Green strategies

Editor's note: Sound management, especially for the industrial sectors in China, also means green efforts. China Business Weekly reporter Fu Jing discussed the issue with Bertrand Moingeon, professor of Strategic Management and Deputy Dean of Paris-based business school HEC School of Management.

Q: When was your first encounter with China and Chinese executives? What impressed you when talking about their green thinking?

A: Through my academic career, I was privileged to have had my first contact with Chinese colleagues and business people in the mid 1980s. At that time, neither Chinese nor Westerners had very developed notions on the subject. Environmentalism was, at that time, reserved for a relatively small group, and was generally marginalized in the business community.

I think for the Chinese in the 1980s, the priorities were different. And honestly, our discussions were focused more about obstacles and opportunities within the context of the opening of China. I think it is normal that our thinking has changed since the 1980s, and the necessity to integrate "green thinking" into our business models has become much more of a priority than it was 20 years ago.

I am impressed in my discussions today, however, by the importance that the subject has taken on for the Chinese, and in such a short period of time. The business community has understood the importance of the subject, and has understood that it is possible to go beyond a cost perception of "green" to a "necessity" perception to a "added-value" perception.

Q: The Chinese government has educated all its officials, especially those with a scientific development outlook, on the concept of sustainable development. How do you expect the campaign will influence the business sector, especially investors and businessmen?

A: First, I think that the notion of sustainable development needs to be differentiated from sustained development. The latter, which is commonly heard in China, concerns the business priority of continued growth, often in a short-term context. The former, however, focuses on a radical shift in business outlook to ensure long-term growth within environmental and social constraints. It is this aspect that the business sector needs to integrate in China.

Long-term growth is not uniquely financial. Investors and businessmen need to understand that a sustainable development approach creates value to the organization and the society. New business models need to be defined, within today's constraints, which will create value. Many believe that we are on the verge of a new economic model, one whose success will be determined by the ability and success of firms to adapt to these constraints.

The fact that this initiative has come from Chinese leadership is fundamental, in that it sets sustainable development as a national priority. One of China's competitive advantages is its capacity to mobilize resources towards achieving results and goals. With this initiative, it is likely that firms will invest in sustainable research, creating new products and services and opening new markets.

Q: What are HEC's advantages in terms of sustainable and green management?

A: At HEC we have invested faculty resources to address issues related to sustainable development. Several years ago we launched a specialized master's program on the subject, and we find the topic entering our curriculum, across all programs, through specific electives. At the same time, students and executive participants often bring the subject up in a variety of general management subjects. It is not uncommon, for example, to discuss sustainable development within a marketing class focusing on product differentiation.

We are engaged in specific research on the area, as well as research on energy and energy management. HEC leads the Deloitte chair on Energy Management, which is a crucial platform for reflection, analysis and application. We are also engaged in critical research, leading to applied learning, on the theme of climate change and competitiveness.

Looking at sustainability in a larger context, HEC recently established a chair on social business, following a meeting between French President Nicolas Sarkozy, 2006 Nobel Peace Prize winner and Grameen Bank founder Muhammad Yunus, and HEC Paris Dean Bernard Ramanantsoa. The chair will be charged with developing a two-month training program on social business designed to complement the final-year curriculum of the MSc in Management. The objective will be to sensitize students to innovative approaches in business that contribute to reducing poverty and exclusion in both developing and developed countries.

Q: As a strategy management professor, how important is it to make business leaders "green strategists" in China and the rest of the world?

A: Sometimes strategy can be simple. In this case, there is no choice. Firms across the spectrum of business, from energy producers, to energy consumers, will be forced to address the issue. With increasing energy costs, firms will create value to their shareholders by reducing costs related to energy consumption. Energy producers will continually look for alternatives to respond to market demands.

Strategy is about allocation of resources. Leaders determine the direction for the firm, and the resources required to achieve the goal. So the overall strategic approach for the firm is to identify how the "green allocation of resources" will achieve goals and create value.

For China, the challenge is to manage its energy needs and the available resources. China's growth has been fueled by cheap access to energy. In the past, it made sense to produce certain goods in China, then ship them halfway around the world. Chinese strategists must find other ways to be globally competitive, and to move up the value chain. On the social side, economic success has created new expectations from the population, with a new set of needs which will increasingly challenge energy reserves. Meeting these demands, in a sustainable manner, is strategically important for China and its firms.

At the same time, responsibility for worldwide pollution also rests with the West. China's concern has arisen due to its rapid economic growth combined with population size that now makes the Chinese economy the biggest contributor to additional pollution, with the consequences we now see in terms of water availability, air pollution, changes in the sea level, etcetera.

Since last year, China has launched a portfolio of policies, laws and regulations to change China's development model and put it on a sustainable track. The enterprises are urged to become greener starting from project choosing, production, sales, to social responsibility. And even the finances and stock market are required to become green. All in all, the business process should be green. And businessmen should be green. That's good for our future.

(China Daily 09/22/2008 page5)