By Michelle Kam, Yang Chengbin, Chris Harreld and Sun Lijun

Executive Summary

Environmental issues have become a top concern in China as they are affecting China's economic and social sustainability. In today's world of global interconnectivity, companies that remain in an environmentally unfriendly mode of operation are not going to reach full potential. Recent tightening up of government compliance requirements, economic considerations including rising energy, raw materials and waste disposal costs, and rising attention of stakeholders, including not only customers but also employees and investors, are advancing the need for Chinese companies to manage environmental impact as effectively as other business operations. The opportunities associated with incorporating environmental considerations into an organization's business strategy are enormous.

Companies should adopt best practices in environmental management

Leading companies worldwide have adopted a comprehensive environmental management system to drive their environmental protection initiatives. The system provides a mechanism to facilitate continual improvement in environmental performance, bringing about enormous benefits and, more importantly, preventing environmental hazards which could result in substantial damage to company reputation and financial loss. Successful implementation of such a management system requires a high degree of management commitment, proactive communications and training of employees, and aligning of existing processes and organization structure with the environmental improvement and risk management initiatives. Also, a sound technical infrastructure, including effective pollution prevention and abatement and monitoring facilities/equipment, and an effective management information system to collect, integrate and analyze information and generate reports for necessary management decisions, is critical to effective environmental impact management.

Energy efficiency should become a new standard for operating and managing a business

Incorporating operational efficiency into a company's overall business strategy will facilitate progression toward a reduction in environmental impact and cost of business operations. One specific area of current focus is energy efficiency. From an information technology (IT) stand point, data center power consumption continues to receive significant attention. Maximizing computing power usage through technological breakthroughs, such as server consolidation and virtualization, is one approach to optimizing energy efficiency. Other approaches include reducing computer heat generation by deploying advanced, more energy efficient IT equipment, improving data center ventilation and other components of building design/management, and implementing best practices of data center energy management involving performance assessments and continual improvement. For companies that do not operate large data centers, improved energy efficiency technologies, aimed at building management, can be effectively implemented as a solution to reducing energy consumption.

Environmental trends will drive changes to supply chain management

Emerging environmental trends require the traditional metrics of supply chain management to be expanded so as to incorporate environmental performance. Environmental considerations should be integrated within the framework of operational objectives. Leading companies have shown their commitment to developing a supply chain that includes environmental management strategies. To drive continual environmental improvement across supply chain operations, companies need to collaborate, and are increasingly doing so, with their suppliers. This can range from setting requirements to identifying areas of focus relevant for each company to transparency in reporting. Companies and their suppliers should leverage innovative technologies and solutions toward achieving real and sustained environmental progress.

This white paper was published in January 2008.

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