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Good Cop, Bad Cop: the Evolving Form of Business-NGO Partnerships in China

A recent trip to China to speak at the Annual Summit of China Green Companies revealed an interesting tension between NGOs, businesses, and the Chinese government: everyone agrees that better policing of environmental performance is needed. But no one can agree on exactly how this should be accomplished.

green china

A recent trip to China to speak at the Annual Summit of China Green Companies revealed an interesting tension between NGOs, businesses, and the Chinese government: everyone agrees that better policing of environmental performance is needed. But no one can agree on exactly how this should be accomplished.

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As the country takes steps toward sustainable policies and practices in the wake of explosive economic growth and industrialization, this tension could turn into a good cop/bad cop act on the world’s stage. To understand how sustainability will play out in China, we first have to understand how these three stakeholders–NGOs, companies, and governments–are alternately vying for authority and clamoring for collaboration.

The NGO-Corporate-Government Triumvirate

Against a backdrop of scandals that continue to plague the emerging powerhouse, from melamine contamination in food to the suicides of electronics workers, China is keen to be seen as taking steps toward a more sustainable economic and industrial future. Government officials and the state news agency are offering an unprecedented level of transparency into these events, in part to demonstrate China’s willingness to overhaul a system that has long been criticized for being opaque.

As an example: the State EPA has actually uses a fair amount of information transparency as a workaround to its limited formal enforcement power with respect to corporations and local governments. Real-time air quality data is easily available in many cities–there is even an electronic billboard in Shanghai with real-time data. And Beijing is the only place I know of where real-time noise data is posted on the street.

Through a foreigner’s eyes, these steps seem to be ways of giving people information that they can use to pressure local governments or companies. Power for environmental governance still rests very much with the state, which is not surprising. (In my view, market forces for greening generate a lot less impact than government mandates even in the U.S.) But social pressure is an increasingly important force.

At the same time, there is a significant level of skepticism about the kinds of numbers the Chinese EPA (and other branches of the government) generates. When I met with Jianyu Zhang, who heads up China operations for the Environmental Defense Fund, he advised me never to take Chinese data at face value. In fact, EDF is trying to craft clever schemes to get stakeholders invested in creating demand for data. One way they are doing this is by building support for carbon emissions trading, which offers numerous opportunities for new business ventures, but will only work if there is reliable data on emissions.

The gap between appearance and reality came up again in a conversation with Jonathan Lash, President of the World Resources Institute, as we were touring the Chengdu area after the Summit of Green Companies. Lash mentioned that he hates corporate social responsibility (CSR) because it is often used as a tool by companies who want to project a good public image without making fundamental changes to their business model.

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Jet Li

As the Chinese government shows its increasing interest in sustainability, there is a rapidly growing movement within the business community to foster sustainable practices. The China Green Companies Awards are one example, and they are no small deal. As a member of the Advisory Board for the project, I shared limos, floor time, and a stage with some of the wealthiest and most successful businesspeople in China, including Jet Li (martial artist, international film star, and founder of the One Foundation) and Jack Ma (founder of Alibaba.com, the world’s largest B2B electronic commerce platform). The prize is not about money, but instead is about status–having attended this summit, it’s clear that there’s real prestige attached to being the “greenest.” When the awards were launched two years ago, they were below the radar screen of most companies in China. This year, though, they were broadcast nationwide on Chinese television.

Collaborative policing

With each of these sectors–NGO, government and corporate–working within their own realms to influence sustainability in China, how are they working together?

I’ve seen some innovative sustainability partnerships emerging between NGOs and businesses. For example, the World Environment Center works with Shanghai GM in an innovative program to green the company’s supply chain in China. Business for Social Responsibility is working with major textile firms like Levi Strauss to reduce water use and promote better water policy in China. And Dow Chemical has partnered with the China Youth Development Foundation to rebuild schools in Sichuan that were destroyed by the 2008 earthquake.

Ultimately, the opportunities for Chinese NGO-business partnerships on sustainability issues depend on how the central government responds to such initiatives. But increasingly, we’re seeing the government open itself to communications from both NGOs and the private sector. In a country that is growing and changing so rapidly, China’s leaders are rightly becoming voracious consumers of new policy ideas.

Thomas P. Lyon is a Director and the Dow Chemical Professor of Sustainable Science, Technology and Commerce at the Erb Institute of the University of Michigan. Professor Lyon’s teaching experience includes managerial economics, business and government, game theory, business strategy, and the management of innovation. He is the author of Good Cop/ Bad Cop: Environmental NGOs and Their Strategies Toward Business.

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