Foreign firms step up push for sustainability

Mondelez International, a global snack company, and L'Occitane en Provence, a French skincare brand, are showing the pace foreign businesses undertake sustainability activities at the local level in China is gathering momentum.

That is because companies such as Mondelez are aware China is seriously pursuing its goal of net-zero carbon emissions to keep its environmental commitments.

Mondelez has announced a string of plans such as using 100 percent packaging designed to be recyclable and 25 percent reduction in the use of virgin rigid plastic by 2025. If it realizes its goal, that will fulfill its larger environmental, sustainability and governance objectives.

An iconic project pioneered in China is the so-called Roof Solar power project at Mondelez's Suzhou plant in Jiangsu province.

By using solar energy as part of its power mix, the project, whose annual power is expected to reach 128 kilowatts per hour, will effectively bring energy-saving benefits and lower management costs to the plant, said Cloris Zhang, vice-president of Mondelez Supply Chain in China.

At the Suzhou plant, where the company's iconic Oreo cookies are produced, Mondelez has set the target of reducing 23 percent of carbon dioxide emissions by 2023 compared with 2018.

Other goals include reducing tap water consumption by 17 percent and organic waste discharge by 45 percent in 2023 from 2018 levels.

The company has also announced plans to fully source through Cocoa Life, its signature sustainable sourcing program, which it said will reduce end-to-end carbon dioxide emissions by 10 percent.

Zhang said the company is reaping substantial gains from localized supply chains. The fact that all packaging materials and 80 percent of raw materials are sourced from China has prompted the company to record high single-digit growth last year, surpassing even pre-COVID-19 levels, she said.

"From the point of view of supply chains, maintaining a high level of localization is key to staying agile and addressing challenges," Zhang said.

Like Mondelez, L'Occitane is embracing sustainability. It has proposed a three-pronged strategy: reducing carbon emissions; respecting biodiversity by devising new products; and recycling used packaging.

In a recent road show in Shanghai, the company showcased how it aims to fulfill these goals in four steps.

The four steps are: reduce emissions from manufacturing to sales; recycle used bottles; recommend refilling of products; and reuse waste containers.

"We are creating ways to produce those essential ingredients in a regenerative way … with lavender, with almond, to regenerate the biodiversity, the soil, and to capture carbon," said Adrien Geiger, the company's sustainability officer.

The pursuit of sustainable development is prompting companies to make changes in their product designs.

For instance, L'Occitane is replacing a previously unrecyclable pump used in one of its shampoo products, a step that greatly streamlines the recyclable procedure and brings down costs, said Wang Yuqing, a public relations officer at TerraCycle, a firm specializing in recycling hard-to-recycle materials that partnered with L'Occitane for the initiative.

"Technically, all materials are 'recyclable'. The real differentiator in most cases is to calculate whether it's economically viable to do so," Wang said. "Coupled with our technologies, infusing ESG philosophies in product designs and material choices can bring down costs, thus making it easy to achieve sustainability goals."

The conditions are right for a leapfrog moment for ESG reporting in China, given that these metrics stand to guide capital flows, help regulators make timely policy decisions and enable customers to make informed supply-chain management decisions that foster sustainable growth, said consultancy PwC in a report in March.

"Business leaders are increasingly aware of the importance and benefits of measuring performance not only through financial indicators but also with ESG metrics," said Ivy Kuo, a partner at PwC China.

"Investors are also integrating ESG factors into their investment analysis and decision-making because clear ESG agendas can help navigate opportunities and fend off risks."