companies like Wallmart. It seems obvious when a company is putting up a front, versus really applying sustainable concepts intertwined into their mission statement.
While most seem to ignore the movement, it does seem like there are plenty of options for environmental business. After having a meeting with some Venture Capitalists yesterday, I’m convinced that there will be huge growth in the clean energy market, and China is a great place to start. Their infrastructure is not built up, so it should be feasible. It was great to hear how Neil Lahey with Devontec is using China as a resource. In the green marketplace, China should provide to be an incredibly lucrative opportunity.
14. Chris Carr | February 27th, 2007 at 4:31 pm
Well said!
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