China is the only real, large market in the world where game-changing sustainability is emerging and has the potential to truly scale
The corridors at Davos are buzzing with discussion over China’s growing commitment to sustainability, says Peter Lacy
One of the recurring themes in conversations at Davos this week is whether China could provide the beginnings of a solution for scaling sustainability and decoupling growth from environmental impact. And, if so, whether China could be the global game-changer in the future.
As is often the case, it is partly a question of definition. To be considered a global game-changer, China would need to influence mainstream market forces of supply, demand and the rules of the game both at home and abroad – and channel these towards a more sustainable model for economic growth. So, is China moving in that direction?
Having come straight to the World Economic Forum from three weeks in Beijing, Shanghai and Hong Kong, it is immediately clear to me that there is a real commitment to develop new rules that promote sustainable development in China – and that this commitment is being backed up by significant investment in areas such as energy efficiency and clean energy through the latest five-year plan. China is expected to spend nearly US$1.6tr on its strategic sectors in the next five years, with the main focus being clean energy investments. At the same time, China is also pursuing a goal of “harmonious urbanisation” and the shift to intelligent cities.
This investment comes at an interesting time. The Chinese government is, for example, beginning to move away from GDP as the sole measure of economic development. President Hu Jintao recently vowed to reduce the country’s dependence on GDP, saying economic development should aim to improve people’s livelihoods and welfare rather than purely push for growth in GDP. This approach will have significant implications for government spending, state-owned enterprises and the wider context in which business will operate.
Our recent study with the World Economic Forum, More With Less: Scaling Sustainable Consumption and Resource Efficiency, shows that China is beginning to envision how its development interests are aligned to sustainable growth and better environmental outcomes, and working to mobilise diverse interests to the cause. For example, the China Greentech Initiative, founded in 2008, is one of the leading international collaboration platforms offering green technology insights and partnering opportunities to technology companies, service providers, investors and policymakers. The initiative is currently focused on identifying areas where private companies can innovate to help deliver governmental targets around the 12th Chinese five-year plan.
As Chinese companies seek to deliver on government – and their own – objectives, and move up the global value chain, from being the workshop of the world to becoming a major global player, there will be an ever greater imperative to drive sustainability into core business and supply chains. This would not only meet expectations in export markets in Europe and North America, but would build trust with local policy makers, consumers and other stakeholders.
Businesses are also starting to make greater commitments to sustainability. The UN Global Compact local network in China was relaunched last November, with a new constitution defining membership, governance and other substantive issues. The local network, which has been shown in other regions to be one of the most powerful catalysing forces for change, will offer new frameworks to share experiences in advancing Global Compact principles, and will send a clear signal that Chinese business is serious about sustainability.
While joining a business network doesn’t always indicate performance or outcome, execution and action in key areas seem to indicate movement in the right direction. In 2010, for example, China invested over $51 billion in new renewable energy projects – accounting for nearly 20% of global investments. The commitment to the development of wind energy by Chinese companies is unparalleled: by the end of 2011, wind power accounted for 45GW of generation capacity, more than in the US. Renewable energy is clearly an engine for growth.
So don’t get me wrong – others such as South Korea, the Nordics and Brazil are making investments, but from my discussions in the corridors of the Congress Centre in Davos it seems that China is the only real, large market in the world where game-changing sustainability is emerging and has the potential to truly scale.
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