We are fishing and eating from our oceans unsustainably, eating down the food chain
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Please watch, this great video from Hong Kong’s Clean Air Network. It really says it all.
- Hong Kong University of Science and Technology/Civic Exchange research has shown that 53 percent of the time, the pollution that affects us most in HK is from transport – trucks, buses and ships
- Last March the government introduced retirement schemes for old Commercial Diesel Vehicles as well as selective catalytic converters for taxis and mini-buses
- And last year, data did show that HK’s air improved slightly
- More good news: The government recently tabled regulation in Legco that mandates ships switch to cleaner from bunker fuel while at berth
- But measures to improve our air have been largely offset by the huge increase in private car ownership in recent years as well as the massive development initiatives that are being undertaken
- The Hedley Environmental Index estimates that in 2014, air pollution caused 2,616 premature deaths, 32.657 billion in lost dollars, 174,926 hospitalizations, and 4.253 million doctor visits
- The so-called “end of pipe” solutions the government has introduced are certainly a beginning but inadequate alone
- Hong Kong needs to follow Singapore and European cities in establishing low emission zones, pedestrian zones, electronic road pricing and intelligent transport solutions
- We urgently need a smarter, cleaner city. This is within our reach.
Sophisticated Investors like to think their portfolio risk has been carefully mitigated and hedged. For the average portfolio, however, standard risk calculations don’t necessarily include analysis relative to environmental and social issues an investee company potentially faces, or even resource consumption analysis, yet all can have a significant impact on returns. This is particularly true of a long-term “buy and hold” investment strategy.
By contrast, impact investors believe not only that these factors weigh on a company’s returns, but also a positive screen for companies actively managing these risks can improve a portfolio’s performance.
Speaking in Hong Kong about their own 13-year journey toward an “Impact Portfolio” were Lisa and Charly Kleissner, founders of the KL Felicitas Foundation. As part of their mission, the Kleissners have urged audiences globally to think about how we can better deploy capital to help better steward the planet’s resources. On Tuesday, they spoke at a forum organized by the RS Group, hoping to advance the discussion in Hong Kong.
Today, the Kleissner’s foundation and personal portfolios, managed by San Francisco-based Sonen Capital, are more than 93 percent allocated across four different asset classes to “Impact Investments”, which signal the intent to generate both financial return and “purposeful, measurable, positive social or environmental impact”.
According to “Evolution of an Impact Portfolio: From Implementation to Results“, a report published by Sonen in October last year, the Kleissner’s portfolios have achieved index-competitive risk-adjusted returns, illustrating that, “impact investments can compete with and, at times, outperform, traditional asset allocation strategies, while simultaneously pursuing meaningful and measurable social and environmental impact”.
Their journey toward impact has not been easy, according to the Kleissners, Silicon valley denizens who both worked under Steve Jobs at Apple, among other firms. The process began with dim looks from early investment managers who wanted to focus only on returns.
“We wanted to know about the positive upside for communities, for the environment, from our investments,” Lisa said. “We wanted to make money and have positive impact but our early investment advisors had no idea how to achieve this.”
They sought an advisor who cared about impact. “We didn’t want someone who saw this as simply a job,” Charly said. “We want to change the world not just make money and our investment advisor needed to be a partner in this.”
The results were far-reaching, meaning investment policies needed to become impact investment policies, due diligence restructured, term sheets re-written, new monitoring and exit strategies developed. Sonen Capital was founded in response to this need.
The portfolios the Kleissners ended up with are far from US-centric, with more than 50 percent of investments made globally. Among those are holdings in renewable timber, carbon offsets, water and land use that is respectful of biodiversity. In other words, the Kleissners invest in companies that reflect positive impact. They have opted not to invest in coal-fired power plants or extractive industries.
Three percent of their assets are in early stage direct investments, reflecting their silicon valley, entrepreneurial background. Indeed, the Kleissners efforts to promote the impact sector has included investments of money and their own time in social enterprise incubators. These, and others, the Kleissners like to think of as “catalytic” investments that can lead to change.
Beyond the incubator model to support social enterprise development, the Kleissners also have invested in helping to build networks of like-minded investors to share due diligence as well as in promoting intermediaries to help develop the impact sector.
“Development of these investor resources is critical,” Charly said, “We want people anywhere to be able to tap into the knowledge”, which is available on the KL Felicitas website.
Measurement, always a difficult discussion, is rigorous across the portfolios, captures trends across the sectors and then includes qualitative analysis, which involves telling the story from the numbers and more.
Charly spoke of impact investment as often an evolution of smarter philanthropy. He also spoke of the importance of collaboration between grantmaking and investment to widen impact, pointing to microfinance as an example of this and to social enterprises that can start life as a nonprofit but move into a more commercial space over time using blended capital.
Speaking in Hong Kong, the Kleissners said, was a learning for them, that having worked with an incubator in India over a number of years, the entrepreneurial context there was more familiar.
In China, where the environmental challenges are substantial and polluting companies numerous, an audience member pointed out that impact might also come from working with conventional companies to change their environmental and social practices, rather than shunning them altogether.
At a recent environmental forum in Beijing, the speakers were in full swing with relatively predictable insight into China’s environmental challenges, and more broadly, environmental challenges elsewhere.
Then came the question-and-answer period and again a couple of relatively innocuous questions before a Chinese man strode to the front of the auditorium and launched into a discussion of his own.
In angry tones and raised voice, he said the Chinese government was not doing enough to mitigate air, water and soil pollution and demanded immediate attention to related public health concerns.
No one flinched, people listened intently, respectfully, no one emerged from the shadows to haul him away. Several students in the audience also asked about lack of action on pollution and suggested that more should be done to clean the environment and protect citizen health.
I sat beside a Chinese friend who simply shrugged, saying she had seen the man speak out at two other recent environmental forums. She said that because of his stature as an energy expert, he was left unhindered to express his opinions publicly.
She pointed out that the students were also feeling free to criticize the government, whereas previously the unspoken line everyone knew not to cross was any sense of direct opposition to Beijing authorities.
My sense from the entire trip (my previous visit being only four months earlier) was that China is changing, and perhaps faster than we could have imagined.
For the first time, censors this year have allowed Chinese media to carry reports about the “cancer villages” in areas of high industrial pollution.
Environmental advocate Ma Jun told me with some amazement that he had felt free recently to criticize a recent Ministry of Environmental Protection decision not to release data about soil pollution, which it considered a “state secret”.
Ma Jun said this was irresponsible and put public health at risk, a comment that was unusually picked up by the People’s Daily and Xinhua, among other news sources that aren’t usually inclined to publish remarks critical of the government.
“Previously, these comments would have been removed by censors,” Ma Jun said. “Now these issues are allowed to be talked about, debated and discussed.”
This became particularly clear, as March brought the annual meetings of the legislative and consultative bodies of China where major policies traditionally are decided and key government officials appointed.
Concern for the environment was a constant throughout the session – and was the subject of one in ten of the 5,000 proposals submitted by delegates.
Social media was also alive with commentary on the environment throughout.
And talk about environmental protection wasn’t simply a side act to the main show. The National People’s Congress (NPC) at 2,987 members is the largest parliament in the world and gathers alongside the People’s Political Consultative Conference (CPPCC) whose members represent various groups of society. This year, the NPC confirmed the new leadership of President Xi Jinping and Premier Li Keqiang.
This once-in-a-decade leadership change emerged from November’s Communist Party congress with a strong reform mandate and promising a more sustainable China, balanced growth as well as more emphasis on environmental protection.
To be fair, this was not, however entirely a departure in direction from the previous Hu Jintao, Wen Jibao administration and it remains to be seen whether the result will be real change.
The 2011, 12th Five-Year Plan, which sets the direction for policy, of course emphasized balanced growth and set priority green industries. The mantra that emerged then was that economic growth should not come at the expense of resource depletion or pollution.
Wen Jibao, representing the departing Old Guard, opened the 12th National People’s Congress with a “Report of the Work of the Government” pointing to “steady progress in conserving energy, reducing emissions, and protecting the environment.”
But levels of anger are rising, fueled by recent truly off-the-charts air pollution in Beijing as well as the repeated and increasingly public (because of the rapid spread of news on social media platforms) water pollution incidents nationwide. Rampant corruption among local officials that has allowed harmful practices to continue unhindered has also been a target of microbloggers.
This sense of disregard for public health coupled with an increasingly affluent and vocal middle class presents a problem for the Chinese government in terms of its own legitimacy.
Recognizing this, Xi Jinping said at the March proceedings that the government should play a stronger role in pushing reform and opening up.
“The new administration wants a new start,” Ma Jun said. “They want to make clear that the current environmental challenges are not their fault.”
Related articles
- China delegates in pollution protest vote (abc.net.au)
- China’s Poison Air Is Becoming Its Leading Export – Bloomberg (bloomberg.com)
- As Pollution Worsens in China, Solutions Succumb to Infighting (wtee.wordpress.com)
- China People’s Congress environment surprise (abc.net.au)
- Anger Over Pollution Becomes Main Cause of China Unrest (bloomberg.com)
Photo: Alex Hofford
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We have spent the last few days contemplating with marine experts the real and terrifying challenges our oceans face and what we, as a philanthropic foundation, can do to stimulate urgent thought and action largely absent in Asia around the consumption and trade in fish.
While there is growing attention from governments (local, national and regional bodies), NGOs and philanthropic funders in the U.S., Europe, Australia and New Zealand, despite being an important consumer and producer, there has been little attention paid to the challenges in Asia, where an estimated 40 percent of major fish stocks are overexploited or collapsed. At the same time, as a region where poor coastal populations are largely dependent on fisheries for their only source of protein and employment, the issues are particularly urgent.
It’s worth reminding ourselves of just how significant those challenges are and why we in Asia should particularly take note.
Oceans cover 70 percent of our planet and are indispensable to life. They generate 50 percent of the oxygen we breathe, absorb warming greenhouse gases, help regulate our climate and are a critical source of food for us all, but most importantly the 1 billion of our world’s poorest for whom fish is their only source of animal protein.
Yet as we have written about here and here, we are depleting, polluting and warming our oceans at unprecedented rates. We are not caring for our greatest resource in the rush to take more and produce more. While population growth has averaged 1.7 percent each year over the past 50 years, with greater global affluence, rates of fish consumption are increasing at an annual rate of 3.2 percent, according to the FAO’s 2012 State of the World’s Fisheries and Aquaculture. How will it be when our current population of 7 billion reaches an expected 9 billion by 2050?
Over the past 50 years we have consumed an estimated 90 percent of the ocean’s big fish, encouraged by $27 billion each year in misguided government subsidies for fuel or boat construction offered to the industrial-scale fishing fleets that have led the devastating global scramble to harvest, according to a Pew Environment Group report. Estimates are that about half the world’s wild capture production comes from the smaller coastal fisheries that can be just as destructive, usually are unregulated and yet are a vital source of employment and protein.
The total number of fishing vessels in the world in 2010 is estimated at about 4.36 million and again it’s worth noting that Asia has the largest fleet, accounting for 73 percent of the world total, according to the FAO.
World per capita food fish supply increased from an average of 9.9 kg in the 1960s to 18.4 kg in 2009, and likely 18.6 kg in 2010 when all the numbers are in. Of the 126 million tonnes available for human consumption in 2009, Asia accounted for two-thirds of which 42.8 million tonnes was consumed outside China (15.4 kg per capita).
China, which is expected to pull an additional 300 million people out of rural poverty and into relative urban affluence over the next two decades, has a long way to go. Already over the past 50 years, that country’s share in world fish production rose from 7 percent to 35 percent in 2010, largely fueled by growth in aquaculture there, while fish consumption per capita rose to 31.9 kg in 2009, with an average annual rate of growth of 6 percent between 1990-2009. China is also the world’s largest single exporter, responsible for 12 percent of world trade by volume.
China now produces more than 60 percent of the world’s aquaculture by volume, while Asia as a whole accounts for 89 percent of global volume. This is not, however, taking pressure off our oceans as many people seem to believe. fishmeal itself contains fish and for the more expensive fish the conversion rates are not good. World aquaculture production reached an all-time high in 2010 of 60 million tons, meaning we now farm about half our global consumption.
This massive and growing consumption has meant that most of the stocks of the top ten species, which account for about 30 percent of world marine capture fisheries production, are fully exploited and have no potential for increases in production. Our fishing capacity, meanwhile, is estimated to be as much as two to four times that needed to harvest the sustainable yield catch from the world’s fisheries.
Meanwhile, not only are we emptying our oceans of life, by overfishing, we are killing what’s left with our bad terrestrial habits.
Acidification and the accompanying ocean warming are continuing apace as our marine life absorbs carbon dioxide and other greenhouse gases emitted by our factories, power plants and transport sector. This has been devastating to our coral reefs, the habitat for 25 percent of our marine species.
Humans are also responsible for a wide assortment of pollutants from oil spills to plastic waste to industrial and municipal effluent, to agricultural runoff from fertilizers that has created whole coastal dead zones.
And I could go on about Illegal, Unreported and Unregulated Fishing, which is an industry unto its own and about which not enough is known but its links to human trafficking, drugs, and terrorism finance have been sporadically documented. With lack of attention to fisheries in Asia and close to zero regulation, this is a particular challenge in terms of even beginning to think about how to stimulate action.
Still, it’s not all gloom and doom – at least in Europe, the U.S., Australia and new Zealand, where NGO pressure and governments (both local and national, as well as regional bodies) have started to focus on the myriad challenges.
According to the FAO report, good progress is being made in reducing exploitation rates and restoring overexploited fish stocks and marine ecosystems through effective management. In the United States of America, 67 percent of all stocks are now being sustainably harvested, while only 17 percent are still overexploited. In New Zealand, 69 percent of stocks are above management targets, reflecting mandatory rebuilding plans for all fisheries that are still below target thresholds. Similarly, Australia reports overfishing for only 12 percent of stocks in 2009. There is also growing EU and USA action around IUU fishing.
But where is Asia in this equation – China, southeast Asia, Japan and India, which together consumed two-thirds of the world’s fish, farm more than 80 percent and export a large chunk to the rest of the world. On marine issues, both governments and NGOs are largely silent, with the exception of the creation of marine protected areas which in concept are important but reality need to be better conceived with proper fisheries management, governance, linkages and adequate funding for monitoring and enforcement.
The reality exists that none of the Asian nations have adequate fisheries management plans, import or export regulations or reliable stock assessments, to their own detriment. IUU fishing is rampant. Yet, fisheries are a vital source of employment and food for the region. Food security and potentially even social stability are at stake.
The question we have been asking ourselves – beyond those provoked by the challenges above – is: What role should a significant global trader such as Hong Kong play in this equation?
Once a fishing village with a booming fishing industry that sustained our appetite for highly commercial species such as snapper and grouper producing 90 percent of the fish we consumed, Hong Kong now imports 90 percent of what it consumes from 140 nations globally. The lack of fish in our oceans caused the government to buy out the once substantial trawling fleets and close Hong Kong waters to commercial fishing.
Despite the declining productivity of our own seas, our appetite for fish, particularly endangered luxury species, has only increased with our greater affluence. In 2009, an average of 71.6 kgs of seafood was consumed per person. That’s 3.9 times higher than the global average and up from 9.9 kg in the 1960s.
So the question remains: should not Hong Kong, a significant consumer of seafood and as such a contributor to global ocean challenges not act now to help save our seas? The key to keep our oceans from emptying completely will be for governments to adopt policies that encourage sustainable consumption and to regulate the fishing and seafood-related industry more carefully.
Related articles
- Green Blog: A Milestone Looms for Farm-Raised Fish (green.blogs.nytimes.com)
- Fishers Fight Over Dwindling Catch (ipsnews.net)
- David Bank: Fish 2.0: Investing in Sustainable Oceans and Fisheries (huffingtonpost.com)
- What’s up with Sustainable Seafood? (jenniferbrowne.org)
- World Fisheries: are we managing an effective decline? (worldfishing.net)
- The high seas are too precious to be left to plunderers and polluters | Callum Roberts (guardian.co.uk)
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- By Ella Smith
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- By Ella Smith
This first appeared as an Op-ed in the October 25 opinion pages of the SCMP.
We might finally have an administration that cares about cleaning our filthy air. Indications are that the new administration led by C.Y.Leung will act to finally stem the choking smog that represents Hong Kong’s No 1 public health crisis and is a major impediment to the city’s competitiveness.
Last week, in his first address to the reconvened Legislative Council, the chief executive said improving air quality was among his top objectives. In a move that already stirred optimism about the government’s determination to protect public health, Leung last month named environmentalist Christine Loh Kung-wai undersecretary for the environment.
It was also encouraging to see, a day after Leung’s address, Secretary for the Environment Wong Kam-sing calling roadside pollution the city’s greatest problem, and that a basket of initiatives to improve the city’s air quality would be introduced next year. These, he said, would aim to comply with World Health Organisation standards rather than the outdated air quality measures still in use.
Among the initiatives being considered are “carrot and stick” policies that include removing some 60,000 heavily polluting diesel vehicles from our roads.
Such measures are urgently needed. Some older vehicles have been on the road for as long as 20 years and should be refused registration if they don’t comply with vehicle emission standards.
While atmospheric pollution might have improved somewhat – due mainly to lower emissions from the city’s power stations – the concentration of roadside emissions remains unacceptably high, and it is these emissions that affect us the most.
Wong has said that 80 per cent of roadside pollutants come from outdated commercial diesel vehicles.
Retiring obsolete commercial diesel vehicles will improve our air and our health. It’s also worth remembering that research from the Hong Kong University of Science and Technology showed that, 53 per cent of the time, pollution that affects us most comes not from across the border, but from our own roads and ships on the harbour.
Indeed, the recent flurry of positive announcements from the government came amid a string of bad air days and public health warnings to moderate outdoor activity.
According to Hong Kong University’s Hedley Environmental Index, which measures the cost of pollution, yesterday was a “clear day” (one that complies with WHO air quality guidelines) in Hong Kong. The last such day was September 22, which means that our air stayed bad for more than a month.
According to the index, there have been only 59 clear days so far this year. The polluted days represent a cumulative HK$33 million in health-related and other costs.
Beyond the direct cost to our economy, surveys of business executives regularly point to our smoggy air as a real obstacle in recruiting and retaining workers – whether foreign or local. Patience is wearing thin.
By now we have heard from doctors and scientists that our dangerously high level of pollutants raises the risk of such conditions as bronchitis, asthma, pneumonia, headaches, lung cancer, stroke and heart attack.
So we should applaud the suggestion of phasing out outdated commercial diesel vehicles, despite what I imagine will be heavy lobbying from the transport sector.
As Wong pointed out, mainland China is phasing out diesel vehicles more than 15 years old, so why should we be any different? The government’s carrot will include subsidies to soften the blow of replacing vehicle fleets.
It is encouraging that the administration has also spoken about retrofitting Euro II and III franchised buses with selective catalytic reduction devices to reduce nitrogen oxide emissions and might even tighten emission standards for LPG and petrol vehicles as well.
Here’s hoping that our new government will finally act to protect our health.
Related articles
- Air pollution study clears the air on diesel versus gas emissions (rdmag.com)
- Hong Kong to tighten power plant emission limits (capitalfm.co.ke)
- Emission standards for new petrol vehicles to be raised (todayonline.com)
Most of us don’t realize that many of the products we use, the foods we eat are causing deforestation on a massive scale in Southeast Asia and are devastating to our planet’s biodiversity.
The culprit is palm oil, which is a key ingredient in many common foods, shampoos, soap and pet products, lubricants, pesticides and paints. It even helps fuel our cars.
Palm oil has become a silent part of our everyday lives and accounts for 30 percent of world vegetable oil. And that’s how it’s usually identified on the list of ingredients – as vegetable oil so we often don’t even know what we are using.
Our consumption of the versatile lipid is soaring. Demand is predicted to more than double by 2030 and to triple by 2050. China is the biggest consumer of palm oil, importing 18 per cent of global supply.
In Indonesia and Malaysia, forests are being cleared at an alarming rate, estimated at 2 million hectares a year, wiping out endangered species such as the orangutan, the black sun bear, the Sumatran tiger and many others. The two countries produce 90 percent of the world’s palm oil.
A new study by Stanford and Yale researchers estimates that 75 percent of deforestation in Indonesia was directly attributable to land use changes, from forestry to plantation. The study was released this month and published in the journal Nature Climate Change
Indonesia already has 8 million hectares of oil palm plantations, but has plans for another four million by 2015 dedicated to biofuel production alone. In total, the country produced more than 23 million tonnes of biofuels last year and is setting aside 18 million hectares to produce much more.
Malaysia in 2011 produced 18.9 million tonnes of palm oil on nearly 5 million hectares and was the second largest producer of palm oil.
Beyond feeding our snack habit, another challenge for forests is that governments are pushing to increase the use of biofuel, which ironically is seen as a quick fix to reduce greenhouse gas emissions. In the EU By 2020, 10 per cent of fuel will be biofuel, while China expects 15 per cent of its fuel to be grown in fields.
But in both Indonesia and Malaysia, in order to plant palm oil, often carbon-rich peatlands are being drained and then burned, releasing stored C02 into atmosphere already clogged with greenhouse gases from razing dry land forests. This represents possibly more carbon emissions than burning fossil fuels.
And not infrequently palm oil plantations are just an excuse for clearing forest because the profits associated with sales of tropical timber are substantial. In this case, companies seek concessions and access to land that is forested but don’t ever bother to plant palm oil.
We might think that forest and peat swamp loss in Southeast Asia sounds bad but it’s far away so why do we care?
We care for many reasons. But if we are thinking purely about self-interest, the effects of forest loss can be seen globally in changing climate patterns and erratic weather.
Forest cutting is responsible for 17 per cent of global carbon emissions, meaning this is the third largest source of greenhouse gas emissions and equal to emissions for the entire global transport sector. It is also comparable to the total annual CO2 emissions of the US or China, according to the UK Eliasch Review, “Climate Change, Financing Global Forests”.
If the international community does nothing to reduce deforestation, modeling for the Eliasch Review estimates that the global economic cost of climate change alone caused by deforestation could reach $1 trillion a year by 2100.
Beyond the effects of climate change from deforestation, we look to forests as sources of vital biodiversity.
Estimates are that nearly half of the world’s species of plants, animals and microorganisms will be destroyed or severely threatened over the next 25 years because of rainforest deforestation. As rainforest species disappear, so do many possible cures for disease.
At least 120 prescription drugs sold worldwide come from plant-derived sources. While 25% of Western pharmaceuticals are derived from rainforest ingredients, less than 1% of tropical trees and plants have been tested by scientists. We just don’t know enough about the significance of forests to sit back while they disappear.
Locally, the consequences of deforestation on such massive scale are even more immediate. Forests help regulate regional rainfall, offer defense from floods, maintain soils and their moisture, and generally offer ecosystem services crucial for maintaining life and livelihoods. Globally, an estimated 1.6 billion people depend on forests for their welfare and livelihoods to one degree or another.
So is it worth it to eat that biscuit, that chocolate, choose a shampoo that contains palm oil and how do we know if it’s not even labeled?
The rule is that if the label shows the saturated fat content is close to 50%, there is a good chance that the vegetable oil will in fact be palm oil. Among those items that should be immediately suspect are biscuits, processed foods, chocolates and snacks.
Other key tip-offs that a food item might contain palm oil listed among ingredients are cocoa butter equivalent (CBE), cocoa butter substitute (CBS), palm olein and palm stearine.
When looking at ingredients in non-food products such as soaps and detergents, those that contain palm oil include: elaeis guineensis, sodium lauryl sulphate, cetyl alcohol, stearic acid, isopropyl and other palmitates, steareth-2, steareth-20 and fatty alcohol sulphates.
Next time you reach for a snack, paint a wall or fill up your car, do your best to make sure palm oil isn’t an ingredient or at least that the brand claims to use oil from sustainable sources.
There are many issues around what makes palm oil sustainable as well as the industry body, the Round Table on Sustainable Palm Oil (RSPO) itself, but this is at least a step in the right direction.
Many brands that say they are producing sustainable product are in reality greenwashing their textile production in China, according to the latest report from five environmental NGOs in China.
“Sustainable Apparel’s Critical Blind Spot,” which can be found here, was a follow on from a report I wrote about here released in April that named 49 global fashion brands using polluting factories in China and suggested consumers make a “green choice” when buying clothes.
Led by Ma Jun’s Institute for Environmental and Public Affairs, “Cleaning up the Fashion Industry” listed 6,000 water pollution violations by manufacturers of goods ranging from sports apparel to luxury handbags.
Subsequently, 30 brands began conversations with IPE about how to improve the environmental performance of their supply chain, according to Ma Jun.
Clothing brands and retailers such as H&M, Nike, Esquel, Levi’s Adidas, Walmart, Burberry and Gap have all established regular screening mechanisms, are actively identifying pollution violations in their supply chain and have pushed more than 200 textile and leather suppliers to clean up.
Adidas, Nike, Levi’s and H&M have begun to address environmental challenges with their dyeing and finishing suppliers, the report said.
The latest investigation looked deeper into supply chains following a letter sent September 25th by the NGOs to the 49 brands requesting information about pollution management issues at materials suppliers.
Besides IPE, authors of the report were, Friends of Nature, Green Beagle, Envirofriends and Nanjing Greenstone
In all, 22 of the brands receiving the letter, including Marks & Spencer, Disney, J.C. Penney, Polo Ralph Lauren and Tommy Hilfiger gave limited or no responses to specific questions relative to emissions violation problems in their supply chain. This despite Marks & Spencer, for example, promoting its “Plan A”, which is a sustainable business benchmark for global textile companies and retailers.
Companies promoting sustainability should “not continue to let suppliers pollute the environment and hurt communities whilst using concepts such as ‘zero waste’ and ‘carbon neutral’ to greenwash their performance,” the environmental NGOs wrote in the report.
The report draws attention to the fact that textile exports from China have dropped recently, weighed by higher labor costs in China, trade barriers, the appreciation of the RMB and higher resource costs.
Big brands have moved some of their cut and sew production to South and Southeast Asia. Nike shut down its only shoe factory in China and recently, Adidas also closed its only factory in China, leading people to believe China is steadily losing its status as the textile factory to the world.
But materials production is still concentrated in China, with exports of these products rising steadily, according to the report. This is the most polluting portion of the apparel supply chain.
In the raw materials processing sector, which includes dyeing and finishing, exports are growing steadily. According to the 2011/2012 China Textile Industry Report, for the six main printing and dyeing product categories, the total amount of exported printed and dyed cloth was 14.412 billion meters which showed a year on year growth of 13.76%.
The value of exported printed and dyed products was US$16.979 billion, which showed a year on year growth of 31.26%. However, at the same time the total value of all exported textile products only increased by 0.49%.
The cut and sew industry provides the most jobs, uses less water and energy and pollution discharge is not a big problem. However, the reverse is true for textile production. Essentially, China has kept the dirty part of the business, while allowing the relatively clean, job-creating cut and sew industry to wane.
The problem is that enforcement of pollution remains weak in China, while the cost of inputs like water and energy are still relatively low. So dyeing and finishing companies often avoid any water or energy savings initiatives and disregard pollution control, ignoring environmental laws and regulations.
Sustainable apparel in particular, has a ”dangerous blind spot,” according to the report, which means that dyeing and finishing mills and factories lower their environmental standards to cut costs and win orders in a race to the bottom.
Essentially the problem is that most apparel and retail brands still choose not to look into the polluting part of their business – the bottom of the supply chain. Consequently, materials manufacturers are still trying to produce in the cheapest way possible in order to keep costs low for fast fashion.
We as consumers must recognize that we have a choice not to buy the cheapest item on the shelves, to acquire less and from companies that truly care about not doing harm to our planet.
I am constantly surprised that Hong Kong does not pay more attention to its water supply, that something so vital to our city is far from secured by our government.
How many of us know that 75 percent of our water comes from the Dongjiang River, while only 25 percent of the city’s drinking water is supplied by reservoirs from within the territory? That while Singapore has similar water concerns, the island nation is investing in technology to conserve, recycle and desalinate water to ensure adequate supply, yet our government simply is not.
This is wrong for many reasons but here are two of the most obvious:
1) China is experiencing a significant water crisis and is acting aggressively to ensure its own supply. As Civic Exchange’s Su Liu recently pointed out while speaking on a panel, “We in Hong Kong don’t see the big picture – 40 million compared to our 7 million also rely on the Dongjiang. If water tensions rise on the mainland – where is the priority? ” You can more read about the excellent discussion on China’s water stresses moderated by http://www.ChinaWaterRisk.org’s Debra Tan, here.
2) The Lower Dongjiang River Basin is becoming intensely industrialized and urbanized meaning industrial pollution regionally is a real concern. At the same time, agriculture further inland has intensified and pollutants from farms, such as pesticides and fertilizers are just as dangerous in drinking water as industrial materials. So How safe is our water in reality? Clearly local testing shows that currently the water we drink meets health standards but can we be sure that will always be the case?
To my first point, China registers a 50-billion-cubic meter water shortage annually, with two-thirds of cities having trouble accessing water, according to a China Daily article last week quoting Chen Lei, the country’s minister of water resources. In all, China’s water consumption apparently has exceeded 600 billion cubic meters, accounting for 74 percent of the country’s exploitable water resources.
In January, the central government issued a document asking the entire country to limit the scale of water exploitation, improve the efficiency of water usage and curb water pollution. According to the article, China aims to reduce water consumption per 10,000 yuan ($1,597) industrial value-added output to less than 40 cubic meters by 2030, raise the effective water use coefficient of farmland irrigation water to above 0.6 and improve water quality.
Chen also has said the nation will set water consumption quotas for local governments and continue to perfect the water price formation mechanism in order to promote water resource conservation and protection.
So it sounds as though Su Liu has the right idea – the Chinese government priority won’t be to keep prices low and supply constant for the 7 million Hong Kongers drawing ever higher upstream on the Dongjiang.
And we are vulnerable. Our water agreement with Guangdong was renewed in late 2011 but only for another three years, until 2014 and for a maximum supply of 820 million cubed meters from the Dongjiang, a major tributary to the Pearl River, 83 kilometers north of Hong Kong. Our current accord commits to this supply regardless of drought. But the river also supplies fresh water to seven other cities, including Guangzhou, Dongguan and Shenzhen. All of those cities, however, have seen allowances decreased during drought years so will Hong Kong continue to receive privileged treatment?
At the same time, we would be ill-equipped for any water rationing. As China Water risk has pointed out here, Hong Kong uses more water per capita than Paris, London, Singapore or Melbourne and over 50 percent of our water is for domestic use. This compares to just 15 percent of water usage in China being for municipal use.
Part of the problem is that our tariffs are among the lowest in the world. As CWR points out, the first 12 cubic meters of water used every four months is free for all domestic users. Countries with comparable GDP per capita such as Netherlands, Switzerland and the U.S. all have higher water tariffs.
But tariffs are also low in China and the expectation is that with a push on the mainland toward water conservation, pricing will likely at some point rise to a water tariff level of 2-3 percent of average household income. That should also translate to higher prices in Hong Kong.
Turning to pollution, I have written several blogs on the lack of enforcement of water quality standards in China. The intense industrial development throughout China, but particularly in the south, has helped fuel annual GDP growth in the double digits but it has also rendered many rivers, lakes and reservoirs, indeed much of the country’s groundwater, essentially useless for agriculture or consumption.
Of the country’s 26 key lakes and reservoirs monitored, only 23 percent fall within grade 1-111, while 19 percent of China’s seven major river basins monitored are considered essentially useless. Finally, almost 74 percent of groundwater is considered grade IV-V standard, or excessively polluted. More information on China’s water pollution can be found here.
We should remember that a river collects the water in its basin and that means that all the pollutants within the Dongjiang Basin could potentially end up in Hong Kong’s water supply – not a pleasant thought. Will we have to wait for a major accident on the Dongjiang or its feeders before the Hong Kong government wakes up to our vulnerability?
For now, Hong Kong water quality data, although only through September last year, can be found here, on the Water Supplies Department website.
Hong Kong consumers have the ability to sustain a significant tariff hike. That would help us move toward greater water conservation and at the same time provide the resources for the city to invest in making options such as desalination and water recycling economically viable. What are we waiting for?
Five Chinese environmental groups have named 48 global fashion brands using polluting factories in China and suggested consumers make a “green choice” when buying clothes.
A report led by Ma Jun and his Institute for Environmental and Public Affairs and released this week lists 6,000 water pollution violations by manufacturers of goods that ranged from sports apparel to luxury handbags.
Brands were linked to the factories over seven months of painstaking review of official websites, financial reports, recruitment ads and procurement bids, among other documents, according to IPE.
Over the past eight years the Institute has gathered a database of over 90,000 air and water violations from official government sources. IPE now works with many brands to make sure they are not using polluting suppliers and to help clean up those that are illegally dumping untreated toxic waste water into rivers.
Between march 22 and March 29 the five environmental groups wrote to the CEOs of each of the 48 brands linked to factories with repeated environmental violations. They asked the brands to ensure their Chinese suppliers would not pollute the environment while manufacturing their products.
While some of the brands named immediately responded to queries from the environmental groups, acknowledged the issues and detailed how they would address the issues, about two-thirds have not yet engaged, Ma Jun said.
Notably, Spanish clothing retailer, Zara, responded by saying that it was not the company’s policy to answer questions about its business model.
Nike, Walmart, Esquel, H&M, Levi’s, Adidas and Burberry were among the companies that responded positively, saying they would work with their Chinese contractors to improve their environmental performance. Many of these brands were already working with NGOs to clean their supply chain, IPE said.
Another 32 brands including Marks & Spencer, Esprit, Calvin Klein, Carrefour, Armani and China-based Anta and Youngor have yet to respond, according to the report.
Besides IPE, the other authors of the report, “Cleaning up the Fashion Industry,” were, Friends of Nature, Green Beagle, Envirofriends and Nanjing Greenstone.
China is a global leader in textile manufacturing, responsible for nearly half the world’s fiber and exporting 34 percent of the garments we wear.
This production has contributed significantly to the country’s GDP but has also taken a heavy environmental toll locally. Ma said that fashion manufacturers discharge 2.5 billion tons of waste water and chemicals into rivers and the ocean, while 80 percent of effluent is generated in fiber dying.
This has a serious impact on the country’s water supplies and is compounded by the fact that the re-use of water in the textile industry lags way behind that of many others, creating a situation where water efficiency is incredibly low, IPE said.
Among the 6,000 violations, a number of factories were given administrative penalties. Many were told to rectify problems such as illegal effluent emissions via secret discharge pipes, directly discharging waste water into waterways, improper use of waste water treatment facilities and pollutant discharges in breach of standards.
Previously, IPE targeted the IT sector, also with information gleaned from the institute’s violations database. We have written about Ma Jun’s efforts here and here.
After five reports looking at the environmental performance of IT sector contractors, most of the brands named had responded to requests for information disclosure and action.
Among the last hold-outs was Apple, which was the focus of the last two reports. The company has since agreed to disclose its connections to suppliers and provide information on contractor environmental performance.
Clearly, Ma Jun and his colleagues hope for a similar response from another industry that is widely credited with some of the worst environmental performance in China.
With IPE and others watching, retailers and brands will no longer be able to hide behind stated ignorance about how a product is manufactured. They will no longer be able to refuse to divulge lists of suppliers or deny responsibility for egregious environmental emissions locally.
Part of the problem for the apparel sector has been the quantity of suppliers used to manufacture just one item of clothing or shoe. This is a problem we have written about here.
While many brands are getting better at understanding and working with the factories actually putting together the clothes, they tend to know less about the dyers, the spinners and the knitters who cause much of the environmental damage.
yet engaging with polluting contractors in any part of the supply chain has become a serious reputational risk and thus business risk for global brands hoping to squeeze their suppliers on cost.
It is also a wake up call for consumers hooked on cheap product made at huge environmental expense abroad. It’s about time we all made careful choices about how we consume, make sure that brands are using responsible suppliers.
For companies, the argument turns back to fiduciary duty and redefining what that means, something I have written about here.
Articles in the New York Times and elsewhere last week have criticized Apple for using Chinese suppliers whose workers are ill-paid, overworked and subject to hazardous conditions.
In a full-page spread, The New York Times compared Apple’s financial strength and reputation for innovation with a less-flattering portrait of how its products are made: “ …the workers assembling iPhones, iPads and other devices often labor in harsh conditions… Problems are as varied as onerous work environments and serious — sometimes deadly — safety problems.”
An “outraged” Apple CEO, Tim Cook, responded swiftly in a strongly worded email to Apple employees cited widely, “we care about every worker in our worldwide supply chain” and “any suggestion that we don’t care is patently false and offensive to us.”
The truth is, nothing like the manufacturing capability found in southern China now exists in the U.S. and nowhere in the U.S. could workers be relied on to dedicate the long hours under similarly challenging conditions. Recent attention has focused on Apple supplier, Foxconn, where the iPhone is assembled. The facility has close to a million employees, many working six days a week, often spending up to 12 hours a day at the plant. Many workers earn less than $17 a day. That clearly helps improve Apple’s margins.
U.S. news show host, John Stewart, last week described Foxconn as “Fear Factory” and detailed conditions at the factory, its treatment of employees, large dormitories of employees, repression of employees who try to unionize and nets around the buildings to prevent suicides. According to Stewart, the cost savings on an IPod is 23 percent to the consumer.
Understandably there is anger brewing in the U.S. toward companies such as Apple that employ tens of thousands of workers outside the United States to take advantage of lax labour laws abroad. There is a growing voice in the United States for a boycott of the ubiquitous Apple products.
In a separate article, the New York Times pointed out that Apple employs 43,000 people in the United States and 20,000 overseas and many more people work for Apple’s contractors: an additional 700,000 people engineer, build and assemble iPads, iPhones and Apple’s other products.
When asked by President Obama last year about overseas workers and whether or not Apple products might be produced at home, Steve Jobs was quoted as replying that those jobs were not coming back to the United States.
According to the same article, the hugely profitable Apple last year, it earned over US$400,000 in profit per employee, more than Goldman Sachs, Exxon Mobil or Google.
The stories on bad labor practices by Apple suppliers, however, follow five reports from a coalition of now 41 environmental groups in China documenting the performance and willingness of IT brands producing in China to address serious environmental violations by their suppliers.
Many of the environmental violations have led to occupational safety issues and hazardous chemical exposure for workers.
In the first of the reports, the environmental groups contacted the CEOs of 29 top IT brands, asking specific questions about suppliers’ environmental performance and provided evidence of pollution violations. As they look to production abroad to skirt labour restrictions at home, companies look to avoid environmental regulation that should protect air, water and soil from excessive emissions.
The Chinese NGOs’ engagement process has from the start actually yielded fruit, with a number of brands such as HP and Samsung responding to requests for information and addressing issues in their supply chains. But a few, including Apple Inc., ironically were initially extremely slow in communicating, and less than willing to address the supply chain issues being raised
Hence, two of the reports, in January and August last year, focused specifically on Apple, which had failed to disclose adequate information relating to its suppliers or their environmental violations to the environmental groups, led by Ma Jun’s Institute of Public and Environmental Affairs (IPE).
Most of the recent negative stories about Apple and the building campaign against the company fail to even mention Apple’s environmental lapses – including the New York Times full-page story, except in passing.
The Chinese environmental NGOs campaign to improve disclosure and environmental performance by brands and their suppliers is something we have written about here and here – long before the Apple news became mainstream.
In a significant success for the NGO coalition, earlier last month, for the first time Apple’s annual supplier responsibility report released a list identifying many of its suppliers and acknowledging some of their environmental and labour violations first publicized by IPE.
Indeed, a look at the reports showed that more than half of the suppliers audited by Apple have violated at least one aspect of the code of conduct every year since 2007, and in some instances have violated the law, according to the New York Times Story.
IPE’s website list of non-compliant factories in China reached 94,725, while the Water Pollution maps now used by many brands to filter their supply chains and make sure they are not using polluting suppliers, registered 6,220,696 page views.
IPE is now working directly with 30 such brands to screen suppliers and 550 companies have responded to being placed on the polluters list by seeking dialogue with IPE.
Since releasing its list of suppliers and acknowledging environmental breaches, Apple has also agreed to continue conversations with IPE later this month and potentially to encourage two suppliers to engage in a pilot third-party audit monitored by the Chinese NGOs.
In all, 3,122 companies have undergone a third-party audit or a document review audit process and this has led to 94 companies being removed from the polluters list.
Reprinted from the South China Morning News, January 16, opinion written by Sophie Le Clue, ADMCF’s director of environmental programs:
In one sense, 2011 was a good year for sharks. The movement in Asia against consuming shark fin gained momentum against a
backdrop of new legislation to ban the trade in California as well as several Canadian cities. In a domino effect, shark sanctuaries were declared worldwide, covering thousands of square kilometers.
In China, the business community also rallied against shark fin. To date, 142 business leaders including chairmen and chief
executives of leading companies such as Lenovo, Haier and China Merchants Bank pledged not to eat it, while hotels and clubs have committed to not serving the infamous soup.
On the government side, in 2011 45 members of the Chinese People’s Political Consultative Conference signed the “Motion on
Development of Regulations on Prohibiting Shark Fin Trade”. Some members of the National People’s Congress also signed the
motion, which will be considered by the government later this year.
Meanwhile, the Hong Kong and Shanghai Hotels Group’s surprising and insightful move to ban the product across all outlets, including its famed Peninsula hotels, was perhaps a fitting end to the year.
Despite these moves, there is a long way to go. There are enormous challenges to implementing regulatory controls and many shark populations globally remain endangered, some threatened with extinction in the near future.
As a result, eyes are now firmly on Hong Kong, the centre of the global shark fin trade and itself a driving force in declining shark
populations.Yet it seems resolute in enabling such ecologically important endangered species to be traded with little regulatory control.
Approximately 10,000 tonnes of shark fin from millions of sharks are imported into Hong Kong every year with virtually no regulation as to species. According to some estimates, this equates to around half of the global trade.
To provide context: of the 507 shark species, only 256 have been assessed by the World Conservation Union (IUCN) to determine their conservation status and of these, 56 per cent, or 143 species, have been identified as threatened with extinction, either now or in the near future. Many of these species are freely traded in Hong Kong.
Last year, questions by legislators on the topic of shark fin met with the standard response: that the government adheres strictly to Cites (the Convention on International Trade in Endangered Species of Wild Fauna and Flora) requirements.
Quite why this prevents the government from regulating trade in endangered species not under Cites remains to be seen.
The paradox, however, is startling. Cites was drafted as a result of a resolution adopted in 1963 at an IUCN meeting and came into force as an international agreement in 1975.
By placing trade restrictions on species at risk, it aims to ensure that the international trade in wild animals and plants does not
threaten their survival. Yet it only includes three species of shark, despite valiant efforts to introduce several others in 2010,
when countries with vested interests in the trade, such as Japan, reportedly bargained with fellow signatories to ensure that highly lucrative shark species – albeit critically endangered – were not included in the convention’s regulatory appendices.
Science and sustainability, the cornerstone of conservation, clearly gave way to commercial interests. For sharks at least, Cites is failing. So when an administration such as Hong Kong hides behind its Cites’ commitment in response to questions about the shark trade, despite the convention’s obvious failings, we know we are in troubled waters.
We can only hope that the next chief executive will have more foresight. Hong Kong remains a gateway to the shark fin trade in
Asia; with a little vision it could make eating shark fin history and have a major impact on an issue of global significance.
Yesterday the Shangri-La took the courageous step of declaring that effective immediately, the group’s 72 hotels and resorts would no longer serve shark fin in any restaurants or at wedding banquets.
The announcement falls under the company’s new sustainable seafood policy, which also includes a decision to phase-out Bluefin tuna and Chilean sea bass in all hotel restaurants within the year.
In a press release, the hotel said that in December 2010 the company initiated the process of becoming shark fin free with the removal of shark fin products from its restaurant menus. “The new policy is a continuation of Shangri-La’s journey towards environmental support,” the release said
This follows the Peninsula Hotel’s decision in November last year to stop serving the soup in its restaurants and at wedding banquets as of January 1st this year.
The hotels should be applauded for their actions, which were not easy in a city that sees 50 percent of the global shark fin trade and where consumption of the soup at special events has been second-nature. Here, shark fin soup is seen as a symbol of wealth and prestige and consumed most often at weddings and corporate banquets.
Yet as the consumption of the soup has increased in recent years with greater affluence in Asia, shark populations have dwindled. In some species. populations have declined by as much as 90 percent. As many as 73 million sharks are caught annually, with millions of these believed caught for their fins alone.
Shark flesh is not a high-value meat, while dried fins can be sold for as much as $300 a pound. A bowl of the soup in Hong Kong can fetch as much as $100. Thus is some cases, shark are finned at sea with the bodies thrown back to drown in a practice that is both wasteful and cruel.
Bloom, the HK Shark Foundation, WWF and other conservation groups have been working hard in Hong Kong over the past few years to educate consumers and the trade about the ramifications of declining shark populations for our oceans.
The work has included research to understand both the cultural attitudes toward consumption of shark fin soup and the trade in shark products; educating the hotels on biodiversity issues related to sharks and learning about the challenges of ceasing sales of shark products; encouraging consumers to consider shark fin free weddings; encouraging companies to sign a pledge not to serve shark fin soup at banquets.
Despite a swell action from local and national governments worldwide to ban consumption of shark fin products, the Hong Kong government (consistent with its course of rarely acting in public or conservation interest) has refused to consider any such action – even a ban on serving at official banquets.
In reality, the assumption is that because of the cost, little shark fin soup is actually served at official banquets in Hong Kong and indeed government officials have alluded to this.
Certainly, however, with the growing awareness around threats faced by our oceans, the sense of inevitability of action as shark populations decline, the government must now be feeling the heat.
Last week the HK Marine Products Association was certainly feeling the heat. The trade group placed half-page ads in leading Chinese publications titled (in English translation) “Is eating Shark Fin Guilty?” and arguing that
- Shark fin is simply a by-product of the shark fishing industry
- CITES bans trade in only four species therefore fishing should be allowed in others
- Any conservation of a species should be based on scientific evidence not emotion
- States the MPA uses resources sustainably and contributes to conservation
Clearly, shark fins, for reasons stated above are not by-products of any shark fishing industry and clearly conservation of a species should be based in scientific fact, which exists and is documented: sharks are in significant decline.We would welcome any communication from the MPA related to their sustainable practices and conservation work.
The CITES issue mentioned in the ads is an interesting one and is raised frequently by the MPA, as well as both the HK and Beijing governments, which hide behind the treaty. The main point here is that CITES is not effective in protecting shark species globally and should not be used, counter-intuitively, as a a justification to fish endangered
CITES was drafted as a result of a resolution adopted in 1963 at an IUCN (The World Conservation Union) meeting and entered into force in 1975 as an international agreement. Today, it has 175 signatories.
Its aim: to ensure that the international trade in wild animals and plants does not threaten their survival. The CITES mechanism to achieve this is by placing trade restrictions on species at risk. The Convention is, therefore, undoubtedly an important wildlife conservation agreement.
Yet CITES only includes three species of shark, despite that according to IUCN 143 species are threatened with extinction, either now or in the near future.
So why should a conservation agreement exclude threatened species? The answer lies in the fact that for a species to be bought under CITES trade restrictions, the signatories must vote.
In 2010, for example, six shark species were proposed for inclusion in CITES. Countries with vested interests in the shark trade, such as Japan, bargained with fellow signatories to ensure that highly lucrative species, albeit critically endangered, were not included in the Convention’s regulatory appendices. Science and sustainability clearly gave way to commercial interests.
In Hong Kong, CITES remains the only mechanism for regulating the shark fin trade and to make matters worse its implementation is unclear.
The Agricultural, Fishery and Conservation Department (AFCD) of the Hong Kong government is responsible for monitoring the trade in endangered plant and animal species.
Currently, visual identification is a commonly used to identify imported plants or animal species. While this may be appropriate for many species, it is extremely difficult, in practice, to determine the shark species from a fin without the carcass, and even more difficult if the fin has been bleached or processed. It is understood that AFCD do not carry out any DNA analysis.
Thus, CITES clearly is not an effective mechanism to monitor the shark fin trade in Hong Kong.
Scientific research based on DNA testing shows that in 2006 approximately 40% of the auctioned fin weight in the Hong Kong market came from 14 shark species listed on the IUCN Redlist of Threatened species.
So bravo to the Shangri-La and the Peninsula hotels for taking action, the 112 companies in Hong Kong that have signed the WWF pledge not to sell or buy shark fin as part of their corporate activities.
Going shark free is a groundswell here and abroad that we certainly hope will continue in time to save the apex predators and our oceans.
I’ve been thinking recently about Fiduciary responsibility and what that has come to mean over the past two decades of rapid growth.
I’ve been thinking about how and why the interpretation that has crept into investment culture over that period – simply to maximize rates of return – has slowed an appreciation of investment that doesn’t cause social or environmental harm.
It goes without saying that this has also slowed investment that promotes social good as well as generating returns.
I’ve also been thinking that by itself this narrow interpretation ignores both business risk and opportunity – neither of which should be ignored considering the dictionary definition of fiduciary duty: to act prudently.
Writing in a Capital Institute blog, Stephen Viederman, former president of the US-based Jessie Smith Noyes Foundation, argues that foundations should align program work with investment strategy – something that is all too rare.
“Foundation fiduciaries have an obligation to seek ‘good’ and ‘competitive’ returns, not necessarily to maximize them,” he says.
Part of the problem has been the accompanying “myth of financial underperformance from ‘social investing,’ a myth that still lies at the heart of the problem for finance committees who conveniently forget that two-thirds of traditional active managers underperform their benchmarks every year,” Viederman says.
“Yet the profit-maximizing argument–that you will underperform if you do sustainable investing–comes up time and time again in conversations and is never examined by the people who are making it.”
Indeed, most investors are not considering the business risk associated with investing, for example, in a power company, a textile operation or mining business in a region that is water scarce.
Most ignore the reputational risks associated with investing in factories or plants that are polluting, overly consumptive of resources, or engaged in bad labor practices.
“All investments are about the future, but most investment decisions are made on retrospective data, which as fund offerings make clear, are not predictors of future earnings,” says Viederman.
“We need to ask about … ‘predictable surprises,’ which include climate change, the BP Gulf disaster and the financial bubble among others. …Any institutional investor who ignores them is in breach of their fiduciary duty. To be prudent, as in the prudent person, is in its original meaning, to be farseeing.”
The ADM Capital Foundation launched a web portal, China Water Risk, in October to provide investors and companies with information about water scarcity and pollution in China.
Part of the thesis behind the initiative is that better investment decisions produce better returns in the long run and these usually come with more information – and not the information investors traditionally have sought.
But, certainly, few could disagree that the regulatory environment is changing to reflect resource consumption and that water pricing in the near future will reflect scarcity.
Few could disagree that NGOs are increasingly sophisticated in exposing pollution incidents (see my blog posts on IPE’s Ma Jun and Apple, on Greenpeace’s Dirty Laundry and other reports) and that local protests in China are growing around pollution incidents.
Workers are no longer content to suffer exposure to hazardous chemicals silently, or work extraordinarily long hours without proper compensation.
All are, potentially, a drag on profits. Would it not then make sense for fiduciary duty to include analysis of such risk?
Fully Risk-Adjusted Returns (FRR), as they might be called, should certainly not be lower as a result, indeed given the current and future challenges the world faces, they could even be enhanced by additional information.
For those who missed this, one company that is looking to consider the impact of production is PUMA, which earlier this year announced the results of an unprecedented environmental profit and loss screening.
This was a big step toward assigning economic value to resources consumed and to emissions. The value assigned was also a step toward determining the true cost of production of PUMA apparel and shoes.
Results from PUMA's Environmental Profit and Loss Analysis
The analysis showed that raw material production accounted for the highest relative impact of Greenhouse Gas Emissions and water consumption within PUMA’s operations and supply chain.
According to PUMA’s report, the direct ecological impact of company operations translated to the equivalent of 7.2 million euros of the overall impact valuation. An additional 87.2 million euros was distributed along the four-tier supply chain.
Thus, the overall environmental impact of GHG and water consumption amounted to 94.4 million euros. That compares to a third-quarter net profit of 82 million euros.
“By putting a monetary value on the environmental impacts, PUMA is preparing for potential future legislation such as disclosure requirements,” the company said.
“By identifying the most significant environmental impacts, PUMA will develop solutions to address these issues, consequently minimizing both business risks and environmental effects.”
Finally, a new and important report from IESE Business school, “In Search of Gama, an Unconventional Perspective on Impact Investing,” steps into the discussion with questions such as:
- By focusing exclusively on the creation of financial wealth for individuals are financial markets destroying value for society?
- Is social responsibility a component of investment that is necessarily detrimental to financial return?
- Should changes be made in the taxation and supervision of financial transactions to account for financial markets’ responsibility to society?
Clearly, business as usual is no longer smart business and change is imminent. Considering the impact of investments and reconsidering how we make investment decisions will be the way forward.
Let’s start by redefining fiduciary responsibility, considering Fully Risked Returns. Clearly, returns may actually be enhanced either when viewed through the lens of an appropriate risk framework/weighting or in reality as a result of a superior business environment.
Concern is growing globally about water resources and the potential for conflict in regions where they are scarce. But are investors and businesses in Asia adequately factoring water into risk assessments?
A recent Neilson study showed that worry about water shortages has overtaken global warming as the top issue, with 75 percent of respondents identifying this as something they worry most about. That represents an increase of 13 percent over the previous year.
And the concern is not without basis. Worldwide, almost 1 billion people lack access to safe drinking water while 70 percent of industrial waste in developing nations is dumped untreated into waterways, further limiting what is often already stretched supply.
Yet investors and leaders of industry may not be paying attention, considering water challenges simply an environmental problem rather than a fundamental business risk.
In China, the water landscape is particularly stark. We hear much about that country’s economic growth averaging 10 percent over the past 20 years, the massive and wholesale transformation of the economy at rapid pace, but not so much about the horrendous cost to the environment that already weighs heavily on GDP .
We hear much less about the dead and dying rivers, the over-pumped aquifers, the creeping desertification in previously agricultural areas, the thinned soil from over-use of pesticides, the power plants without adequate water to function, the massive and growing health care costs from poisonings and escalating cancer rates.
We hear very little about the growing numbers of protests nationwide linked to pollution incidents.
The government is clearly concerned. The official response in China has been a tightening regulatory environment, and a move toward real pricing of the precious resource, or the investment opportunities that an inevitable clean up will bring.
The recently approved, 12th five-year plan for the first time features climate change and energy, sets lower growth targets for the country and favors investment in industries that promote pollution clean up and cleaner processes generally.
Clearly, there are thus significant ramifications across a broad range of industries in China but are investors prepared? Are they staying ahead of the water risk curve, engaging in the due diligence and mitigation efforts needed to survive the inevitable and seismic shifts around water?
China Water Risk (CWR) is ADMCF’s redesigned follow-on from Asia Water Project, the pilot initiative launched 18 months ago to inform investors and companies of both risk and opportunities around water crisis in China.
This initiative, which launches later this month at www.chinawaterrisk.org, is designed to influence capital allocation to industries in China located in water-appropriate regions, with solid mitigation strategies built around water.
A brief portrait of water in China tells the back story.
Per capita global water resources are 6,280 cubic meters on average but people in China have less than 1/3 of that amount at 1.816 cubic meters.
So, the country with 20 percent of the world’s population has access to only 7 percent of global water resources, while an estimated 300 million people in the country are without access to safe drinking water.
And this is not just a problem for rural areas in China. In 2007, research showed that 60% of China’s cities faced water scarcity and 110 cities faced serious water shortages.
Despite already limited access to water in china, horrendous levels of pollutants are allowed to spill untreated into waterways and seep into aquifers from agriculture and industry in China.
Last year, the Ministry of Environmental Protection said serious pollution violations numbered on average 10 every month.
In all, an estimated 90 percent of urban groundwater is contaminated with pollutants and the quality of 40 percent of that is getting worse, according to China’s Ministry of Environmental Protection.
Pollution of groundwater follows from the low urban sewage treatment rate, which was only 73 percent in 2009, according to a recent article in China Business Times. Hundreds of new sewage treatment plants have been built nationwide in recent years and sit idle because of the high cost of operating them.
The Beijing-based Institute for Public & Environmental Affairs in its water pollution map (an inspiration for China Water Risk and a CWR partner) lists hundreds of violations by sewage plants.
According to the Ministry of Environmental Protection, 77 percent of 26 key lakes and reservoirs, 43 percent of 7 major river basins are considered unfit for human contact. Meanwhile, 19 percent of monitored rivers and basins, 35 percent of lakes are reservoirs are believed unfit even for agricultural or industrial use.
The World Bank has warned of “catastrophic “ consequences for future generations if the government does not act to solve quickly the acute water shortage and pollution problems. The report urged new pricing, management and regulatory strategies.
In China, agriculture has been by far the largest consumer of water at 62 percent, and the largest polluter, with pesticides and fertilizers responsible for about half of contamination of waterways.
With water scarcity becoming more evident, waterways increasingly unfit for irrigation coupled with the fact that China holds only 7 percent of the world’s arable land, food security has by all accounts become of national concern.
Part of the problem around agriculture and food security in China has been that regions south of the Yangtze account for 33 percent of the country’s total farmland and 83 percent of the country’s water resources. North of the Yangtze, however, lies 67 percent of national farmland but only 17 percent of water resources
Exacerbating the problem, the country is the globally the largest consumer of pesticides and this has contributed heavily not only to aquifer and waterway pollution but to depletion of farmlands.
Meanwhile, as environmental and labor regulations tightened in the West pushing up prices at home, Foreign Direct Investment has flooded into China, fueling the factories, building the industry that is now feeding, clothing and housing the world.
Last year, FDI was estimated at $105.7 billion, surging 17.4 percent over the previous year. This is also helping build a huge middle class and affluent consumer market in China that is expected to almost triple to 400 million by 2020.
According to a September HSBC report, already next year China will replace Japan as the world’s largest consumer of luxury items – something unthinkable just a decade ago.
A joint report published in 2007 by the World Bank and the Chinese government estimated the combined health and non-health cost of outdoor air and water pollution at approximately $100 billion a year, or about 5.8% of China’s GDP.
Water pollution, meanwhile, worsens China’s severe water scarcity problems, with the overall cost of water shortages estimated at 1% of GDP.
The weight on economic growth is certainly of concern to Beijing, but equally concerning is the growing discontent in China related to pollution incidents and scarcity. In 2005, the last year for which government figures have been released, there were an estimated 50,000 protests nationwide related to pollution incidents.
This comes in response to significant growth of so-called cancer villages, or clusters of cancers invariably located near heavily polluting factories, fast-growing rates of urban cancers and outbreaks of illness or poisonings related to drinking polluted water.
Many of these protests have been centered around specific polluters and in several instances have forced factories or power plants to close. This then involves not just reputational risk but threatens serious economic losses for polluters.
There are also additional considerations around political risk. Concern is that as climate change potentially exacerbates the country’s water shortages, the government sees the need to exert further control over domestic water resources with far-reaching consequences.
Of the 261 International rivers globally, 15 originate in China, including the Mekong, Ganges, Brahmaputra and Indus rivers. These international rivers span 16 nations and China has no formal agreements or treaties regarding the use of these rivers with any of its neighbors.
What is patently clear, is that no investor or business leader can step into China without carefully considering the water challenges facing each industry and then positioning to mitigate risk. At the same time, don’t investors and business leaders want to position themselves to take advantage of potentially huge opportunity?
Today is World Ocean Day and marine conservation organization, Bloom, seized the opportunity to launch a playful new short film, “A Shark’s Fin.”
Half animation and half live-interview format, the film tries to lightheartedly illustrate the problem with eating shark fin soup and let people know just what that apparently simple act of consumption means for our oceans.
Made by Hong Kong writer director, Crystal Kwok, executive produced by Elaine Marden and featuring actor Michael Wong as well as two adorable Hong Kong primary school students, the film targets the younger audience, with the view that they will educate their parents.
Please share the film – the more views, the more education and hopefully fewer bowls of shark fin soup will be consumed.
Remember, 73 million sharks are killed each year, mostly to satisfy demand for shark fin soup and 50 percent of the global trade passes through Hong Kong. We can take a stand: Honor our oceans by refusing to eat shark fin soup before we lose the majestic predators to extinction.
Hong Kong vegetables, mostly imported from the mainland, contain high levels of lead and traces of other metals, including cadmium, according to research released last week by the Hong Kong Baptist University. This followed last month’s revelation by Chinese government scientists that 12 million tons of Chinese rice are contaminated with heavy metals.
The Baptist University tests were of 93 vegetables imported from the mainland and bought at local Hong Kong street markets or supermarkets, as well as of produce grown on Hong Kong farms, between September and December last year.
The most contaminated vegetable was apparently mainland-grown choy sum, which is also one of Hong Kong’s most consumed vegetables.
An article in the South China Morning Post on Friday showed that although the levels of lead in the study were 2.8 times higher than the global standard, they were acceptable under Hong Kong regulations. Traces of Cadmium also were found in some vegetables.
According to the SCMP, Hong Kong’s standards are shockingly 20 times less stringent than those of the World Health Organization, the European Union or Australia.
Author of the study, Professor Jonathan Wong Woon-Chung of Baptist University’s Hong Kong Organic Resource Centre told the Standard that ninety percent of vegetables in Hong Kong were imported from the mainland.
“The result demonstrates that lead pollution in mainland farm produce is serious,” he was quoted as saying.
In China, heavy metal pollution in crops comes mostly from contaminated irrigation water, pesticides or excessive application of chemical fertilizers and hormones as well as direct heavy metal contamination of the soil as a result of emissions from nearby factories.
Long-term consumption of vegetables polluted with heavy metals can contribute to cancers as well as damage the nervous system. Excess cadmium can also cause kidney stones, while excess lead can affect brain activity in children.
Wong pointed out in the SCMP article that leaf vegetables such as choy sum and spinach were more likely to absorb heavy metals. He suggested people alternate between these and fruit vegetables such as tomatoes and eggplants.
China has recognized that food security is a real issue for the country, following scandals over melamine in baby milk and many others that have caused unrest in many parts of China following discovery of contamination.
In February the SCMP reported that government scientists revealed millions of acres of Chinese agricultural land and 12 million tons of grain, or about 10 percent of the country’s rice crop, were contaminated by heavy metals. China’s southwestern provinces, where much of the country’s export manufacturing is concentrated, were particularly contaminated, according to the article.
Potential economic losses from the contaminated rice, which is enough to feed more than 40 million people, hit 20 billion yuan or HK$23.66 billion a year, the China Economic Weekly said, citing 2007 statistics from the Ministry of Land and Resources.
China is also confronting a serious and potentially costly health crisis, with clusters of “cancer villages” springing up downstream from factories and near mines.
At the annual plenary session of China’s parliament this past week, soil contamination was a topic of urgent discussion. In a news report on China.org Jia Kang, a CPPCC National Committee member and head of fiscal science at the Ministry of Finance, called for legislators to begin drafting a soil protection law.
Jia was quoted as saying that land pollution already threatens the sustainability of economic growth and social stability.
Meanwhile, the same site quoted Health Minister Chen Zhu as saying that comprehensive evaluations of health risks from soil pollution are underway. Environment Minister Zhou Shengxian in recent months has said he will work to curb soil pollution during the period of the current, or 12th, Five-Year Plan – a framework for China’s economic development over the period.
The most recent plan, introduced at the parliamentary session this past week, calls for China to step away from exclusive focus on rapid economic growth to a more balanced development model that includes more benefit sharing and recognizes the environmental challenges the country faces.
The annual parliamentary gathering generally sets the country’s political tone and government priorities.
Let’s hope that food security stays at the forefront of China’s agenda and that we see action from officials both on the mainland and in Hong Kong to protect public health.
Greenpeace photo of worker and wastewater textile discharge
That trendy shirt or pair of jeans, the underwear we buy these days mostly comes with a “Made in China” label. When choosing clothing presumably we think first about style and second about price. Can we afford the style and quality? We rarely think about the environmental or social cost of the item, the “true” cost of manufacturing a coveted dress.
We don’t know about the dye that washes into the local rivers where the item is made, the chemicals spreading downstream from manufacturing plants, contaminating water supplies and making local people sick. We want, we can afford, we buy. But should we without knowing how our clothes are made and the damage they do in the process?
Last year, according to the American Apparel and Footwear Association, Americans spent about $340 billion on clothing and shoes, accounting for 75 percent of the global market. Of that, 99 percent of shoes and 98 percent of clothing was made abroad, where environmental and social laws are less stringent and enforcement of those that do exist is significantly looser.
The trouble is, many of the clothes we wear, particularly the cheapest, are highly polluting to produce at the low cost-point. According to the World Bank, 17 to 20 percent of industrial water pollution comes from textile dyeing and treatment, and there are at least 72 toxic chemicals in our water that originate solely from textile dyeing. Of these, 30 cannot be removed.
That’s a real problem for the textile industry: In China, Polluted water causes 75 percent of diseases and over 100,000 deaths annually, the World Health organization has said. Meanwhile, cancer rates among villagers who live along polluted waterways are much higher than the national average.
Estimates are that 70 percent of lakes and rivers in China are polluted, as well as 90 percent of the groundwater. In all, an estimated 320 million Chinese do not have access to clean drinking water – more than the entire population of the United States.
It used to be that clothing was made close to home, so we knew when a textile mill or garment manufacturer was polluting the local water or air and U.S. mill towns experienced some of the same problems China now faces, with local rivers often fetid and colored by dye. With greater awareness of the hazards, then years of battling, government regulatory authorities set tougher environmental and labor standards to make sure production wasn’t exploitative or damaging to our air and water. Manufacturers were forced to comply, installing capture equipment on smokestacks and treating any wastewater before pumping it into rivers.
But that made clothing more expensive to produce and then with the opening of China in the mid-1970s and the growing availability in the 1980s of cheap labor along with manufacturing capability, most of the production process gradually shifted there. Eventually, environmental and social laws were put in place in China too but often local enforcement is limited and corruption rampant.
That has meant many factories and textile mills have been able pollute at will. When they have been fined for violations, the fines are often insignificant relative to profit. That, and the fact that an abundant migrant labor force comprised of some of the hundreds of millions who previously lived below the poverty line and were willing to work for cheap, meant clothing could be produced at prices that didn’t factor in either the real cost of labor or the environmental damage.
Those costs were left for future generations to cover in health care, clean-up and other forms of support.
The result is that we are all now hooked on the irrationally cheap. Prices on fabric and clothing imported to the U.S. have fallen 25% since 1995, partly due to the downward pricing pressure brought by discount retail chains, according to an article in the Wall Street Journal.
Still, in China, the future is now. While migrant workers, now with a better standard of living, want fair wages and benefits such as health insurance, the Chinese government recognizes that the holy grail of economic growth at the 10 percent plus levels seen over the past two decades is unsustainable if the rampant environmental degradation continues apace.
Unrest has been growing across the country, particularly around perceived labor and environmental violations, with tens of thousands of mostly small protests annually, many of them unreported.
Besides the cost of cleaning up contaminated water, land and air, pollution will cost China billions in additional health care, lost productivity and early mortality, dragging down growth, the government recognizes. The World Bank in a 2007 report estimated China’s environmental costs at around $100 billion a year, or about 5.8 percent of GDP, including the impact on mortality.
So any way you look at it, those clothes we like to buy in abundance, and have been taught in recent years to purchase and throw away without thought because prices are so cheap and styles constantly new, are a real problem for the environment, for workers who make them and ultimately for China’s economy.
In a report released in December, Greenpeace recounted time spent in two textile industry towns in Guangdong province: Xintang, the “Jeans Capital of the World,” and Gurao, a manufacturing town 80% of whose economy is devoted to bras, underwear, and other clothing articles.
Greenpeace testing found five heavy metals (cadmium, chromium, mercury, lead, and copper) in 17 out of 21 water and sediment samples taken from throughout Xintang and Gurao. In one sample, cadmium exceeded China’s national limits by 128 times.
Xintang, known as the “Jeans Capital of the World”, produces over 260 million pairs of jeans annually, equivalent to 60% of China’s total denim production, and 40% of the jeans sold in the United States each year.
Gurao, “the capital of sexy,” in 2009 produced 200 million bras, or enough for every third woman in China to have one. But this prosperity has come at the cost of the degradation of the local river, the Xiao Xi.
Villagers told Greenpeace that the dirty, fetid river is no longer fit for drinking or laundry. Fish no longer live in the river and people living nearby complain that they must endure the stench from the wastewater. When the river overflows, their yards and homes are flooded by wastewater.
Unfortunately, Gurao and Xintang are not unique, representing just 2 out of 133 textile manufacturing cluster towns where there exists unregulated or at least tolerated hazardous chemical use and release – all in the name of economic growth and jobs.
True, the rise of China over the past few decades has been startling, and the achievements not to be forgotten. In no other time in history has one government accomplished a similar feat: Pulling some 300 million people out of poverty. The questions remain, however, around the price of that transformation and how the government will choose to address this looking forward.
Indeed the 12th five-year plan, unveiled in March, includes provisions for reform that involve working to rebalance China’s Economy and improve livelihoods. The government is keen to shift the growth model from export and investment driven to domestic consumption drive, and will focus on the quality of economic growth, not just the growth rate itself, perhaps reducing GDP targets to around 7 percent. There will be additional investment in alternative energies and a push toward promoting less-polluting industries, with a shift away from more polluting producers.
As wages rise in China, however, this is a trend that is already underway, with some of the dirtiest factories moving to Bangladesh, Pakistan and Vietnam, where regulations are even lighter and costs less. Once again, rather than cleaning the supply chain and charging higher prices to reflect cleanup costs and higher wages, some brands are just looking further south.
Luckily, this is not universally the case. There are retail brands that are looking to improve their own supply chains and influence the industry more broadly.
In March a coalition of retail companies, apparel and shoe manufacturers, fashion houses, non-profits, and the U.S. Environmental Protection Agency launched a new organization that seeks to reduce the environmental and social impacts of the clothing industry worldwide.
The Sustainable Apparel Coalition (SAC), which includes Wal-Mart, Hanes, J.C. Penney, Nike, Gap Inc, H&M, Levi Strauss, Marks & Spencer, and Patagonia, among others, will help to develop improved sustainability strategies and tools to measure and evaluate sustainability performance. The group of thirty organizations began working on this informally last year.
The group announced it was developing a database of the environmental effects of every manufacturer, component and process in apparel production, with the aim of using the gathered information to give the garments a sustainability store.
Part of the problem for the apparel industry is the complexity of the supply chain. There are many bits and bobs that go into producing our clothes and each piece may be produced in a different factory and then assembled in yet another. That means accounting for the environmental impact of any one item of clothing, tracing the zippers, the buttons, the natural fabric, the dyed fabric, is quite a feat.
Still, for the new coalition, tracing the various parts that make up one jacket or pair of trousers is the goal, along with conveying that information to the consumer. The idea is that eventually there is a label that allows shoppers to see how well their coveted item of clothing is produced and learn about its impact on both the planet and people.
And as consumers we all have a responsibility to think about how much and how we consume. Are our expectations around price and how long we use an item of clothing unrealistic?
The campaign against shark-fin soup is building in Hong Kong and perhaps this is a good moment to summarize some of the actions and challenges around educating consumers about this unsustainable dish.
Recently, Legislative Council member, Hon. Audrey Eu, requested the moribund Hong Kong government to clarify its position on serving shark-fin soup at official banquets and to release information about how often the dish was included at state functions.
She also asked the government whether or not it was educating the public about the ecological damage caused by excessive consumption of high-value shark fins, which are often hacked off the still-alive marine animals. The shark body is then discarded in a practice widely condemned for its wastage and banned in U.S. and other waters.
The predictable response from Secretary for the Environment, Edward Yau at a Legco meeting on January 12 was that because of budgetary constraints not much shark-fin soup was served at official functions but that detailed information on this was impossible to gather. “We do not think it is appropriate to lay down guidelines to regulate the kind of food to be consumed in official banquets and meals,” Yau said.
Further, Yau hid behind the traditional government line, which is that HK follows CITES, which allows the trade in all 468 shark species (Yau says there are 320), except the three listed in the CITES appendices, Great White, Basking and Whale Sharks. “At present the laws of Hong Kong regulate the trade in shark species in accordance with the CITES requirements,” he said.
CITES is the Convention on International Trade in Endangered species of Wild Fauna and Flora.
The Hong Kong government showed once again that officials are more concerned with keeping an industry or trade body happy, in this case the Marine Products Association, than in any action against ecological damage or move toward encouraging sustainable fisheries.
Echoing this sentiment, in a recent letter to the SCMP, Robert Jenkins, identified as president of Species Management Specialists and apparently also a consultant to the Hong Kong Marine Products Association, wrote “There are no valid reasons for Hong Kong’s Department of Agriculture, Fisheries and Conservation to condemn traditional Chinese cuisine simply to satisfy the views of persons and organisations ideologically opposed to human use of marine species for food.”
As justification for this he points again to CITES, which has 180 sovereign states as members and “for 25 years has been the premier international legal instrument identifying wild animals and plant species endangered by trade.” Even for the three listed shark species, Jenkins points out, CITES requires trade to be regulated, not stopped.
The reality is, however, that CITES is primarily a trade rather than a conservation body and as such is inherently political, motivated by issues beyond protection of species. CITES last year at its Doha meeting failed to include a severely threatened shark species, the Scalloped Hammerhead, among its appendices because member states with specific interests were unable to reach agreement. Even critically endangered Blue Fin Tuna is not listed by CITES.
Yet the International Union for the Conservation of Nature Red List of Threatened Species, has classified 143 shark species as either critically endangered, endangered, vulnerable, or near threatened with the risk of extinction. That amounts to 30 percent of all shark species and many of the shark fins that we find in Hong Kong markets actually belong to these.
Still, action against the consumption of shark-fin soup is growing in Asia. Illustrating the reputational risk to companies ignoring the issue, shark conservation organizations were again successful in pressuring a Hong Kong bank to withdraw a shark fin soup promotion. Last summer, following similar pressure, Citibank Hong Kong withdrew a shark-fin soup promotion and asked its employees to avoid the delicacy during work events.
Working together, several marine conservation groups recently launched a campaign against Dah Sing Bank for announcing it would offer a shark-fin soup banquet for 12 to new borrowers.
After a few days of intense adverse publicity, the bank withdrew the offer. Hopefully, other financial institutions locally will also recognize the reputational risk around promoting or even serving shark fin soup at banquets.
Just to recap the importance, shark populations worldwide are facing massive decline. Scientists estimate that the fins of tens millions of sharks are traded globally. This is devastating to sharks, which are slow-growing, long-lived, late to reach sexual maturity and produce few young.
In other words, the human appetite for shark fin and other shark products simply cannot be sustained. The consumption of shark-fin soup is a major factor in declining shark populations, with potentially disastrous impacts on the entire marine ecosystem.
Although shark fins are widely regarded as tasteless, shark fin soup is considered a delicacy mainly because of the high price of the fins. People eat or serve it mostly as a measure of status and a bowl can cost as much as US$400 a bowl.
Shark fins fetch a high price , while shark meat does not. Fins sold in Hong Kong range from about 90 euros to 300 euros per kilogram while shark meat in European markets fetch 1 euro to 7 euros per kilo, according to a Jan 22 letter to the editor in the South China Morning Post written by Claire Garner, director of the Hong Kong Shark Foundation (www.hksharkfoundation.org).
That means the wasteful practice of shark finning – the cutting off a live shark’s fins and then throwing the body back to the sea – is highly lucrative.
WWF and other conservation organizations in Hong Kong such as Bloom Association, the Hong Kong Shark Foundation, Green Sense, Greenpeace, Shark Savers and others are working in their own way to draw attention to the need to protect sharks.
WWF has managed to persuade many corporations in Hong Kong such as HSBC, the Hong Kong and China Gas Company, Hang Seng Bank, Swire Properties, University of Hong Kong, Canon Hong Kong to adopt a no-shark-fin dining policy ( http://bit.ly/dtkHA1 ). Hong Kong Observatory, and 180 primary and secondary schools also have made a similar pledge.
So what can the average person do to promote awareness around the damage shark finning causes our marine ecology? Beyond not consuming shark fin soup yourself, please do ask your companies and trading partners about their own policies.
It is urgent we act against waste and move consumption toward sustainable fisheries before it’s too late!
Greenpeace last week released the results of its third-annual green electronics survey – a look at how leading electronics manufacturers companies are doing. All but Apple and Phillips of the 21 companies contacted agreed to be ranked on three criteria; removing toxic substances, responsible take-back of their end-of-life products and energy efficiency.
The survey was motivated by the fact that throughout a product’s lifecycle – from material extraction to production, and from consumer use to disposal – electronic products have the potential to impact human health and the environment through the release of dangerous substances and energy consumption.
China is the world center for processing IT products and that country’s environment is paying the price. Printed Circuit Board and battery power production especially create heavy metal pollution.
Part of the problem is consumer demand for cheap products that don’t reflect the true cost of production – they don’t reflect the toll on the environment, on public and worker health.
Furthermore, IT companies continue to produce goods that have obsolescence built in, which means we consume endlessly looking for the newest or better product, boosting company revenues but at huge environmental and social cost, that, again, is not reflected in the price we pay.
The Greenpeace survey found a general improvement in green features compared to the previous two surveys in 2008 and 2007, including a significant decrease in use of hazardous chemicals and almost all products met or exceeded energy efficiency standards.
But lifecycle management was still the weakest point, with very little use of recycled plastic, varying take-back practices and few marketing efforts to prevent fast obsolescence of products.
Generally, also, Greenpeace found that electronics companies were becoming more transparent in the amount and type of product information provided to customers, often listing product’s chemical make-up and performance details.
Apple and Philips, however, once again refused to disclose any information to Greenpeace. Of course this reluctance to provide information is disappointing and not limited to probing by Greenpeace.
Beijing-based IPE, led by environmental activist Ma Jun, has also over the past year focused on the IT sector for its significant contribution to environmental degradation in China.
IPE has also contacted electronics companies about environmental violations and Apple is among those refusing to address questions about noxious emissions by factories producing its products.
Writing in a Guardian blog earlier last year, Ma Jun said 34 Chinese environmental organizations, including Friends of Nature, the Institute of Public and Environmental Affairs, and Green Beagle, questioned heavy metal pollution produced by companies in Apple’s supply chain in a letter sent to CEO Steve Jobs. Last week Ma Jun said that the only response from Apple has been a demand for proof that the polluting factories are producing electronics for Apple.
“The links between these companies and Apple are clearly established,” Ma Jun said last week. “We are working now to provide the company with hard evidence. Their unwillingness to release information about their production processes reminds me of Nike in the 1990s,”
By contrast, in an interview with Asia Water Project last year Ma Jun praised Hewlett Packard and Samsung for duck disclosure and movement toward greener products. Indeed, HP and Samsung were among the companies singled out in the Greenpeace survey for the producing some of the greenest products.
Why single out Apple, as IPE has done? Does a company with a solid reputation for being on top of its game, for producing innovative, quality and well-designed products, have a responsibility to manufacture without excessive environmental and social cost? Shouldn’t Apple be a leader also in its production processes and not a laggard? Should we as consumers not demand more from the companies that sell us our products?
Fortunately, consumers ARE beginning to taking note. Companies that fail to adapt are poised to suffer huge reputational and revenue losses as a consequence. A game-changing opportunity awaits those companies that choose to meet this challenge.
emilybotsford
sleclue
Rethinking Philanthropy (Lisa Genasci) 