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Delta Developing Without Depleting(HKTDC Enterprise, Vol 09,2007)

Benefiting From Sustainable Manufacturing


Sustainable development is more than a fashionable phrase for all kinds of companies with manufacturing facilities in the Pearl River Delta region

Facing up to the realities of environmental awareness through sustainable manufacturing is becoming increasingly important for companies everywhere in terms of energy reduction, emission controls and product sourcing.

Nowhere is this more important, however, than in the Pearl River Delta (PRD) region of the southern Chinese mainland that is home to one of the world's largest agglomerations of factories of all sizes and industries.

"There is still a great deal of work to be done, but Hong Kong companies operating in the PRD are increasingly focusing on ways to adopt sustainable manufacturing processes that respect the environment," claims Alex Fong, CEO of Hong Kong's General Chamber of Commerce (HKGCC).

He says that in the process, companies are finding that they can benefit through cost savings, reduced environmental impact and enhanced business relationships.

"In certain areas we are witnessing a trend that involves a changing mindset that requires businesses, government bodies, professional organisations such as the HKGCC and the wider community to work together," Fong says.

The challenge for most companies is identifying the efforts that should be made to efficiently use resources, materials and energy, and to recycle and prevent pollution in the manufacture and distribution of products.

Fong believes some companies' sustainable manufacturing initiatives are comprehensive, with extensive performance criteria and evaluation processes given to all, or most, areas of activities.

However, others' efforts are smaller and more targeted, focusing on packaging, reducing a specific type of emission, environmentally-friendly procurement or energy reduction. "It really is a case of every positive effort contributing to a more environmentally friendly and sustainable manufacturing future," he maintains.

He says the driver behind sustainable manufacturing is two-pronged. "There is a growing awareness that every business needs to play a role in protecting the environment," Fong believes.

"Also, companies are facing stiff competition from their mainland counterparts in low-end manufacturing processes and need to find ways to climb further up the value-added ladder."

In addition, the PRD's Guangdong Province has embarked on a rigorous economic restructuring programme in recent years, upgrading its industries with an emphasis on relocating low-end enterprises to especially-developed locations and building up the number of high-value-added industries.

Hong Kong's manufacturing industries in the PRD therefore face more pressure in future and need either to upgrade their technology level and adjust their business modes or relocate to more distant areas.

Fong points out that there are also other less-tangible benefits linked to high-end sustainable manufacturing. "Studies have shown that employees are happier working for a company that believes in corporate social responsibility, while end-users are increasingly concerned about the environmental impact involved in the production of the goods they buy."

Developing a business case for sustainable manufacturing can also reveal untapped opportunities that enhance the commercial performance of industrial processes, including reduced energy and business costs, increased productivity and performance gains and improved control over production, processes and systems.

Fong believes that companies striving to reduce their environmental impact by pushing environmentally-friendly and sustainable manufacturing measures up the business operation chain often find that this is easier and less expensive than they first imagine.

"Reducing energy costs by a few per cent by introducing better efficiencies actually saves money and contributes to a reduction in emissions from power stations," he says.

The HKGCC is taking a leading role in helping to improve air quality within the PRD region with the introduction of a Clean Air Charter.

The council introduced the charter in 2005 in collaboration with the Business Coalition on the Environment (BCE) as part of a larger Project Clean Air initiative.

"The Clean Air Charter aims to encourage both Hong Kong and local manufacturers in the PRD to set a good example by voluntarily implementing emission reduction measures to improve air quality," Fong explains.

The charter is a campaign that seeks the business community's involvement on a wholly voluntary, best-effort basis. "Businesses obviously vary from sector to sector, so the charter is a statement of general principles to encourage the implementation of an energy and emissions reduction programme in accordance with the individual nature of each company," Fong advises.

As such, the charter complements the PRD Regional Air Quality Management Plan established by the Hong Kong and mainland Guangdong environmental protection authorities, which involves evaluating the regional emissions trend and responding with corresponding strategies and follow-up actions with a view to achieving a mutually-agreed set of emissions reduction targets by 2010.

Not content with this initial step, the HKGCC has also developed a series of initiatives to raise awareness among Hong Kong manufacturers regarding energy saving, emission reduction and application of clean-production technology through clean-production demonstration projects and technological support.

The council stresses the fact there are many low-cost measures that can be taken to achieve more efficient energy consumption with practically no extra financial commitment.

One way to get started is to establish an Energy Emissions Management team (EEM), which Fong claims need not be as daunting as it seems. "An energy audit might sound like a technical term, but in fact it's a simple examination by one or two people of existing energy-consuming systems within a company," he says.

Good housekeeping practices ensure that energy is being used efficiently - for example, turning off power sources when they are not in use and replacing traditional, relatively wasteful light bulbs with their low-energy consumption counterparts.

Fong is also keen to highlight the fact that each of the HKGCC's executive member companies has signed the charter and is also actively taking measures to reduce its overall environmental footprint, with the council reducing its own energy consumption by about 10%.

He believes that Hong Kong companies are also looking beyond their own sustainable manufacturing performance by forging environmentally-friendly procurement processes within the supply chain.

"Greater awareness of the impact of manufacturing processes on the environment, as well as the growing expectations of customers and business partners, is forcing companies to factor procurement processes into their entire business operations," Fong says.

Currently, most efforts to improve suppliers' overall eco-performance centre on encouraging compliance with voluntary industry standards and meeting increasingly stringent compliance requirements in various international markets.

"Hong Kong companies are very good at responding to challenges and adapting their processes to fast-moving markets, including those that require rigorous environmental compliance," Fong believes.

He says companies and organisations could decide whether to adopt existing industry standards or to develop their own standards and criteria. "There is no one procurement policy that fits all approaches," Fong admits.

A policy may be as simple as restricting certain substances used in manufacturing or as complex as a comprehensive procurement policy and product specifications that cover every supplier and product.

"Until recently, enterprises were engaged in environmental protection only in the final stages of production and disposal of used materials, rather than at the technology exploration and raw material procurement stage," he notes.

Looking ahead, Fong remains positive that Hong Kong companies would continue to excel in the international environment and continue to build a reputation for sustainable manufacturing.

"There is no doubt that among Hong Kong companies there is a gathering momentum to look after our environment through sustainable manufacturing," Fong concludes.