2018 – The Year Sustainability Goes Strategic

Happy New Year and welcome to 2018; the year that sustainability goes strategic in China.

Yes, we know that this may appear to be an overly optimistic view of 2018, and some of you might be wondering what we at Collective Responsibility were drinking over the holiday. But while we were on break reflecting over the work we have done, the conversations we have had, and the regulations we have seen passed in 2017 (improved air quality in Beijing, factory closures in Guangdong, packaging lawsuits in Chongqing, etc.), we firmly believe that 2018 will be a turning point for sustainability in China.

This turning point is a strategic and tactical shift in China’s approach to “sustainability” that will not only result in further fines and closures for businesses who play the “Business As Usual” approach, but more importantly, will be a missed opportunity for firms whose products, processes and services are aligned to solve the problems.

We have developed a list of areas where we have seen progress and that we feel highlights the opportunities that exist.

The Waste Import Ban

China recently passed an import ban on 24 types of overseas waste. Despite most coverage focusing on the negative aspects of the ban, such as how it raises costs for steel enterprises and creates waste problems for the United States, Australia, and the United Kingdom, this ban is a huge step in the right direction for China’s waste management system.

As explained in our blog posts, our recent informal waste report and our videos on the topic, the informal waste system is a very efficient market, and this ban will increase the value proposition for both formal and informal recyclers.

The Carbon Market

Despite China’s carbon market being far from perfect, the country has made enormous strides in bringing the market from a dozen pilot markets to a single standard.

Although we at Collective have never viewed the carbon market as strategic, we do acknowledge that the major improvements in China’s carbon market have the potential to negatively impact firms who do not understand their position in relation to this market.

Any firm who is a heavy emitter of pollution or a heavy user of energy will most likely be heavily impacted by this market by means of heavy fines and harsher guidelines.

Shanghai sustainability
Shanghai

City Population Caps

According to recent reports, Beijing and Shanghai both plan to cap their populations at 23 million and 25 million by 2035. These caps are big in many ways, but for us, the one most interesting aspect of these caps is that they are tied to the goals of the city planners, who make their cities more “livable.” Plans to make these cities more livable have been said before without much action, but over the last 2-3 years, new plans have started to be implemented, including investments in parks, enforcement of traffic laws and the removal of illegal buildings.

Socially, these caps will also open up opportunities for communities to start establishing community development programs that will cause communities to stabilize and deeper community roots to be planted.

Consumer Waste Awareness

Following the Singles’ Day and 12/12 events and the Chongqing lawsuit involving an environmental group suing packaging companies, the rapid increase in shopping and food waste packaging has caused the Chinese government and industries to strategically look at the packaging waste issue.

This year, firms need to begin seeing the wider impacts of this issue and begin to understand that packaging waste is not just going to continue to “go away.” Businesses who are reliant on delivery e-commerce platforms will need to consider the impact of any action concerned with solving the packaging waste problem. Furthermore, for those who have an environmentally benign material, or a new process/solution that delivery firms can leverage, investing in programs aimed at alleviating the packaging waste issue is a great opportunity.

Electric Transportation

A few weeks ago, Shenzhen announced that it has successfully electrified its entire fleet of public buses, thus setting the standard for electrified public transportation in China. This new standard is in accordance to a recent mandate that every mode of public transportation and a large percentage of all private cars in China must be electrified.

For foreign automakers, this new mandate may present a major challenge for automakers whose manufacturing and product development strategies are not aligned. On the other hand, this shift towards electric modes of transportation provides a huge opportunity for others who have innovative, and scalable, mobility solutions.

Children and Poverty

Strategic sustainability is not only about the environment; it is about individuals and society as well. In China, there is still an abundance of societal issues, such as issues related to the 60 million left-behind children and tens of millions of people who live below the poverty line. However, a few weeks ago, the Chinese government announced that it will end poverty by 2020.

This is a goal that would unleash the largest “bottom of the pyramid” economic development scheme to ever be launched. It is a scheme that would, if successful, cause a significant jump in China’s GDP growth and would provide an abundance of opportunities for businesses to engage with, and sell solutions to, targeted communities.

Growth in Wellness / Vegetarianism

Younger generations have become more health-conscious about their food and the Chinese government has begun supporting the vegetarian movement as part of their efforts to reduce meat consumption in the country.

The vegetarian/health-focused market is expected to grow by 20% due to middle-class millennials in Chinese cities being one of the most active and health-conscious populations in the world.

Conclusion

In summary, China has made huge progress in terms of environmental and societal sustainability.  China’s development success is so great that it blew past its 2020 goal of building 40 million panels and 2017 saw more blue skies than it ever has in the last ten years. Despite this success, there is still a lot of room for improvement and for many markets to be tapped.

For us at Collective, the path of China’s sustainable development is clear, and business leaders have a decision to make.

They can (continue to) ignore the signals, and risk paying fines and losing out on markets, or they can see these signals as opportunities by putting together strategies to deliver the products, processes, and services to support China’s strategic shift towards a more sustainable country.

To understand this topic further, we have invited a panel of executives to speak about a specific event or trend that they have seen that makes them believe sustainability in 2018 will be strategic.  We will also ask what these executives plan to do about it. Check out the details of the workshop here.

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