Monthly Archives: May 2018

Here’s how China is going green

After years of heavy industrialization, China’s environmental challenges are nearing a tipping point.

The factories and power plants that have driven its economic growth have also polluted its air, water and soil, to the point where environmental hazards could lead to a significant risk to China’s society and economy, if not corrected in a timely manner. In a bid to tackle these challenges, China’s government has declared a “war on pollution” and introduced a number of green initiatives.

Here are the most important ones:

Less coal, cleaner air

China has taken steps to dismantle coal-fired power plants, reduce overall emission levels and cut particulate-matter emission rates. Huge progress has been made on air quality, and there are now fewer smog days in China’s largest cities.

Better regulation

The former Ministry for Environmental Protection has been transformed into the Ministry of Ecology and Environment (MEE), a new entity with broader, clearer responsibilities. The new ministry will oversee all water-related policies, for example, from ocean resources management to groundwater. Previously, these were scattered among different departments. The ministry is also in charge of policies on climate change.

Funding a greener future

China needs an estimated additional RMB 40.3 trillion ($6.4 trillion) to RMB 123.4 trillion ($19.4 trillion) to finance the transition to a greener economy. It has started collecting an environment tax to help fund its environmental policies, and is also trying to attract more green investment.

China’s Belt and Road Initiative (BRI), a massive global programme aimed at improving inter-connectivity between countries, inspired by the ancient Silk Road, seeks to boost trade and economic growth in Asia and beyond. As Vice Premier Liu He said at the World Economic Forum’s Annual Meeting in Davos this year, reducing pollution is one of China’s main strategic goals as it pursues this initiative, along with preventing major financial risks and alleviating poverty.

Years of life saved per person Image: China National Environmental Monitoring Center

The BRI will be backed by considerable resources. At maturity, investments in the initiative are expected to hit around $4 trillion, stemming from private sources, dedicated funds, and multilateral development banks. If aligned with sustainable development priorities, these resources have considerable potential to help advance the green agenda.

The next challenge is to improve green investment standards. Recently, China launched the Environmental Risk Management Initiative for China’s Overseas Investment. There is huge potential to “green” the Belt and Road Initiative, if Chinese financial institutions and enterprises improve the environmental risk management of their overseas investments and adopt responsible investment principles. Green bonds are a win-win for investors and developing countries, since they fund the green infrastructure projects that are so urgently needed by many of these countries.

Sustainable development zones

Earlier this year, the Chinese government approved three sustainable development zones, which will implement the United Nations 2030 Sustainable Development Goals:

Shenzhen is China’s innovation engine. This zone will integrate technologies in sewage treatment, waste utilization, ecological restoration, and artificial intelligence to solve issues from resource management to pollution.

This zone will focus on innovations that tackle desertification, creating solutions that can be replicated by other regions facing the threat of encroaching deserts.

Targeting air and water pollution, this zone will foster innovative solutions that can be replicated by regions relying on resource extraction.

Tech companies as green innovators

China’s technology giants play a vital role in sustainable development. Tencent, Baidu and Alibaba are among the world’s top 10 internet companies. Online technology – particularly e-commerce, internet banking and social media – is accelerating the pace of change.

For example, Ant Financial, a banking subsidiary of Alibaba, is a founding partner of the Green Digital Finance Alliance. This alliance aims to use digital technology to advance green finance.

Over 200 million of Ant’s users signed up to Ant Forest, an app that gamifies carbon footprint tracking. The app prompts users to cut greenhouse gas emissions in real life, demonstrating the massive potential of Fintech for supporting sustainable development. By the end of January 2017, the approach had saved 150,000 tonnes of CO2.

Spotify CEO wins backing of business families for ‘creative Davos’

Daniel Ek, Spotify co-founder and chief executive © Bloomberg

The chief executive of Spotify is teaming up with some of Europe’s leading business families to finance an annual conference they hope could be a “creative Davos” with a focus on technology and innovation. Brilliant Minds, an event set up by Daniel Ek of music streaming company Spotify and Ash Pournouri, the ex-manager of the recently deceased DJ Avicii, is now owned and financed by a group of Swedish families including the Wallenbergs, Stenbecks and Olssons, whose companies include Ericsson, Electrolux, Kinnevik, Zalando and Stena.

“Daniel Ek would like to put Sweden on the map more in this new world and the new economy. This is not about one family or one entrepreneur — it’s about Sweden,” Marcus Wallenberg, the chairman of bank SEB and defence group Saab, told the Financial Times. This year’s event will take place over two days next month and feature a variety of events including a keynote speech from David Solomon, the favourite to become the next Goldman Sachs chief executive and an electronic dance music DJ, and a focus on female and creative business founders. Mr Ek and Mr Pournouri launched Brilliant Minds in 2015, featuring speakers such as singer Wyclef Jean, Prince Daniel of Sweden, and Skype co-founder Niklas Zennstrom. They wanted to secure its future without resorting to commercial sponsors.

Natalia Brzezinski, chief executive of Brilliant Minds, said the idea was to bring together two worlds — technology and traditional business families — that did not often mix. Leading Swedish business figures now financing the event include Caroline Berg, the fifth generation of the Ax:son Johnson family, Fredrik Rapp, the owner of investment group Pomona, and Mr Ek himself. Other families have been approached, with Karl-Johan Persson, chief executive of retailer H&M, sitting on the advisory board. The families are backing the event for five years for an undisclosed investment. “It is important that Brilliant Minds promotes and supports the transformative environment we have, which isn’t well known outside of the Nordics,” said Mr Ek.

For all their backing of Sweden, however, both Mr Ek and the Wallenberg family have warned the government to take action to avoid start-ups and bigger tech groups leaving the country due to problems with housing, taxation of stock options and so on. Spotify listed recently in New York while payments company iZettle was bought by PayPal of the US last week instead of floating. “It is fair to say that one of the big challenges for Sweden is to keep its entrepreneurs so they want to stay here and develop their companies. [The Wallenberg cousins] think it would be very sad if entrepreneurs of this time and age decide to develop their companies somewhere else,” said Mr Wallenberg.