Responsible businesses have advantage

Updated: 2011-12-13 10:40

By Brook Horowitz and Jessica Scholl (China Daily)

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Judging by the pall of smog that hangs over many Chinese cities, it is all too easy to think that doing nothing seems to be the most common course of action for the average Chinese company, rather than making the huge financial, technological and managerial investments necessary to clean up their act.

Although there is a commitment at government level to source 15 percent of its energy needs from non-fossil fuels and to reduce carbon emissions per unit of GDP by 40 percent by 2020, many running Chinese companies seem to be asking why should they invest their resources into supporting a cleaner environment, reducing carbon emissions and enhancing social development, when their profit margins are being squeezed by the global slowdown and multinationals' supply chains.

From the viewpoint of enterprises, this is understandable. Why should they divert their profit margins to support longer-term sustainability, which depends on the behavior of other players beyond their control? And can the Western concept of sustainability, which underpinned the Durban conference, despite the conference's multilateral credentials, realistically be applied to the Chinese marketplace, business traditions and cultural values?

In fact there is a strong degree of consensus both in China and elsewhere that the main driver for responsible business behavior and adherence to the best environmental standards is above all heightened competitive advantage and new commercial opportunities, both at home and abroad. Amongst the Chinese leadership, there is a strong belief that companies which have embedded environmental targets and social responsibility into their core operations have a far greater potential for growth than those which treat these aspects of business as just "nice to do".

In the latest five-year plan, for example, the Chinese government has been trying to raise environmental standards in a conscious effort to promote longer-term sustainable development.

By moving away from the traditional view that there is a trade-off between environmental standards and growth, Chinese businesses can position themselves to become a net contributor to a cleaner environment, rather than a net polluter, and make money in the process.

There are plenty of examples of how Chinese companies can grow their businesses by being at the center, rather than on the margins of the global environmental movement, by finding imaginative solutions in renewable energies, redefining the communications industry and rethinking the technology of transportation for a green future.

Take for example the many wind farms or coal plants upgrading their technology which have benefited from billions of dollars of subsidies under the Kyoto Protocol's clean development mechanism; or the $54 billion of public and private funds which were invested in the renewables sector in 2010; or the strategy of individual companies such as Huawei, which has put a combination of technological prowess and green values firmly at the center of their product design and global rebranding effort.

If Chinese companies, incentivized by a well thought out enabling regulatory environment, can redefine their approach to the climate and society by linking it directly to growth, that's a far-sighted investment into one of the major business trends of the future and one which will have a significant impact on improving the environment.

Getting it right will prove to be crucial not only for China, but for global sustainability and the future and well-being of each and every one of us living on our precious and precariously balanced planet.

The authors are from the International Business Leaders Forum.