Visit on 25 August, 2014 I recently spent four weeks observing several small-scale renewable energy projects in Mozambique. As part of the Rising Powers project, I accompanied two consultants from the Harare office of the NGO Practical Action and the...
Friday, 14 November 2014
Tuesday, 28 October 2014
Nanotechnology Research and Innovation in Russia: A Bibliometric Analysis
By Philip Shapira
Researchers with the Rising Powers and Interdependent Futures project on Emerging Technologies, Trajectories and Implications of Next Generation Innovation Systems Development have published a new working paper on Nanotechnology Research and Innovation in Russia. This working paper presents findings from analyses of Russian nanotechnology outputs in publications and patents focusing on developments over the period 1990 through to 2012. The investigation draws on bibliometric datasets of scientific journal publications and patents and on available secondary English-language and Russian sources.
The working paper is authored by Maria Karaulova, Oliver Shackleton, Abdullah Gök, Maxim Kotsemir, and Philip Shapira. Kotsemir is a researcher with the National Research University Higher School of Economics, Moscow – the project’s principal international partner in Russia. The other authors are researchers with the Manchester Institute of Innovation Research at the Manchester Business School, University of Manchester. The research was supported by the Economic and Social Research Council [grant number ES/J012785/1] as part of the project Emerging Technologies, Trajectories and Implications of Next Generation Innovation Systems Development in China and Russia.
For further details, please refer to:
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| Image by Victor Habbick FreeDigitalPhotos.net |
The working paper is authored by Maria Karaulova, Oliver Shackleton, Abdullah Gök, Maxim Kotsemir, and Philip Shapira. Kotsemir is a researcher with the National Research University Higher School of Economics, Moscow – the project’s principal international partner in Russia. The other authors are researchers with the Manchester Institute of Innovation Research at the Manchester Business School, University of Manchester. The research was supported by the Economic and Social Research Council [grant number ES/J012785/1] as part of the project Emerging Technologies, Trajectories and Implications of Next Generation Innovation Systems Development in China and Russia.
For further details, please refer to:
Karaulova, M., Shackleton, O., Gök, A., Kotsemir, M. and Shapira, P. (2014) 'Nanotechnology Research and Innovation in Russia: A Bibliometric Analysis', Project on Emerging Technologies, Trajectories and Implications of Next Generation Innovation Systems Development in China and Russia, Working Paper, October 2014.
Thursday, 16 October 2014
Creating social value in 'bottom of the pyramid' markets: What can multinationals learn from businesses in rural India?
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| image by africa/FreeDigitalPhotos.net |
In a recent article published in International Business Review, 23(4), 692-707, Noemi Sinkovics, Rudolf Sinkovics and Mo Yamin explore the role of social value creation in business model formulation at the bottom of the pyramid and the implications for MNEs.
'Bottom of the pyramid' markets in Rising Powers
Within International Business, Rising Power countries such as China, India, Brazil and Indonesia are not only important as home countries of emerging multinational enterprises (MNEs), but their large populations also present huge markets for MNEs from other countries. However, despite growing middle classes in the Rising Power countries, significant parts of their populations still live on low incomes at the bottom of the economic pyramid. In fact, the majority of people belonging to the 'bottom of the pyramid' (BOP) worldwide can be found in emerging economies. Thus, understanding how BOP markets work can be an important advantage for MNEs to be successful in Rising Power markets.
Creating social value at the bottom of the pyramid
Discussions on MNE strategies in BOP markets often centre around the notion of creating social value, in addition to making profits for the business. Social value creation can be defined as contributing to sustenance, self-esteem and freedom of servitude (Todaro & Smith 2011)1, which ranges from basic necessities such as food and shelter to issues such as dignity and personal freedom to make choices in life.
To better understand the phenomenon of social value creation, this paper looks at how social value is created by entrepreneurs within the bottom of the pyramid, and what MNEs entering BOP markets can learn from these businesses.
Five examples of social value creation: businesses in rural India
For this purpose, we interviewed the owners of five businesses in rural India, who are not only targeting BOP markets but also themselves come from a low-income background. Two of these explicitly created their business to create social value, in order to overcome specific difficulties experienced in the local community: A company selling traditional paintings was founded to stop dependence of local artists on middlemen, who were selling their artwork at high margins. In a more modern sector, an IT entrepreneur founded a rural business process outsourcing firm in response to high unemployment among skilled workers in the area. Three other companies did not explicitly see community benefit as their mission, but nevertheless created social value through their operations in a variety of ways. Two companies producing bangles and incense sticks both have a positive impact on the community by providing education and employment opportunities to people from disadvantaged social groups, such as physically handicapped or slum-dwellers. Similarly another company that grows and processes amla (Indian gooseberry) and grew out of a women's self-help group has not only improved incomes for its members and employees. It has also acted as an example for other entrepreneurs to start similar businesses lifting them out of poverty.
On the whole, these case studies illustrate that social value can be created independently of whether this is a stated objective of the business or not. Further, for those businesses that do explicitly aim to create social value, this tends to be in response to a very specific 'trigger constraint', i.e. a local constraint that entrepreneurs experience and try to overcome.
On top of this, all five businesses show that in order to make a difference for communities, a business model at the bottom of the pyramid needs to be closely linked to specific needs and constraints experienced by members of this community. All business models studied addressed such needs as part of their core business, no matter whether they consciously aimed to create social value or not.
What can MNEs learn from this?
For MNEs, this means that in order to be successful in BOP markets connecting to local communities is key, but also that they will likely find it difficult to do this. In practice, it may be hard for MNEs to establish close links in social networks at the bottom of the pyramid to find out about the needs experienced locally. This puts them at a disadvantage over local companies. Further, long term engagement is important to understand the local situation - again, this is unlikely to happen for many MNEs. MNEs originating from Rising Power countries may nevertheless have an advantage in understanding of BOP markets over Western MNEs, based on cultural or spatial proximity.
The question of how MNEs can know about and respond to the needs of BOP customers is important to find ways of creating social value by responding to local constraints, as practised by businesses originating from the BOP.
For more details, please refer to: Sinkovics,N., Sinkovics,R.R. & M.Yamin (2014) The role of social value creation in business model formulation at the bottom of the pyramid – Implications for MNEs?, International Business Review, 23(4), 692-707.
http://dx.doi.org/10.1016/j.ibusrev.2013.12.004
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1 Todaro, M.P., & Smith, S.C.(2011). Economic development (11th ed.). Harlow: Pearson Education Limited.
Monday, 13 October 2014
Researchers at Risk: Debating the Dilemmas of Research in Authoritarian Societies
By Catherine Owen
Marking the 100th day since the arrest of Alexander Sodiqov in Khorog, Tajikistan, staff and students in the Universities of Exeter, Sciences Po and Toronto met to debate the wider implications for conducting fieldwork in potentially dangerous or rapidly changing societies. On 16th June 2014, Sodiqov, a PhD student at the University of Toronto, was detained by Tajik security officials in Khorog, capital of the autonomous province of Gorno-Badakhstan, while conducting research for the University of Exeter into conflict resolution in the region. He was subsequently accused of collecting information that undermined national security and of working for a foreign intelligence service. The Tajik government soon charged him with high treason, a crime that carries a punishment of 20 years in prison. After spending more than a month behind bars, Sodiqov was released but was required to remain inside the country. Finally – and although the charges are still to be formally dropped – Sodiqov was allowed to return to his studies in Canada on 12 September.
Clearly, these events, and others like them, have serious implications for scholars. The questions driving the meetings were: what implications does the arrest of Sodiqov have for the future of ethnographic research in changing political contexts around the world? And how can we, as an academic community, prevent such events from happening in the future? In Exeter, the packed meeting was organised jointly by the undergraduate Politics and Amnesty International societies, and drew both undergraduate and postgraduate students as well as faculty and management. Questions were raised about the specifics of the Sodiqov case before developing into a broader discussion about how to protect researchers conducting fieldwork in authoritarian states. In Paris, the meeting draw researchers from a variety of institutions, who discussed whether the flurry of events similar to the Sodiqov case indicates the development of a broader trend towards greater hostility regarding foreign researchers in authoritarian states and, if so, how the academic community can and should protect those researchers.
A number of ideas were discussed that could potentially alert those planning research trips to authoritarian states to emergent dangers or changing perceptions of foreign researchers. In particular, the creation of a website to which posts detailing any difficulties encountered in various locations could be anonymously uploaded, thereby alerting the academic community to the current situation ‘on the ground’. This idea, a project of John Heathershaw and Edward Schatz, and currently in the planning stage, could serve as an important resource for researchers working in potentially turbulent areas. Ideally, such a site could allow scholars and their institutions to make informed decisions about whether or not to risk conducting research in these areas. Indeed, a similar body had been mooted by the French academic community in 2011, but alas was not pursued.
While a website that collates information about the political risks to researchers conducting work in authoritarian societies is an excellent idea in theory, there are, perhaps, a number of problems in practice. The following is not meant to be taken as pessimistic or cynical, but rather as a contribution to the on-going discussion about how to prevent the imprisonment of another researcher while also being unafraid to ask challenging research questions.
My primary concern is that the widespread use of such a site would create a culture of fear among researchers working on these countries. Would the collation of stories of arrest, imprisonment, harassment or persecution discourage scholars, particularly junior or post-graduate scholars, from pursuing their ideal object of study? Secondly, and following on from this, would such a site inflate the dangers of working such places? It could be that many hundreds of researchers conduct successful projects in a particular region, but five cases of state harassment were uploaded to the site, thus creating the impression of severe repression. In other words, it may end up exaggerating rather than reflecting potential risks. Furthermore, if individuals were uploading their own stories, they would be less likely to admit their own errors that perhaps partially precipitated their problems. It would be hard to know whether a region was genuinely risky, or whether researchers had somehow been insensitive, naïve or otherwise foolhardy. In short, would such a site inadvertently ‘shoot itself in the foot’, having been founded through a commitment to academic freedom but resulting in scholars’ self-censorship? While an online tool that collates researchers’ experiences conducting fieldwork evidently an important and much-needed resource, the big question, in my view – as someone who has also confronted the authoritarian state’s boundary of ‘appropriate’ research – is how to ensure that such a site is used to empower, not discourage, pioneering research.
Are these issues resolvable? I cannot pretend to know the answer. The most important thing is to continue a broad discussion about how to protect scholars from state persecution arising from their commitment to the furtherance of academic knowledge.
Marking the 100th day since the arrest of Alexander Sodiqov in Khorog, Tajikistan, staff and students in the Universities of Exeter, Sciences Po and Toronto met to debate the wider implications for conducting fieldwork in potentially dangerous or rapidly changing societies. On 16th June 2014, Sodiqov, a PhD student at the University of Toronto, was detained by Tajik security officials in Khorog, capital of the autonomous province of Gorno-Badakhstan, while conducting research for the University of Exeter into conflict resolution in the region. He was subsequently accused of collecting information that undermined national security and of working for a foreign intelligence service. The Tajik government soon charged him with high treason, a crime that carries a punishment of 20 years in prison. After spending more than a month behind bars, Sodiqov was released but was required to remain inside the country. Finally – and although the charges are still to be formally dropped – Sodiqov was allowed to return to his studies in Canada on 12 September.Clearly, these events, and others like them, have serious implications for scholars. The questions driving the meetings were: what implications does the arrest of Sodiqov have for the future of ethnographic research in changing political contexts around the world? And how can we, as an academic community, prevent such events from happening in the future? In Exeter, the packed meeting was organised jointly by the undergraduate Politics and Amnesty International societies, and drew both undergraduate and postgraduate students as well as faculty and management. Questions were raised about the specifics of the Sodiqov case before developing into a broader discussion about how to protect researchers conducting fieldwork in authoritarian states. In Paris, the meeting draw researchers from a variety of institutions, who discussed whether the flurry of events similar to the Sodiqov case indicates the development of a broader trend towards greater hostility regarding foreign researchers in authoritarian states and, if so, how the academic community can and should protect those researchers.
A number of ideas were discussed that could potentially alert those planning research trips to authoritarian states to emergent dangers or changing perceptions of foreign researchers. In particular, the creation of a website to which posts detailing any difficulties encountered in various locations could be anonymously uploaded, thereby alerting the academic community to the current situation ‘on the ground’. This idea, a project of John Heathershaw and Edward Schatz, and currently in the planning stage, could serve as an important resource for researchers working in potentially turbulent areas. Ideally, such a site could allow scholars and their institutions to make informed decisions about whether or not to risk conducting research in these areas. Indeed, a similar body had been mooted by the French academic community in 2011, but alas was not pursued.
While a website that collates information about the political risks to researchers conducting work in authoritarian societies is an excellent idea in theory, there are, perhaps, a number of problems in practice. The following is not meant to be taken as pessimistic or cynical, but rather as a contribution to the on-going discussion about how to prevent the imprisonment of another researcher while also being unafraid to ask challenging research questions.
My primary concern is that the widespread use of such a site would create a culture of fear among researchers working on these countries. Would the collation of stories of arrest, imprisonment, harassment or persecution discourage scholars, particularly junior or post-graduate scholars, from pursuing their ideal object of study? Secondly, and following on from this, would such a site inflate the dangers of working such places? It could be that many hundreds of researchers conduct successful projects in a particular region, but five cases of state harassment were uploaded to the site, thus creating the impression of severe repression. In other words, it may end up exaggerating rather than reflecting potential risks. Furthermore, if individuals were uploading their own stories, they would be less likely to admit their own errors that perhaps partially precipitated their problems. It would be hard to know whether a region was genuinely risky, or whether researchers had somehow been insensitive, naïve or otherwise foolhardy. In short, would such a site inadvertently ‘shoot itself in the foot’, having been founded through a commitment to academic freedom but resulting in scholars’ self-censorship? While an online tool that collates researchers’ experiences conducting fieldwork evidently an important and much-needed resource, the big question, in my view – as someone who has also confronted the authoritarian state’s boundary of ‘appropriate’ research – is how to ensure that such a site is used to empower, not discourage, pioneering research.
Are these issues resolvable? I cannot pretend to know the answer. The most important thing is to continue a broad discussion about how to protect scholars from state persecution arising from their commitment to the furtherance of academic knowledge.
This blog post was originally published by the Exeter Central Asian Studies Network at http://blogs.exeter.ac.uk/excas/2014/10/03/researchers-at-risk-debating-the-dilemmas-of-research-in-authoritarian-societies/ on 3 October 2014
Wednesday, 8 October 2014
Small firms and Corporate Social Responsibility: comparing the social contract in Brazil, China and India
By Peter Knorringa and Khalid Nadvi
In a recent article published in the Journal of Business Ethics, Peter Knorringa and Khalid Nadvi compare the local institutional context for socially and environmentally sustainable behaviour in small firm clusters in Brazil, China and India. The paper points to a number of open questions around small firms and CSR in the Rising Powers.
Multinational companies have been adopting elaborate Corporate Social Responsibility (CSR) programmes at global level, but often face difficulties in implementing social and environmental standards throughout the supply chain - especially with many small suppliers located in emerging economies. To better understand how and when small firms are likely to improve their social and environmental performance, we propose to pay closer attention to the underlying social contract in these countries, including the formal and informal institutional context for CSR.
Important elements of such a social contract include both the national policy framework of labour and environmental regulation, as well as informal norms on ethical behaviour and traditions of compliance with formal rules that may exist in local industrial clusters. Hence, small firms that are located in industrial clusters in emerging economies and are supplying to multinationals not only face demands for compliance with global CSR standards from their international buyers, but they are also strongly influenced by the local context they operate in.
Nevertheless, we currently know very little about how these local and global forces interact. Do national labour laws and private social standards from MNCs complement each other in pushing for better working conditions in small firms? Are there informal ethical norms in local communities that small entrepreneurs belong to, which facilitate compliance with global CSR standards? Or, on the other hand, will small firms be less likely to comply with global social standards if they operate in a context where national labour laws are weakly enforced?
Comparing the social contracts in Brazil, China and India reveals differences in the local context for CSR, and in the ways in which these interact with global CSR standards:
In India, informal labour is common in small firms, which means that workers are not covered by formal labour laws. In addition, complex layers of subcontracting make it more difficult for international buyers to influence compliance with global CSR standards in suppliers. As a result, small firms in India face little pressure to improve social and environmental performance from the outside, and any willingness of entrepreneurs to engage in more social and environmentally sustainable production for ethical reasons is made more difficult by cut-throat competition in very price-sensitive markets.
In Brazil, on the contrary, there is relatively less informal employment. Labour laws in the formal sector are generally enforced, for example through a system of labour inspectors monitoring and facilitating compliance. Further, there is growing cooperation between the public and private sector around sustainability issues at national level which sets the scene for mutually reinforcing engagement including on global sustainability standards.
China is an intermediate case, where national labour and environmental laws have become stricter over the past decades, but the details of regulations and the effectiveness of enforcement differ across regions. Hence, the local institutional framework may be better positioned to accommodate global CSR demands than in India, but seems less conducive to effective enforcement of social and environmental standards than in Brazil.
Future research on CSR in emerging economy industrial clusters should explore in more detail the interactions between CSR pressures from global buyers and the localised social contract in which small firms operate. This requires paying attention to how public policies and informal norms at national and local level facilitate or hinder compliance with global social and environmental standards. In addition, it will be important to observe how the emergence of increasingly affluent middle classes in emerging economies such as China, India or Brazil influences the demand for social and environmentally sustainable goods in domestic markets. Potentially, such domestic sustainability standards in emerging economies may also begin to shape the formulation of global standards, as these countries increasingly engage in global governance fora.
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image by David Castillo Dominici/
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In a recent article published in the Journal of Business Ethics, Peter Knorringa and Khalid Nadvi compare the local institutional context for socially and environmentally sustainable behaviour in small firm clusters in Brazil, China and India. The paper points to a number of open questions around small firms and CSR in the Rising Powers.
Important elements of such a social contract include both the national policy framework of labour and environmental regulation, as well as informal norms on ethical behaviour and traditions of compliance with formal rules that may exist in local industrial clusters. Hence, small firms that are located in industrial clusters in emerging economies and are supplying to multinationals not only face demands for compliance with global CSR standards from their international buyers, but they are also strongly influenced by the local context they operate in.
Nevertheless, we currently know very little about how these local and global forces interact. Do national labour laws and private social standards from MNCs complement each other in pushing for better working conditions in small firms? Are there informal ethical norms in local communities that small entrepreneurs belong to, which facilitate compliance with global CSR standards? Or, on the other hand, will small firms be less likely to comply with global social standards if they operate in a context where national labour laws are weakly enforced?
Comparing the social contracts in Brazil, China and India reveals differences in the local context for CSR, and in the ways in which these interact with global CSR standards:
In India, informal labour is common in small firms, which means that workers are not covered by formal labour laws. In addition, complex layers of subcontracting make it more difficult for international buyers to influence compliance with global CSR standards in suppliers. As a result, small firms in India face little pressure to improve social and environmental performance from the outside, and any willingness of entrepreneurs to engage in more social and environmentally sustainable production for ethical reasons is made more difficult by cut-throat competition in very price-sensitive markets.
In Brazil, on the contrary, there is relatively less informal employment. Labour laws in the formal sector are generally enforced, for example through a system of labour inspectors monitoring and facilitating compliance. Further, there is growing cooperation between the public and private sector around sustainability issues at national level which sets the scene for mutually reinforcing engagement including on global sustainability standards.
China is an intermediate case, where national labour and environmental laws have become stricter over the past decades, but the details of regulations and the effectiveness of enforcement differ across regions. Hence, the local institutional framework may be better positioned to accommodate global CSR demands than in India, but seems less conducive to effective enforcement of social and environmental standards than in Brazil.
Future research on CSR in emerging economy industrial clusters should explore in more detail the interactions between CSR pressures from global buyers and the localised social contract in which small firms operate. This requires paying attention to how public policies and informal norms at national and local level facilitate or hinder compliance with global social and environmental standards. In addition, it will be important to observe how the emergence of increasingly affluent middle classes in emerging economies such as China, India or Brazil influences the demand for social and environmentally sustainable goods in domestic markets. Potentially, such domestic sustainability standards in emerging economies may also begin to shape the formulation of global standards, as these countries increasingly engage in global governance fora.
For more details, please refer to:
Knorrigna, P. and Nadvi, K. (2014) 'Rising Power Clusters and the Challenges of Local and Global Standards', Journal of Business Ethics, September 2014.
Wednesday, 24 September 2014
Asian firms and the restructuring of global value chains
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| image by hyena reality/FreeDigitalPhotos.net |
Global clothing brands such as Levi's, H&M, Marks & Spencer or JC Penney are well known players in the apparel industry. They have been shown to coordinate complex global value chains with supplier firms located in various countries. Less known are the strategic and pivotal roles that Asian transnational garment firms take on as first-tier suppliers to these brands. These new players, though largely unknown to most people, are crucial because they are increasingly able to reshape geographies and organizational processes within global value chains.
Who are these 'strategic and pivotal' Asian firms and how do they function?
Many of these first-tier suppliers come from Greater China, e.g. Hong Kong or Taiwan, and South Asia. While their headquarters are based in these home countries, they have evolved from simple producers supplying to Western brands into truly transnational companies, with subsidiaries and suppliers around the globe, including in Asia, Africa and Central America. Asian transnational garment firms now take on more and more functions in the apparel industry, such as logistics or research and design for the brands that buy from them. For example, some Asian firms use forecasting software that is directly fed with data on current sales in the stores of global brands, which allows them to predict demand and respond quickly with changes in production and delivery. While some of them are developing their own brands, many do not see this as a priority for their business.
Can they actually change the structure of global value chains in the apparel industry?
These Asian transnational garment firms have highly developed organisational capacities, which allow them to coordinate flows of products, but also flows of labour and capital, across various locations. In doing so, they not only need to engage with different cultural, political and regulatory contexts, but also monitor changes in trade rules or regulations that may affect garment production in a particular location. In fact, they are extremely flexible in reacting to such changes. They tend to avoid being too closely embedded in any particular country context, ready to leave when preferential trade rules are discontinued or when labour costs rise. This contributes to a very flexible model of globalisation, and the Asian 'strategic and pivotal' firms are the key players driving the decisions to change production locations.
The example of Jordan
Jordan illustrates these dynamics and the crucial roles of Asian firms. Without much history of a textile and apparel industry, and with high labour costs, Jordan did not appear to be a likely location for FDI in the sector in the early 1990s. However, in 1997 Jordan and the United States signed a preferential trade agreement, giving firms producing in a 'Qualifying Industrial Zone'(QIZ) in Jordan duty and quota free access to the US market. A condition was the use a minimum share of inputs from Israel, in an effort to promote the Middle East peace process. In addition to the preferential trade rules, a special labour regime was implemented in these zones allowing firms to bring migrant workers to their factories and also excluding these zones from the legal minimum wage in Jordan in recent years.
These two policies acted as a catalyst, attracting Asian multinational garment firms. Investment from these firms was the key driver for Jordan to become a garment exporting country. Within a few years, these Asian firms set up an almost entirely new industry in Jordan and integrated the country into the global value chain for apparel. As a result, exports to the US rose from USD 3 million in 1997 to USD 1.25 billion in 2006.
However, as described above, Asian firms did not embed deeply into the Jordanian economy. Flexible rules of origin attached to the preferential trade rules made the arrangement attractive for these firms, because they could use their existing supplier networks in third countries to source inputs such as yarn. In addition, the flexible labour regime allowed firms to bring in migrant workers from Asia, which make up 75-80% of workers in the garment factories in Jordan. Fitting with the trend of global locational flexibility, interviews with firms indicate that they are ready to go elsewhere, if either the trade preferences or the labour regulations should change.
For more details, please refer to:
Azmeh, S. & Nadvi, K.(2014.) Asian firms and the restructuring of global value chains. International Business Review, 23(4), 708-717.
http://dx.doi.org/10.1016/j.ibusrev.2014.03.007
Friday, 5 September 2014
Low carbon standards made in China?
By Clara Brandi
In a recent article on Low-Carbon Standards and Labels in China, published in Oxford Development Studies, Clara Brandi asks how Chinese actors respond to the proliferation of environmental sustainability standards and what this will mean for global sustainability. This post summarises some of the findings.
Environmental sustainability standards are increasingly used by multinational companies, and could be an important tool to address global challenges such as climate change. An example are low carbon standards and labels that measure the 'carbon footprint' of a product. In the UK, Tesco was using carbon labels on 500 of its products in 2012, informing customers about the amount of greenhouse gas emissions caused throughout different stages of producing, transporting and storing the product on its way to the final consumer.
How will actors in Rising Power countries, such as China, engage with these new standards? Considering the share of emerging economies in the global economy and in global carbon emissions, this question is crucial to understand whether low carbon standards will actually make a difference on climate change. China is a particularly interesting case, as a major emitter of greenhouse gases, as home to emerging multinationals, and as 'factory of the world' supplying Western multinationals. Emerging Chinese multinationals face pressures to comply with low carbon standards in countries abroad and from financial markets. Suppliers to Western multinationals are under pressure to measure their carbon emissions so that these lead firms are able to calculate the full carbon footprint of a product throughout the supply chain.
Basically, as proposed by Simon Zadek and his colleagues, Chinese firms and the Chinese government have four options how to respond to these international sustainability standards: a) ignore them (not do anything, as long as they do not affect the competitiveness of Chinese firms), b) mitigate them (try to minimize the harm caused to the competitiveness of Chinese firms), c) promote an existing standard (if this standard can be shaped in a way to give Chinese firms a competitive advantage) or d) leverage a new standard (if this would create a competitive advantage for Chinese firms).
Ignoring or minimizing the impact of carbon standards and labels will be difficult: So far, relatively few Chinese companies use carbon standards, but requirements to move to low carbon production processes filter directly down the supply chain as international buyers become more environmentally conscious. So doing nothing may hurt the international competitiveness of Chinese firms, which tend to have relatively high carbon emissions at present.
In terms of promoting existing standards, large Chinese companies have started reporting on their greenhouse gas emissions (70% out of the largest 100 listed companies do so). Examples of companies actively engaging with their carbon footprints are China Mobile signing a Green Action Plan to reduce emissions in its supplier firms, and Lenovo setting reduction targets for emissions in its supply chain. Nevertheless, it is too early to tell if this signals a general move towards adoption of international carbon standards in China. In particular, firms producing for the domestic market may prefer to use a new low-carbon product labelling scheme that is being developed by the Chinese Ministry of Environmental Protection, which will be cheaper than paying for certification under international labels.
Leveraging new low carbon standards appears the most promising option for Chinese actors. These could be standards developed in China, or standards that Chinese actors have shaped through their engagement in international standard-setting processes. China has been developing its own sustainability standards in a range of sectors, and is currently preparing a low-carbon product labelling scheme. The first voluntary low carbon labelling standard was released by the Ministry of Environmental Protection in 2010, and it differs from international standards by certifying a product as 'low carbon' if it meets certain emissions criteria, rather than indicating its quantitative carbon footprint. Recently, the first products have been certified. Chinese actors have also been actively involved in design of the ISO 26000 social responsibility guidelines, in contrast to their earlier reluctance to engage in international standard-setting fora. This shows a trend towards becoming standard-setter rather than standard-taker internationally.
Overall, dynamics around low carbon labels in China show that Rising Powers do not necessarily cause a race to the bottom on global sustainability standards. Rather, Chinese firms engage with international low carbon standards more widely than is often assumed. Chinese actors are also creating new domestic standards around carbon labelling, and are becoming increasingly active in international standard-setting processes. So low carbon standards are likely to be changed by Rising Powers such as China, but do not seem to become any less important in the future.
For more details, please refer to:
Brandi, C. (2014) Low-Carbon Standards and Labels in China, Oxford Development Studies, 42(2), pp. 172-189. http://dx.doi.org/10.1080/13600818.2014.885938
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| image by domdeen/ FreeDigitalPhotos.net |
Environmental sustainability standards are increasingly used by multinational companies, and could be an important tool to address global challenges such as climate change. An example are low carbon standards and labels that measure the 'carbon footprint' of a product. In the UK, Tesco was using carbon labels on 500 of its products in 2012, informing customers about the amount of greenhouse gas emissions caused throughout different stages of producing, transporting and storing the product on its way to the final consumer.
How will actors in Rising Power countries, such as China, engage with these new standards? Considering the share of emerging economies in the global economy and in global carbon emissions, this question is crucial to understand whether low carbon standards will actually make a difference on climate change. China is a particularly interesting case, as a major emitter of greenhouse gases, as home to emerging multinationals, and as 'factory of the world' supplying Western multinationals. Emerging Chinese multinationals face pressures to comply with low carbon standards in countries abroad and from financial markets. Suppliers to Western multinationals are under pressure to measure their carbon emissions so that these lead firms are able to calculate the full carbon footprint of a product throughout the supply chain.
Basically, as proposed by Simon Zadek and his colleagues, Chinese firms and the Chinese government have four options how to respond to these international sustainability standards: a) ignore them (not do anything, as long as they do not affect the competitiveness of Chinese firms), b) mitigate them (try to minimize the harm caused to the competitiveness of Chinese firms), c) promote an existing standard (if this standard can be shaped in a way to give Chinese firms a competitive advantage) or d) leverage a new standard (if this would create a competitive advantage for Chinese firms).
Ignoring or minimizing the impact of carbon standards and labels will be difficult: So far, relatively few Chinese companies use carbon standards, but requirements to move to low carbon production processes filter directly down the supply chain as international buyers become more environmentally conscious. So doing nothing may hurt the international competitiveness of Chinese firms, which tend to have relatively high carbon emissions at present.
In terms of promoting existing standards, large Chinese companies have started reporting on their greenhouse gas emissions (70% out of the largest 100 listed companies do so). Examples of companies actively engaging with their carbon footprints are China Mobile signing a Green Action Plan to reduce emissions in its supplier firms, and Lenovo setting reduction targets for emissions in its supply chain. Nevertheless, it is too early to tell if this signals a general move towards adoption of international carbon standards in China. In particular, firms producing for the domestic market may prefer to use a new low-carbon product labelling scheme that is being developed by the Chinese Ministry of Environmental Protection, which will be cheaper than paying for certification under international labels.
Leveraging new low carbon standards appears the most promising option for Chinese actors. These could be standards developed in China, or standards that Chinese actors have shaped through their engagement in international standard-setting processes. China has been developing its own sustainability standards in a range of sectors, and is currently preparing a low-carbon product labelling scheme. The first voluntary low carbon labelling standard was released by the Ministry of Environmental Protection in 2010, and it differs from international standards by certifying a product as 'low carbon' if it meets certain emissions criteria, rather than indicating its quantitative carbon footprint. Recently, the first products have been certified. Chinese actors have also been actively involved in design of the ISO 26000 social responsibility guidelines, in contrast to their earlier reluctance to engage in international standard-setting fora. This shows a trend towards becoming standard-setter rather than standard-taker internationally.
Overall, dynamics around low carbon labels in China show that Rising Powers do not necessarily cause a race to the bottom on global sustainability standards. Rather, Chinese firms engage with international low carbon standards more widely than is often assumed. Chinese actors are also creating new domestic standards around carbon labelling, and are becoming increasingly active in international standard-setting processes. So low carbon standards are likely to be changed by Rising Powers such as China, but do not seem to become any less important in the future.
For more details, please refer to:
Brandi, C. (2014) Low-Carbon Standards and Labels in China, Oxford Development Studies, 42(2), pp. 172-189. http://dx.doi.org/10.1080/13600818.2014.885938
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