China Development Brief no. 48 (Winter 2010)
Introduction: The following is a in-depth interview with one of China’s best-known environmentalists. Ma Jun is the founder of the Institute of Public and Environmental Affairs (IPE), an independent environmental NGO, the author of the book, China’s Water Crisis (1999), and the recipient of the 2009 Ramon Magsaysay Award. In 2006, he was included in Time Magazine’s list of the 100 Most Influential People in the World. In 2008, Ma was one of the organizing forces behind the Green Choice Alliance, a coalition that now includes 35 NGOs around the country focusing on greening China’s industrial supply chain. In this interview, Ma reflects on strategies that Chinese NGOs and NGO networks like IPE and the Green Choice Alliance can use to pressure businesses to conform to environmental standards. He discusses the opportunities and challenges that Chinese NGOs face in collaborating both with each other, with international NGOs, and with the business and government sector, and how the environmental movement in China has changed over the last few decades.
I. Public participation in the Supply Chain Management (SCM) and the Green Choice Initiative
How we got involved in SCM
After making the water pollution database (水污染数据库) publicly available in 2006, we discovered that some large companies began to feel pressure by being exposed for pollution violations, particularly multinational corporations. An overwhelmingly large percentage (80-90%) of the first 100 enterprises that asked us for clarifications (concerning the recorded violations) were representatives of multinationals.
But we also discovered that only major brands were sensitive to public pressure. So the question we asked ourselves was how we could push for changes among mainland Chinese, Hong Kong, Taiwan and Korean enterprises? Since these enterprises did not care about public pressure and pressure from media exposure, we wanted to find a way to pass on the pressure from those enterprises “who care” to those “who do not care”. Nowadays more and more brands outsource the high-pollution, high-risk elements of their production. However, outsourcing does not mean that enterprises also pass on their environmental responsibilities to their suppliers. In modern business, the behavior of suppliers is also a key part of an enterprises’ responsibility.
Based on this consideration, we decided to use the water pollution database as a tool for SCM. In this database we created records of violations committed by enterprises, including their suppliers, to create a search engine for customers. When searching a company, customers can clearly see who a company’s suppliers are, and what violations either they or their suppliers may have committed before making a purchase.
In 2008, we developed a process management system for a ‘Green Choice’ supply chain, which included a comparison function, and promoted the use of this database among large-scale enterprises. The first enterprise to begin using it was the Hong Kong based “Esquel” (溢达). Soon after, a number of even larger companies, such as General Electric (通用电器), Nike (耐克), Wal-Mart (沃尔玛) etc. gradually began to also use this database. Having these big multinationals use the database put pressure on companies in their supply chain. The big multinationals didn’t want pollution records associated with their company, so they would speak with their suppliers to try to get them to change their behavior in order for their pollution records to be removed from the database.
When we first started promoting the idea of large enterprises taking responsibility for the “greening” and supervision of their supply chains, we discovered that our work became a lot easier. There were thousands of records in the database, and based on the capacity and resources we had at hand, we were always going to be fighting an uphill battle challenging violating companies one-by-one. However, if you take for example Wal-Mart—they have tens of thousands of suppliers. So if they compare their list of suppliers with our list of violators once a month, this means that thousands of suppliers are being pressured or discouraged not to pollute every month.
We have also just started another project to have Siemens (西门子) involved in a similar way, as it is another company in China with tens of thousands of suppliers.
Third-Party Review: A Way In
By going through a third party review, we’re able to encourage the responding enterprises to rectify their actions. In the rectification process, all the background materials, including each and every violation and monitoring record carried out by the government are reviewed. In many cases, companies even have to dig up their plumbing network so that this can be checked. In the past, we rarely had such opportunities, but now company representatives will take us around the factory and let us read through all the important environmental documents, and then demonstrate how the wastewater network functions, including the collection of the wastewater, and the wastewater treatment discharge process. They will even go through and explain the various aspects of the plumbing network with us.
The first part of the review process is the compliance review, and in this part of the process we always discover new problems. When companies undertake only specific actions to change, they rarely pass the compliance review the first time. But once they begin to make comprehensive changes, many more companies are able to pass. However, of the companies we have reviewed, there are still at least a dozen or so enterprises that have not been able to pass and are still going through the review process. So far, the longest time a company has spent before becoming compliant with the review has been one year.
Evaluating the Effectiveness of the Supply Chain Management
Green Choice’s achievements depend to a large extent on the way in which supply chain management systems work. Out of the 170 companies that approached us last year, 120 were pressured by their customers higher up in the supply chain. In our 2010 Chinese New Year’s Manufacturers Blacklist Campaign, letters written by university student consumers also placed pressure on many enterprises. In addition, media reporting and other factors played a role. For example, the report we released accounting for polluting enterprises listed on the Hong Kong stock exchange put pressure on these enterprises. One company was competing for a green company award, but being listed as a violator in our report prevented it from moving forward in the selection process. The award’s selection committee also requested the company to make a public statement about the nature of the problem, which they complied with. So with regards to the effectiveness of Green Choice, one thing which is quite clear is the way in which it influences supply chain management. You can clearly see where an order gets stuck because the supplier doesn’t meet their customer’s demands. This makes the suppliers really anxious to solve the problem.
Since starting Green Choice in 2007, we have been a driving force in pressuring around 300 enterprises to respond to violations. A considerable number of these companies have also undertaken rectifications. Many people are surprised to hear this, because we are just an NGO, and have no administrative power. We are a few people with very limited resources, and these companies are so strong and powerful. How can it be possible for us to pressure them to change? Why do these companies care about reports published by representatives from civil society? These questions point to significant changes in the attitudes and behavior of more than 300 enterprises as a result of actions taken by the Green Choice Alliance (绿色选择联盟). We can say that we’ve been successful, because we‘ve seen that companies have taken measures to reduce the amount of pollutants they are releasing into the air and water, and they are able and willing to verify facts based on serious investigations. These are very positive developments.
But on the other hand, we have more than 70,000 records relating to more than 30,000 enterprises in total, and overall the response rate is far less than one percent. In the overall scheme of reducing energy and controlling pollution, our approach is still limited. There have been no substantial improvements in either water or air quality, so we are still a long way from achieving our fundamental goals.
Moreover, at the moment we are still only able to influence the supply chains associated with multinational corporations. It seems unlikely that the same measures will be able to influence domestic enterprises, such as China National Petroleum Corporation (中石油) and Zijin Mining(紫金矿业), as these enterprises aren’t overly concerned about their suppliers’ environmental image. However, if one day “green credit” and “green securities” policies are properly implemented then perhaps they will be able to also influence these enterprises. This would require the integration of green credit and green securities with stock exchanges and banking policies, through loan policies, as well as listing and delisting mechanisms. Of course, this kind of work would require even higher standards of technical capacity compared to what we are doing right now.
The Strategy of the Green Consumer “Movement”
When we initiated Green Choice, we actually designed two paths— one was focused on encouraging consumers to make green choices and the other was focused on promoting a green supply chain. As you can probably imagine, great progress on the green supply chain has been made up until now, but the green consumer initiative is still only in the beginning phase. If we were to give an overall evaluation of Green Choice we could say that one leg (the green supply chain management system) has taken a big step, whereas the other leg (the green consumer initiative) has hardly moved, or is still moving very slowly.
The first challenge comes from our own limitations. At the outset we wanted to push for changes at both ends (consumers and suppliers) but we discovered that influencing consumers to make green consumption choices was much more difficult. First, we needed to consider whether we have the capacity to influence consumers. Second, even if we did have this capacity, any kind of large-scale efforts to influence consumer choice would necessitate some form of social mobilization and within the existing social context in China, these kinds of activities are still considered to be sensitive. Therefore, we decided to take a more cautious, step-by-step approach and to focus on advocacy instead of mobilization. Since 2010 we have launched activities focused on encouraging consumers to write letters to voice their requests, but we intend to keep this operation within the scope of student organizations, so that these activities are more easily controllable. As you can see, Green Choice cannot (presently) be called a true green consumer movement. We are working hard toward this goal, but we are approaching this in a gradual way so that society will have time to slowly get used to these ideas.
Public Participation as Mechanism for Controlling Pollution
What the Green Choice essentially is trying to achieve is improved pollution standards as a result of greater public participation. Overall, pollution problems in China are still not being solved, and the core of the problem is not the lack of technical and financial means to deal with pollution, but a lack of motivation. In order to control pollution, we have already adopted a number of measures, such as a variety of administrative, technical and financial mechanisms (including market mechanisms), but companies prefer to pay a fine (for violations of environmental laws and regulations) instead of addressing the underlying problem.
The broad participation and involvement of all sectors of society is the most important factor in addressing the apathy companies have towards pollution, but this is not going to happen overnight. A prerequisite for public participation is for a wide range of environmental information to be disclosed to the public. In my opinion, water pollution problems are the most pressing environmental problems China faces, and information disclosure is the most needed approach to address environmental problems. So you can see the logic behind the creation of the water pollution database to address the very serious environmental problems China faces.
In order to as be as effective, timely and comprehensive as possible, the Water Pollution Database was designed with a user-friendly format that would make it easy for the general public to access information1. The database itself cannot give us back clear-blue skies, but it can stimulate the public to get involved and take initiative.
II. Green Choice Alliance’s Cooperation Mechanisms
The Importance of Credibility
Getting back to the question of Green Choice’s effectiveness, I think the biggest surprise and the most unexpected result for everybody was the finding that civil society organizations can have an impact on business. If NGOs are to exert an influence, they must possess credibility. We lack administrative power, and resources, but we do have a unique resource, which is credibility. Credibility is crucial.
All the data that we use are from government departments; in fact what we have done is to use the credibility of the government and put it in the database. Through these means we can to a large extent draw support from the government’s authority.
Credibility also comes from third-party audit organizations with strong technical capabilities who have joined the alliance. At this stage, we have worked with four internationally renowned environmental consulting and environmental engineering firms to carry out audits. I myself previously worked in a consulting firm, on projects specifically focused on supply chains, and I also have some experience with CSR management. I drew on these experiences to develop Green Choice.
We have also carried out dozens of third-party audits. In our society, there is a widespread lack of trust, and this is also true of the way in which auditing firms are viewed. This lack of trust can be explained by the fact that auditing firms obtain funding from corporations; so it is clear that third party auditing also needs supervision. Having a credible environmental organization participate in these audits serves two purposes: to control the quality of the auditing, and to act as “bad cops” to help auditing firms absorb some of the pressure coming from the enterprises. Unlike the auditors, we have nothing to gain from enterprises, so can play a unique role. Furthermore, for each audit process, we try to invite local environmental organizations to participate, as I firmly believe that local environmental problems must be solved by the involvement of the local population and local environmental groups. I think that the participation of NGOs in these kinds of audits is unprecedented and very important. Based on my limited understanding, this type of involvement is not common on an international scale.
Finally, credibility comes from within ourselves, so when we involve local NGOs we make sure that they don’t establish any unhealthy or compromising relationships with enterprises. There is an agreed upon system of checks and balances among the 35 organizations which participate in the Green Choice Alliance, and all organizations must avoid acting on their own to do anything that might be perceived as irregular. Furthermore, when it comes to compiling the audit report and making the decision to remove any pollution records, these decisions require the approval of all members of the alliance. This is an important aspect of ensuring the credibility of the alliance.
One of the things that I had not foreseen is how the formation of the Alliance has helped us to deal with stress and pressure. It is often very difficult for us to deal with situations where representatives from businesses or the government, and even personal acquaintances come to see us and put pressure on us. Now I just tell them that I need to discuss this issue with the other members of the Alliance, and this is an effective way of stopping them from troubling us.
Motivations for continued cooperation
A clear division of labor and tasks has emerged within the Alliance. EnviroFriends (环友科技), and Friends of Nature (自然之友), are responsible for coordinating and sending letters within the network. Green Beagle Environmental Institute (达尔问自然求知社) is mainly responsible for handling communication with the media, while South China Nature Society (华南自然会) is responsible for the supervision of the auditing processes. In addition, several other organizations have encouraged student organizations in Dalian and Beijing to write letters to polluting enterprises, and many other organizations recognize the value of the whole process and provide important moral support.
NGOs can obtain more opportunities for cooperation only by becoming more professional and establishing a clearer separation of tasks. If NGOs are all focused on doing the same thing without a sense of the bigger picture, cooperation will not develop. IPE is good at some things, but in other areas, such as mobilizing society and consumers at large, we are not so effective. But this area is the strength of some other organizations. Furthermore, we are not specialists in communication and media, we tend to be more passive, but Green Beagle is very active in this area. So, the specialized division of labor and tasks within the Alliance is very important.
It is fair to say that cooperation among NGOs in China is difficult. At times everybody has experienced various setbacks, which is why we finally had to come together to form an alliance based on a common cause. The members of our alliance are engaged in environment protection throughout the country, but each and every one of them is focused on different areas. Each organization has a strong sense of independence and since we are all equal partners in the Alliance, it can be very difficult to work together and to focus our work. Non-for profit enterprises are unlike business groups that form around a common economic interest. In fact it is a common cause that brings us all together, in this case namely the issue of providing Green Choices. We all acknowledge that the environmental performance of companies has a huge impact on environmental pollution, and this is why we need to focus on initiatives like Green Consumption and Green Supply Chains. Taking up this cause is the only way to push enterprises to improve their environmental performance.
First steps towards international NGO cooperation
NGOs participating in the Green Choice Alliance are all Chinese groups, but some international organizations have been involved in coordinating cooperation and feedback. For example, in the campaign involving Apple Computer and the IT industry’s dumping of heavy metal pollutants in China, the U.S.-based NGO, Pacific Environment (美国太平洋环境组织)(PE), served as a vehicle to inform consumers in the United States. More than 900 consumers in the States wrote letters to Steve Jobs, the CEO of Apple, demanding Apple to take measures to solve the problem. As a result, Apple issued a brief response.
The U.S-based Business as Human Rights has developed a large database, through which they monitor the activities of thousands of companies. Among the recipients of this information are many representatives from high-level institutions. Business as Human Rights has included our data in their database, and posted all of our reports on their website, meaning that data collected in China is reaching a high-level, international audience. In addition, Business as Human Rights have contacted international companies with negative performances in our database, and those who have failed to respond to our correspondence, to hold them accountable. In addition, one of the members of our alliance, Envirofriends (环友科技), has translated the letters we write to polluting companies into Japanese and spread awareness in Japan. Furthermore the Chinese, Japanese and Korean members of the Environmental Information Network (中日韩环境信息网) at the Asia Institute for Environmental Studies in Japan have sent these letters to enterprises in Japan and Korea.
Using the Resources We Have
Up until now, Green Choice activities have mainly been carried out with the help of funding from some of its member organizations. Moral support doesn’t involve any costs, but when specific activities are being carried out, the situation is different. Some of the organizations have made Green Choice an integrated part of their own activities and central to the operation of their own, independent projects. IPE bears the operating costs for Green Choice partner organizations that lack funding. Some of these costs are for trainings that we provide.
Rather than focusing on long-term training programs, we provide training specifically related to conducting on-site audits. In this way, we are able to use our financial resources effectively in order to meet Green Choice goals. The next step is to systematically address securing more funds, which we have begun to prepare for through the completion of a preliminary project proposal.
Enhancing Our Professional Capacity
Participation in an audit actually involves monitoring the auditing process, while the actual audit itself is carried out by a technical auditor. There are very few enterprises that open their doors and welcome this form of public monitoring, so we have very few chances to do this. However, strong technical capabilities to monitor the process will ensure that monitoring will be more accurate.
NGOs should adopt measures to learn in order to strengthen their own capacity. Technical jobs may require hiring somebody outside of the organization. Another way of developing organizational capacity is to cooperate with other organizations and learn from them, as in the way we work with third party audit companies. From now on, we need to enhance the capacity of other organizations to work together. Moral support from other organizations can also turn into substantial participation in the alliance’s work. If members of the alliance can follow the same procedures to carry out auditing work, then IPE will no longer need to travel all the country to provide technical support in auditing monitoring.
As a part of the capacity-building processes, we invite representatives from other organizations in the alliance to come and work in our office for a period up to two months. In this way they become familiar with the whole process: from collecting data to the final stage where information is transformed into a tool to place pressure on companies to change. Organizations such as the South China Nature Society among others have already made clear strategic choices in this direction; to spend more time and resources on obtaining more comprehensive knowledge and mastering technical skills. They are based in the region of the Pearl River Delta is the world’s workshop, where the vast majority of audits are conducted. And I fully expect that the investment the South China Nature Society has put into developing its capacity will enable it to work fairly independent in this region during the next auditing process.
NGOs Should Pay More Attention to Efficiency
Of course, in cases where conditions are not yet fully ripe, we can only make gradual progress. NGOs are not-for-profit organizations and therefore cannot produce goods that will bring in revenues, so NGOs are to a large extent dependent on the good intentions of others (supporters and donors). Currently, there have been some very positive developments in regards to domestic foundations. I believe that if NGOs can achieve higher standards and partner with other sectors of society, then we’ll be able to gain the attention and support of these foundations.
NGO should pay attention to donor’s expectations of how NGOs can develop their capacity. Even though what we, as representatives of civil society, are doing is not-for-profit work, we still have to operate to according to efficiency standards. In fact, we should pay even closer attention to efficiency standards than businesses. This shows respect for donors, and is crucial if we are to obtain even more public support. By using the alliance to collaborate through the sharing of information, we have seen the efficiency of our work grow. The most effective way of exerting pressure on enterprises to take their environmental responsibility seriously is by using credible information.
The costs of doing nothing other than monitoring are inconceivable. But the approaches of Green Choice are many and various, and closely link up with other parts of society. Moreover the alliance’s foundation is relatively stable and participating NGOs are constantly developing and obtaining new knowledge. The combination of these factors have greatly increased the overall capacity of the alliance.
Non-profit organizations have not had an easy time accessing resources in the past and that’s not going to change dramatically in the near future. But in the long run Chinese people need to wake up to our environmental problems and funding from within China needs to be used to push for change. If IPE and other members of the alliance can help China solve its environmental problems and thereby improve and enhance the quality of life of the people living here, our work is going to be acknowledged and will receive support. Our website has received a considerable amount of support from the Society for Entrepreneurs and Ecology (阿拉善生态协会). Also, a large part of our total budget now comes from funding from Chinese donors, which gives me hope for future developments. I have also noticed that a number of environmental NGOs have recently improved their domestic fund-raising abilities2.
III. NGO – corporate relations: from a cooperative CSR role to independent advocacy
Changing the Relationship between NGOs and Businesses
The type of monitoring relationship that exists between NGOs and business in the Green Choice initiative is a completely new development. Although the 35 organizations involved in the Alliance have never actually sat down to openly discuss this, I am quite sure that we all recognized that in addition to establishing cooperative CSR relationships with business, we should also have an independent oversight and monitoring relationship. We shouldn’t receive funding from enterprises to carry out activities completely unrelated to their business. CSR funding should result in improvements for employees and local communities related to pollution and health concerns.
The formation of such a monitoring relationship has been a major challenge for us. NGOs need sufficient capacity to do better work in this area. At the outset, it was very important to decide what kind of attitude we should take towards enterprises. Our position is that we should respect the enterprise, and their contributions to society, but at the same time strongly oppose violations of environmental laws, and businesses engaging in activities that exploit others. Our approach is based on establishing a healthy relationship with companies, using exposure and pressure to engage them. Ultimately, the main goal is to provide follow-up solutions and a way to solve the problem, and to motivate the enterprise to change. So the relationship we have with business includes both opposition and confrontation, but also the desire for collaboration. If the enterprise continues to violate environmental laws, then our relationship turn confrontational; but if the enterprise is willing to adjust, and willing to change, then our relationship will change very quickly. In these situations we adopt a patient and proactive attitude and focus on providing assistance to the enterprise to make positive changes.
I think that the NGO community should also keep an open mind and positive attitude and work with other organizations and the government. We have the potential to learn from the experiences of businesses and government regulatory agencies, which can help to develop our capacity and enhance our own efficiency. On the other hand, we have something which businesses and government agencies do not have, namely, our starting point is an environmental philosophy. If we stand firm and work hard, then we can make a very unique contribution. This type of influence results in a win-win situation for everyone. If NGOs only serve to be implementers of enterprises CSR projects, we will lose our integrity and our value to society.
Trends in the Strategies of Environmental NGO’s
If we look at the development of environmental NGOs in China, we can see it in stages. The first stage was initiated by Liang Congjie and his organization, Friends of Nature. This organization’s work was significant, as it was the first time environmental NGOs provided environmental education activities. Friends of Nature has been successful in raising society’s environmental awareness, and this still remains one of the main focal points for many NGOs today. Environmental rights is another main area NGOs have been involved in. The China Legal Assistance Centre for Pollution Victims (污染受害者法律援助中心) at the China University of Political Science initiated and led by Wang Canfa, with the support of other professionals and local NGOs, is the main champion in this area. Judicial independence is restricted in this area, but they are standing firm and continuing their work.
In 2003, we witnessed the environmental movement’s second wave. It was symbolized by opposition to the building of hydropower stations along the Nu River and Tiger Leaping Gorge Dam. Since the introduction of the Environmental Impact Assessment Law, NGOs have become more deeply involved in public decision-making processes. One example of this is the work done by Green Earth Volunteers (绿家园) to promote public participation in environmental decision making. In addition to this, in recent years, organizations such as Global Village (地球村) have made great strides in developing sustainable community projects. Moreover, some environmental groups have focused on shaping corporate behavior. These groups include the Guardians of the Huai River (淮河卫士), Green Han River (绿色汉江), the Green Volunteer League of Chongqing (重庆绿联会) and Green Anhui (绿满江淮), which have all made some contributions to the field of monitoring and pressuring enterprises to make changes in the way they impact the environment.
I think that in the future we will see developments in other directions. Environmental education needs to be tirelessly promoted, while there is a need to expand efforts to influence policy influence and conduct advocacy. The next step we are planning within our organization is to try and influence even more businesses at various levels of the supply chain in different industries. We also want to try to exert our influence to start a substantive consumer movement. Furthermore we want to follow up on the Green Banking Project initiated by Yu Xiaogang at Green Watershed (绿色流域).There are many gaps in the work of environmental NGOs are doing in China, and NGOS should work together in the spirit of cooperation, rather than competition, to identify these gaps and expand their scope of work.
Editor’s Note: Ma Jun here is referring to an important trend covered in our Special Issue on Philanthropy and Civil Society in China, and that is the rapid growth of Chinese foundations like the Society for Entrepreneurs and Ecology. The rise of foundations presents Chinese NGOs with a wider range of funding opportunities, and a number of Chinese NGOs that used to rely heavily on international funding are now beginning to draw increasingly on domestic funding. ↩
美国的Business as Human Rights开发了一个很大的数据库（网站），盯着数千家企业，有很多高层次的信息接收者，我们的每期报告都在他们的网站上登出来，他们还挑选表现消极、不做回应的公司，以他们的名义要这些公司去回应。是他们看到报告后主动来找我们，提供了非常实际的帮助。另外，通过联盟成员——环友科技，把给企业的信翻译成日文，由中日韩环境信息网的成员——亚洲环境研究所（日本）直接递给企业，也起到了很好的推动作用。