Ma Jun won a Goldman Environmental Prize last month for his work to improve corporate environmental standards in China by increasing transparency and accountability in the manufacturing industry. The organization he founded, the Institute of Public and Environmental Affairs (IPE), created two pollution databases exposing over 90,000 air and water violations by local and multinational companies. Jun also developed the Green Choice supply chain program, encouraging consumers to influence corporate behavior.
They have no regulatory authority, but IPE has managed to get more than 500 companies to publicly disclose their cleanup plans, including some of the world's biggest brands—Wal-Mart, Nike, GE, Coca Cola, H&M, Sony, and Unilever. Focusing at first on tech companies, Green Choice recently expanded to apparel, an effort that GreenBiz cleverly framed as the apparel industry's opportunity to avoid its own Foxconn. We spoke a few days before the Goldman Prizes were announced about his efforts to strengthen environmental policies in China.Why did IPE choose to focus on disclosure of pollution data, and how do you get that information?
We firmly believe the environmental issues cannot be addressed without extensive public participation, but people need to be informed before they can get involved. So we needed to create a database, a website. But data is sensitive in China. So we made a compromise, we decided to use mainly government-sourced data at this stage.
When all this data is put together, people are surprised. On corporate supervision, we started with 2,500 and today the number has topped 97,000. Before it was hard to access that data, but now it's just a mouseclick away.
Is the problem in China more that environmental regulations are few or weak, or that regulations exist but lack enforcement?
There are problems with both sides. To me, first and foremost, it's the lack of enforcement. I think that's a bigger problem, because even if you make the laws more comprehensive, they won't be effective if there's no enforcement. We copied laws and regulations from western countries but enforcement remains weak and environmental litigation is still quite near impossible. And in many cases, the cost of violation is much lower than the cost of compliance—so companies choose to pay fines year after year without solving their problems.
On the legislation side, I think there are still major gaps. One of them is the lack of legislation similar to Europe's Toxic Release Inventory and the Pollutant Release and Transfer Register. Both require operations to disclose data on hundreds of chemicals, but in China, there are no such requirements. The corporations are not held accountable to the public.
And it's both local and multinational corporations?
It's a mix of international and Chinese-owned. In the IT industry, we have many American, European and Japanese brands listed, but we also have the local Chinese brands like Lenovo, Haier. And this time with the apparel industry, it's the same—major American and European brands, but also we have local brands.
We created this database so people can use it to impose some public scrutiny. What we've found is when people access this information, companies feel the public pressure. We provide them opportunities to explain what went wrong and how they can fix their problems. We also created a third-party audit protocol, so they can go through an independent audit under the supervision of NGOs and get their records removed from our list.
So far, we have nearly 600 polluters on our list, and more than 100 of them have managed to get their records removed.
What has the government's reaction been to the work you've been doing, and has that evolved since you started?
Most of our data comes from government sources. So it's in our interest to see that the government keeps expanding environmental transparency—the monitoring and disclosure.
We worked with our partner NRDC to build a index called the Pollution Information Transparency Index, PITI. We use that to assess the performance of 113 major cities in China every year. The idea is to make sure they don't backtrack on the disclosure—and they can create some healthy competition to become a better scorer. For the past three years, we got the average score moving up from 31 to 36, and then 40. So it is moving up, but it's still far from even reaching the passing level of 60.
There's a lot of work to do. Some of the local governments approach us to check how to keep up with their neighbors, which may score better than them. And of course, we also get pressure from the local government because we expose these polluters—sometimes they say, that's a major taxpayer and employer, and they want us to remove those records. That can be awkward because our data comes from them [the government], and some of them will say that company is good, why can't you just take it away.
What do you do in those cases, and do they happen often?
We will explain to them that we have a special space for the government to provide follow-up monitoring data. Whatever they want to say, we are happy to publish that, but we cannot remove any records without going through an audit process—and we don't have the power. We delegate the power to an NGO coalition called the Green Choice Alliance. So 41 NGO members all need to agree before a record can be removed. So [we say] if they insist, they should talk to the other 40 and of course, no one wants to talk with that many. They will usually go back and say to the companies, it's easier for you just to give some explanation about your issues.
It's happened quite a few times recently. You could imagine that when more brands are using this, some of them are losing some of the very valuable contracts. And very often, they choose to go to their government contact rather than us.
Who actually uses the database? Is it mostly average citizens who want to learn about nearby factories, or are users at a higher level than that?
We have some stakeholders who are very active users. For example, the media. There are toxic spills every now and then, and many of them will check our website to see whether it's just one accident or whether it's kind of a serial polluter. And we have NGOs, and researchers and professionals, who also are natural users. And increasingly, we have the local community starting to use it—and they also provide information and feedback to us, which is very valuable.
Most recently, the government started using it as well. We notice that in environmental audits, they sometimes cite our pollution map as the source for those violation records. And then corporate citizens, many of the big brands have become very active users.
We want to expand. Phase one for us has been to build up this database to ensure access. But Phase two is to make sure we can create some applications for people to use it, because many in China feel cynical about the environmental protection work&mdsah;many would say, "We are individuals and this is such a big problem, how can I help as an individual." I hope they can see that as a consumer, if they express themselves, they may make an impact and leverage their impact on the brands, and the brands can leverage their buying power on tens of thousands of polluters—suppliers—in China.
Do companies tend to approach you first, or do you tend to initiate the process?
At the beginning, in most cases, companies simply approached us because we have so many of the polluting factories listed in our database and it's hard to decide who to contact first. We wanted to give them equal footing, so the first couple of hundred simply approached us due to the public pressure that had been generated through our database.
And then around 2010, we were working with NGO partners and decided to proactively go through the supply chain program, industry by industry. We took the IT industry first—to build the link, through our research, between the polluting factories and suppliers and their buyer brands. We managed to build up a link with 29 IT brands. Then we sent letters to the CEO of each one, and over the past nearly two years have been in communication with all of them. Some of the brands, such as Apple, would not respond at all at the beginning, but have turned more proactive to try to deal with the problems in their supply chain.
We just moved to the second industry, apparel, and launched a Green Choice Apparel program. Again, we approached 48 brands; around 20 of them have responded and some of them have been taking actions already. Still many have not responded; we're going to have further communication with them.
How do you think Americans can help with this pollution problem in China?
I hope people realize that there are opportunities to help with the pollution control efforts in China. Many brands outsource most or all of their production, and much of the highly polluting process has been outsourced to developing countries like China. Such a disconnect between the brands and the polluting factories is causing a transfer of pollution globally. Brands who come to China, often they just care about price—so they actually drive the suppliers to cut corners on environmental standards to win a contract.
The more you consume, the more impact you will have. We try to change that by making the brands integrate environmental standards in their sourcing codes. That will generate powerful motivation for suppliers to enhance their environmental performance. But many brands take advantage of the loopholes to maximize their gains. Many of them don't want to change, so I hope that consumers can see the opportunity and express their views to the brands. I think that will be extremely helpful.