China Development Brief no. 48 (Winter 2010)
The Institute of Public and Environmental Affairs (IPE) is one of China’s best-known independent environmental NGOs. Founded by Ma Jun in 2006, IPE maintains a water and air pollution database, and is one of the organizers of the Green Choice Alliance, a coalition of 35 Chinese environmental NGOs
IPE and the Alliance have pursued an advocacy strategy of uncovering problems in corporate supply chain management to encourage companies, and indirectly encourage local governments, to improve their environmental record. The following article draws from a case study of the Alliance’s efforts to deal with environmental problems stemming from Shanghai Richina, a major supplier to the U.S. shoe company, Timberland. It reveals how the Alliance’s actions, and its focus on international companies and the IT industry in general, are part a larger strategy of exploiting situations to achieve the maximum impact.
Of the many “lucky” companies listed in the Institute of Public and Environmental Affairs’ (IPE,公众环境研究中心) air pollution database, the Shanghai Richina Corporation, Ltd. has had an especially poor environmental record. From 2004 to 2009, Richina received repeated complaints from local residents about the fumes from its wastewater treatment facilities and, for six years running, was under continual investigation by the local environmental protection bureau. The foul odor, which came to be known as the “Richina Aroma”, became a nightmare for residents. Ongoing investigations by the local environmental protection bureau and protests from the community, however, failed to bring about fundamental change. Relations between Richina and the community were strained and hostile.
Long-term efforts by the Green Choice Alliance (绿色选择联盟), a coalition of 34 environmental NGOs, to publicize the problem, and to pressure and engage the company have forced Richina to respond. On September 23, 2009, Richina hosted its very first open house day under the initiative of the newly appointed American CEO and in cooperation with the community. Neighborhood representatives were invited to tour the factory, take part in a dialogue, and discuss possible remedies. Richina’s CEO also gave his personal cell phone number to residents so they could call with complaints and feedback at any time. In the future, Richina plans to hold periodic open houses to facilitate communication.
Given the long history of animosity between Richina and the community, trust is still lacking. Even when community representatives detected the “Richina Aroma” in the air in the evening, they were still afraid to enter the factory to confirm their suspicions. It was not until April 2010 that Richina finally accepted a third party audit to independently verify environmental compliance. On April 19-20, a special team of environmental inspectors did a two-day audit of the treatment process for exhaust fumes.
In its capacity as a third party, the Green Choice Alliance selected a standard set of criteria to evaluate Richina. These included their response to past violations, the presence of a sophisticated environmental management system and pollution treatment capacity. The members of the audit team came from the environmental technology consulting firm AECOM. Even more remarkable, community representatives, the Shanghai branch of Friends of Nature (自然之友) and IPE, were also invited to participate in and supervise the entire audit process.
“The purpose of our work is to safeguard the community’s environmental rights,” said Ma Jun, IPE’s director. “When NGO staff and community representatives visited the factory, they did not just take a look around; they were there to supervise the audit process and had a the rare opportunity to identify the source of their problems.” Ma also added that, in contrast to past meetings that have been undermined by mutual distrust, a third-party audit shed light on Richina’s business practices and showed that communication between polluting enterprises and the community was possible.
Residents learned a valuable lesson from an incident that happened on the 20th. Some residents had complained that the water in the neighboring river had turned black from Richina’s wastewater. In response to these claims, residents conducted a follow-up survey and discovered that much of the polluted water came from a pipe that discharged directly into the river. The inspection team immediately demanded an explanation from Richina and at the same time, reported the incident to the Baoshan District environmental protection bureau. An hour later, the bureau’s environmental monitoring team arrived on the scene and, after confirming that the pipe was a municipal waste pipe, contacted the city water bureau about repairs. On July 15, the inspection team conducted a further on-site investigation and, through excavation and tracing techniques, confirmed that Richina’s main drainage pipe was not connected to the municipal pipeline and that Richina was not responsible for the incident.
On October 21, Friends of Nature and IPE jointly issued an audit report detailing: Richina’s pollution violations and penalties; documentation of the third party audit process and findings; areas for improvement identified by the audit; reports on the situation after the requested improvements were made; photos of the scene; government appraisals; feedback provided by Richina; and internal monitoring reports on the fumes.
The third-party audit process spurred Richina to action. “Although the problem was not entirely fixed, as there are still fumes, feedback from residents has been more positive and their attitude has been calmer,” Wang Jingjing, IPE’s deputy director said.
Trust however cannot be rebuilt overnight. Before Richina agreed to third-party inspections, NGOs and the community had been trying to hold the company accountable for quite some time. Local residents and the Shanghai branch of Friends of Nature had filed complaints with the environmental protection bureau, notified the media, and even attempted to bring a lawsuit that was later rejected by the court. In July and August of 2010, the Green Choice Alliance even sent a letter to Richina’s customer, the American shoe company Timberland, but received no response.
An article published by the international media, marked a turning point. On August 17, the South China Morning Post reported on Richina’s environmental record, and, on the 18th, Richina sent a letter to IPE, opening the lines of communication. The South China Morning Post article created a domino effect which put pressure on Timberland. As an important customer of Richina, Timberland was worried about its reputation and the possibility that negative coverage of Richina in the English-language press would affect consumer preferences. The concerns raised by Timberland pushed Richina to open a dialogue with Green Choice Alliance.
“The Richina case highlights the progress that has been made in incorporating meaningful community involvement. In no small part, the Shanghai branch of Friends of Nature is responsible for this accomplishment,” said Ma Jun. “As an independent third party, we (NGOs) cooperate with the community and heip defend their environmental rights. The central actor should be the community, and when we are pushing for a result, we need to be respectful of the community’s desires and their realities.”
“The Shanghai branch of Friends of Nature had several environmental lawyers working on this case. Their work was at times as good as services rendered by a professional consulting company,” said Ma Jun. Local partners demonstrated their initiative in other ways as well. When Richina failed to disclose that the Shanghai environmental protection bureau had categorized the company as a “black enterprise” in 2009, a fact revealed on the EPB website on June 10, 2010, the Shanghai branch of Friends of Nature successfully petitioned the Shanghai government to release more information.
In the end, while the audit report approvingly cited Richina’s communication with the public, it also pointed to the company’s efforts to conceal its pollution. In addition, Richang was unable to furnish a satisfactory explanation for why it was deemed a “black enterprise” in 2010 by the city environmental protection bureau. In response, the members of the Green Choice Alliance decided to temporarily keep Richina on the air pollution map.
In the Richina case, Green Choice Alliance members and the community played a critical role. Moreover, the media’s role as a catalyst highlights the need for local NGOs to utilize international methods to expand their reach in this era of global supply chain management. Ma Jun said that the media were central in amplifying the efforts of the Green Choice Alliance. Given the limitations and risks of social activism, it is impossible to influence companies without media coverage. When IPE collects data, it uses media citations of official data as clues. Media reports are also critical to efforts to expose corporate behavior and push for change.
Indirectly influencing the government
In Ma Jun’s opinion, Richina’s behavior showcases positive interaction between businesses and the community at a time when more and more corporations are changing how they act. Experiences of two of Wal-mart’s suppliers, Han Jiang Dafu Footwear (涵江大福鞋业)and Putian Hanjiang Shoes (莆田涵江鞋业), adds another layer to the story. Ma is often asked, “You NGOs always pressure our companies. Can’t you also push local governments to do some thing?”
In 2006, IPE added the two companies to its pollution map after the Putian City environmental protection bureau put them on a list of enterprises exceeding wastewater and exhaust emission limits. Since 2008, Wal-Mart has been using IPE’s pollution map database to monitor their suppliers’ environmental compliance. Upon discovering that two suppliers were on the air pollution map, Wal-Mart asked the companies to take corrective measures, and publicized their request through the pollution database.
Pressure from Wal-Mart spurred the two companies to look for a solution. They found that the Hanjiang District sewage treatment plant was less than 600-700 meters away from the closest municipal sewage pipe. Since extending the municipal pipeline network to the factory grounds was a way to solve the problem of excessive emissions, they reported this information to the government and submitted an application requesting the government to lay additional pipeline.
“The pollution problem has not been solved, although both companies have paid fines for exceeding pollution standards. International customers now say they will stop their orders if environmental standards are not met, which would be a huge blow to exporters,” Ma said. According to the Law on the Prevention and Control of Water Pollution [the report says that] you [the government] are responsible for infrastructure.” As a result of local government improvements to the municipal pipe network, which now takes in 600 tons of sewage from the two companies each day, the companies were able to meet emissions standards. Not only did the companies save more than 80 million RMB that it would have cost to construct wastewater facilities, the new pipeline network also benefited other enterprises along the line.
“In the past, the government paid the most attention to the “three accesses, one flat” objective (ﾈﾍｨﾒｻﾆｽ) [for a construction site to have access to water, electricity, and roads, as well as level ground, before a project was begun] rather than improving environmental infrastructure. It was difficult to influence the government and sewage was discharged anywhere. But this chain of events created a remarkable turnaround,” said Ma. He speculated that because government needs businesses to sustain the economy and provide jobs, it also takes their environmental demands seriously. Public pressure on businesses like Wal-mart was passed onto their suppliers and even the local government, producing miraculous results. [Editor’s Note: The point of this section about “indirectly influencing government” is that environmental NGOs like IPE can pressure local governments to clean up their environmental record by putting pressure on international companies and their suppliers working in that locality.]
A Situational Strategy
According to Ma, given current constraints on large-scale public mobilization, the Green Choice Alliance decided to adopt an elite-based strategy different from Western consumer movements. The idea was to select enterprises to work with that could eventually serve as model cases. Starting with larger enterprises also made it easier to get others on board, expand coverage and increase impact. [Editor’s Note: An “elite-based” strategy here is one that relies on a few actors, rather than mass mobilization, to achieve results.]
Another strategy is exploiting situations to get the biggest impact For example, an announcement of an “environmental blacklist” of special festive items was issued on the eve of the 2010 Spring Festival when it was likely to get the most public attention.
Action directed at the IT industry in 2010 mainly focused on concerns over heavy metal pollution after many people, most of them children, were poisoned in 2009. When IPE went through their database, they found that many of the violating companies identified by authorities were suppliers to the IT industry.
“IT sounds like it would be a non-polluting industry, almost like a virtual industry, but the industry’s heavy metal pollution is rarely mentioned. In fact, the production of computer hardware creates very serious pollution. So we approached the heavy metal problem from this angle. Strategically, we were taking advantage of the situation,” Ma Jun said.
The basis for this strategy is comprehensive data gathering and collecting as much public, government data as possible on companies that have broken the law and exceeded emissions standards. The Green Choice Alliance will then be in a position to select companies to target. In the first half of 2011, the Green Choice Alliance plans to continue focusing its efforts on the IT industry and to compile a list of major environmental issues for public release.