China's slow progress in reducing pollution from its factories means global companies that make products there need to step up their efforts to clean up their own supply chains, according to participants at a China green-manufacturing conference.
Experts at the Green Supply Chain Management Forum in Hong Kong on June 2 pointed to a number of reasons for the slow progress, from poor enforcement of laws and short-term thinking at Chinese factories, to strong cost pressures from foreign retailers and consumer-product companies.
But they said, for example, that with 60 percent of China's water being undrinkable largely because of factory pollution and untreated municipal waste runoff, there is much more industry could do.
The green manufacturing standards that do exist are too weak, so “there are no real improvements on the factory floor or in the local environment within the provinces,” said Richard Casey, managing director of Hong Kong-based Sustainable Sourcing Ltd.
Casey's company helps foreign firms buy renewable-energy technology like solar panels and green building materials in China. He said many of those products are now made in China, but “they're sourced in a very un-environmental way.”
To make real environmental improvements, Casey said there needs to be more openness in manufacturing, such as requiring carbon footprints on products, better factory audits and more life-cycle analysis of products, a process he called “radical transparency.”
A few products bound for North America and Europe are starting to require that type of information.
Solar panels sent to California, for example, must have carbon-footprint labels, and California and Germany are increasingly pushing for more responsible sourcing and openness about manufacturing processes, Casey said.
“It will take a number of years but it will change,” he said.
Another speaker at the conference, sponsored by Hong Kong's Business Environment Council, said the big-picture problem is that the earth's population is expected to hit 9 billion by 2050, but current manufacturing systems waste too much energy and generate too much pollution to handle that.
Consultant Alan Knight said that as people in developing countries improve their living standards, manufacturing must become more efficient.
“If everyone enjoyed my U.K., plasma-screen-TV lifestyle, we would need three planets,” said Knight, director of Southampton, England-based consultancy Single Planet Living Ltd. “People are waking up to the need to re-engineer supply chains.”
Knight held jobs as head of sustainability at both British home improvement retailer B&Q plc and SABMiller, the world's second-largest beer maker, before starting Single Planet.
In an interview after his speech, he said “nobody would argue” with China's success in lifting large numbers of its people out of poverty, but he said the focus should now be on “unlocking the genius that allowed China to develop its economy” and turning that to sustainable growth.
Western companies are sometimes unsure how to approach China on these questions, he said, noting recent news stories about labor problems at Chinese factories that manufacture products for computer maker Apple. Oversight of the factories sometimes fails, Knight said.
“We know the factory audits are not doing what they should be doing,” he said, arguing that they are too often “pass/fail” and don't work to improve communications with suppliers.
A Hong Kong-based environmental affairs specialist with German athletic apparel maker Adidas Group told the conference the company is working to build more dialogue with suppliers, and was one of the first companies to have a restricted-substances list in its supplier factories, because it worried about worker exposure to chemicals like benzene.
“Working with them on a partnership is a much better way than working on carrots and sticks,” said Lyn Ip, regional manager for social and environmental affairs in the company's Asia-Pacific office. “[Carrots and sticks] may work for a while but it's not a sustainable way to work with the supply chain.”
Still, she said firms like Adidas have to be cautious that suppliers have the credentials they claim, like environmental management or other certifications.
“Let's be honest — especially in China, certificates can be bought,” she told the conference. “They are placed in the conference room and look beautiful, but when you walk the factory floor, you can tell nothing has been done.”
In other areas, she said, Adidas is interested in working with suppliers on developing new materials and is exploring the use of recycled polyester and polylactic acid-based fabrics to help make its products more sustainable.
Casey, who has worked in sourcing mainly in China since 1996, said China is making substantial efforts to clean up its environment.
The country is spending “huge” amounts of money to clean up some large industries, like aluminum smelters, and that pressure will filter down to smaller factories in many industries over the next five years, Casey said.
But he said it's not realistic to expect most Chinese factories to clean up quickly unless they are very large, because they won't have the resources or knowledge to approach the problem.
“A lot of Chinese factories do look quite short term,” Casey said. “If you look at their accounts, there's not a lot of depreciation. If you tell them the environment will improve in 10 years, they'll look around and say, 'Will this get me more orders next year?' “
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