China pollution risks

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In China, more than 400,000 people die every year as a result of air pollution, an estimated 190 million people drink water so contaminated that it makes them sick and 40 per cent of its land mass is affected by soil erosion. Indeed, the Chinese desert is expanding at a rate of 1900 square miles per year and is already encroaching on Beijing.

All this presents enormous risks for multinational companies in China.

A piece in Harvard Business Review, Scorched earth; will environmental risks in China overwhelm its opportunities? says big companies need to recognise the risks. These include potential damage to their reputations, faulty supply chains, transport accidents (China has more car accidents than any other country), lost production capacity, collusion with local governments and political instability with thousands now protesting against China's environmental problems.

The Chinese Government is well aware of these problems, and announced measures last week, but there is a long way to go.

First, there's the collusion between officials and businesses. Local officials want the growth, corporations want the business and environmental degradation keeps costs down. Then there are the supply chains hanging off long lines of contractors and subcontractors.

The HBR report says companies need to reduce their environmental footprint in China. It also calls on them work with the Chinese government to address the problem.

It cites examples which include Coca-Cola putting in bottling plants that have no net loss of water resources, Shell's joint venture with PetroChina that rerouted a pipeline around biodiversity hotspots and GE working with Chinese scientists to develop clean coal technologies.

You can read the entire HBR piece here.

Still, the question is whether these corporate efforts would help. Let's be blunt: can businesses really save China from environmental implosion? Market approaches to solving global warming can be short-term and profit-based. As a result, many are likely to fail. And China has already told the developed countries to shove it and fix global warming themselves.

As Chinese President Hu Jintao said, developing countries need to consume and generate energy to drag people out of poverty:

"Developing countries still have a long way to go before achieving industrialisation, urbanisation and modernisation, and they face an arduous task of improving people's life. To meet their development goals, developing countries need to consume more energy."

That's why there is no easy fix to this problem.


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3 comments untill now

  1. Interesting – for me personally I just think that western countries need to stop their dependence on cheap goods from China. It’s just fueling more pollution from industry. see http://www.mindreign.com/en/mindshare/Environmental-Concerns/China-3a-The-Environmental-Rogue/sl36962308bp325cpp10pn1.html for more details

  2. China will learn that it cost 5 times more to fix any problem that they could have solved or reduced in the first place. Most countries now know that it is better to reduce pollution than try to fix the problem later.

  3. The international community should strengthen co-operation and help more countries embark on a road of clean development that protects the environment and ecosystem and ensures meeting their development goals.

    G8 leaders said they would back UN Security Council moves on a third set of sanctions against Iran if Tehran failed to suspend enriching uranium, a process that can produce fuel for civilian energy or fissile material for a bomb.

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