Sustainability is good business
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By Jason Patterson
Climate change was the name of the game at Huawei’s Fourth Annual Global
Supplier Sustainability Conference, held on October 18th at the Huawei campus in
Shenzhen. Roughly 170 Huawei suppliers and five major customers gathered together
with Huawei leadership to hear each other’s thoughts and plans for sustainable
industry, and most of those thoughts revolved around how to reduce waste, energy
consumption, and overall carbon footprint.
Huawei used its Fourth Annual Global Supplier Sustainability Conference as an
opportunity to voice its dedication to fighting climate change, and how it expects its
suppliers to join in that fight. The company spoke about how stamping out excessive
overtime, child labor, and toxins in the workplace is good, but not good enough for a
supplier, or anybody else, to really be considered sustainable.
Huawei Executive Vice President Eric Xu explained that Huawei now defines
sustainability as moving beyond mere passive risk management to actually embracing
the active management of efficiency (Huawei would hammer this efficiency point
repeatedly throughout the day). He outlined a four-pronged strategy that Huawei will
follow regarding CSR – eliminating the digital divide, promoting green/sustainable
development, becoming a trusted partner with stakeholders, and harmonizing the
development of the entire value chain. The latter is particularly important as it
indicates a shift from the “customer-oriented supplier CSR risk management” strategy
that Huawei has been following for the last decade to an “overall sustainable
development” approach that focuses more on efficiency than risk management.
Huawei Chief Operation & Delivery Officer Benjamin Peng elaborated on this
somewhat by defining sustainability as the moving on from reactive risk management
to proactive problem prevention. He then went into greater depth regarding Huawei’s
ambitions for efficiency by stating that “sustainability requires zero waste.” This is
reflected in Huawei’s efforts to recycle any & all components from retired equipment,
as well as its efforts to reuse packaging whenever possible.
Peng would state unequivocally that “Huawei recognizes climate change and is taking
unprecedented steps to cope with it… There is no reason not to do it…
CSR/Sustainability is part of our DNA.” As to Huawei’s suppliers, Peng would add,
“Compliance is okay but it does not demonstrate the spirit of sustainability.” However,
it wasn’t all liberal piety from Mr. Peng. He would go on later to remind the audience
that “sustainability is also a business imperative.”
This point would also be reflected by the distinguished customers who attended the
conference, who often spoke about the preferences of potential clients for sustainable
products & services. The first customer to speak was British Telecom (BT),
represented by Kelly Ning (a BT supply chain manager & business improvement
specialist), who master of ceremonies Alan Aicken (Huawei’s VP for supply chain
CSR) referred to as Huawei’s mentor in helping the company enhance its knowledge
of sustainability. She outlined how BT managed to cut its waste to landfill by half
from 2009 to 2011 and plans for 25% of its energy consumption to stem from
sustainable resources by 2016.
She was later joined by John Spear, Director of Energy Performance Index Ltd., (a
British energy consultancy that works with BT), who outlined the carrier’s supplier
sustainability framework, dubbed Better Future. This program is particularly
interesting as it hands out bronze (meets the minimum), silver and gold awards to
suppliers, as opposed to merely handing out a simple “attaboy” prize every year that
fails to distinguish the degree of achievement. What’s interesting about BT’s ranking
criteria is how rigorous it is. A bronze simply means that a supplier is up to BT’s
minimum standards, but a supplier could be the best in class in all ten criteria and still
not get a gold. However, these very strict criteria seem to get results. The telco stated
that the average supplier who participates consumes 20% less electricity, 10% less
raw materials, and utilizes 10% less water & effluent, while seeing a return on
investment (ROI) in less than three years.
Philipp Wallis (a terminal procurement expert) spoke for Deutsche Telecom and laid
out a picture of the carrots (loan approval) and sticks (LOHAS disregard) out there
related to going green, followed by a nuts & bolts presentation on how a new supplier
might be evaluated and later audited by the operator. He discussed the problems that
have been encountered with cramped worker housing, excessive/forced overtime, and
inadequate wages. The latter seemed to be a particular concern as it frequently ties
into the overtime issue. Wallis clearly expressed a desire for suppliers to pay out a
wage generous enough for workers not only to live, but also to save.
Bernardo Scammacca (a supplier performance monitoring manager) from France
Telecom followed this up with some scary statistics about energy consumption and
network operations, while detailing the telco’s efforts to achieve a 20% reduction
(from 2006 levels) in carbon emissions by 2020. The operator noted that in 2008,
energy cost hikes quadrupled other cost increases at the French incumbent, but
something even more scary is the fact that 71% of Orange’s increases in energy
expenditures from 2006 to 2008 were attributed to increased consumption as opposed
to mere price hikes. Electricity consumption is a major concern at any telco, with the
Orange group in particular consuming (in 2010) an annual total equal to what the
entire country of France consumed in 3.7 days at that time. However, the operator is
proving itself more than just another consumer. It has set targets for 15% energy
usage reductions (from 2006 levels) by 2020, while planning to have 25% of its
electricity consumed in Africa be solar-generated by 2015. What’s more, the operator
also plans to achieve a large part of the aforementioned carbon emission reductions
through terminal recycling, a sensible answer considering how quickly most get
discarded.
Tony Yu (a senior sourcing manager) of Vodafone, which has named Huawei its
Supplier of the Year for 2012, let the audience know that even though 86% of the
company’s carbon emissions stemmed from its network, the company is making
efforts in all areas to reduce its footprint. Teleworking/teleconferencing reduced its
carbon emissions in the U.K. alone by 24,000 tons in fiscal 2010, while the Huawei
PowerCube solution, a diesel-battery hybrid solution, has been installed in at least
3000 sites (as of the end of fiscal 2010), leading to an 80% reduction in diesel
generation and a carbon emission reduction of approximately 100,000 tons. As a
kicker, a Vodafone innovation center in South Africa has been given the first 6-star
rating (as rated by the Green Building Council of South Africa) on the continent (a
maximum score), indicating world leadership in ecological building practices.
Huawei itself would then go into detail about what it expects from its suppliers.
Master of ceremonies Alan Aicken partially defined sustainability as the employment
of lean manufacturing (elimination of the “seven deadly wastes”), but in far more
imperative terms. “As individuals we all have personal choices to make, but as
businesses, there is no choice. We either have to behave sustainably or our customers
will choose other suppliers.”
This last statement, in particular, is far from the usual soundbyte fodder, at least in the
eye of the Carbon Disclosure Project (CDP), an NGO dedicated to tabulating climate
change data and other environmental statistics. According to its program director for
China, Li Rusong, 56% of surveyed multinationals are now willing to dump suppliers
if their carbon reduction efforts will not prove adequate within five years.
Clearly this message has filtered down to these suppliers, as Steven Chen, General
Manager at COMPEQ (a Taiwanese-owned PCB manufacturer) illustrated to the
conference attendees how the company is on track to reduce its carbon footprint by 35%
this year from 2009 levels, which would represent a 25% improvement over its target
levels and a third straight year of 10-15% reduction. It was also demonstrated by
Hytems (a Chinese maker of heat exchangers, device cabinets, etc.) whose Executive
Vice General Manager, Tong Huazhou, discussed how the company has reduced fuel
consumption by 33% for its spraying process, and energy costs for its air compressors
by 20% (with the trend still decreasing). Tong also discussed how the company has
seen significant savings by replacing its wood containers with steel, as well as through
lighting improvements at its facilities, referring to the latter as “low-hanging fruit.”
On the whole, the take-home message for this conference seemed to be that
“greenwashing is not enough.” This sentiment was echoed by Alan Aicken, who
stated, “Our vision for the supply chain is to work with self-sustaining sustainable
suppliers based on your proactive, innovative, and innate commitment to
sustainability, versus driving compliance by audit. You’ve seen that Huawei goes
beyond compliance. We don’t just do what our customers want, we do more. We
don’t just do what the government regulations require of us, we do more. We have
significantly better air emissions than are required by law, and we have the data to
prove it. Water treatment is significantly better than required by law. The wages that
Huawei pays are significantly higher than minimum wage. Not because it is required
by law. Not because the customer demands it, but because it’s the right thing to do.”
When asked later about the results of the conference, Aicken added, “I received a lot
of positive feedback, from suppliers, customers and others, regarding how aligned
Huawei is with our customers. The message was clear that the sustainability train is
leaving the station – be on it, or be left behind.”
Editor: Julia yaohaifei@huawei.com
Quotations (not all will be used)
Benjamin Peng: At Huawei, we only want to do business with the best suppliers in the
world. We expect that you will support us and our customers in behaving in a
sustainable manner.
Kelly Ning (BT): “If our suppliers are not as sustainable as we are, then we are at
significant risk of brand damage, and this is not alarmist talk because we have been
seeing lots of brand damage issues happening across the world, not only in China but
in other regions and other countries.”
John Spear (Energy Performance Index Ltd.): “Customers now are concerned.
Customers are seeing, in the U.K., lots of floods this summer. They believe that
global warming is real. They believe that global warming affects them in their house,
in their life, in their job, and with their children.”
Philipp Wallis (DT): “What do you really know about your supply chain? Even if you
know your first-tier suppliers, and you probably know your second-tier suppliers, but
where do your resources come from? Where is the mining done? Where does the base
material come from? This is one of the challenges for all of us.”
Alan Aicken: “We have to design a product such that at the end of the product’s life,
there is zero waste. What that means is that each of the components that we have
designed in can be reused or recycled. Now that is a very hard target – zero waste. So,
if you cannot make zero waste, then make 95%.”
For the box
Huawei’s Green Initiatives
Huawei is fully committed to the fight against climate change. As a Fortune 500
company, this is particularly important as the vast majority of the increase in global
carbon emissions since 1980 stems from Asia. As Huawei grows, it strives that much
more to make certain that every element of its business is ecological, as can been seen
in its three-pronged strategy for green initiatives – Green Communications, Green
Huawei, Green World.
Green Initiatives
Huawei is fully committed to the fight against climate change. As a Fortune 500
company, this is particularly important as the vast majority of the increase in global
carbon emissions since 1980 stems from Asia. As Huawei grows, it strives that much
more to make certain that every element of its business is ecological, as can been seen
in its three-pronged strategy for green initiatives – Green Communications, Green
Huawei, Green World.
Green Communications
Huawei’s Green Star program for its own products evaluates energy
consumption, carbon emissions, resource consumption, hazardous substances,
waste generated, and health & safety; over 30 products have been certified
since 2011.
Mini-shelter solutions reduce space by 60%, power by 40 to 80%.
MxU design reduces POTS power consumption by 50%.
Green Huawei
Green packaging (which accounts for 60% the packaging it ships to carriers)
saves over 5000 square meters of woodlands annually, reducing carbon
emission by 13,000 tons.
Huawei has decreased air shipments by 38% since 2010 and increased its
percentage of direct shipments (direct shipments from supplier to customer) by
46%.
Huawei is projected to exceed its target for water consumption reduction at HQ
by 25%.
Green World
Songshan Lake solar facility can generate 4.03MW of power annually, saving
516 tons of coal and 4000 tons of carbon emissions each year.
Green Partner program focuses on eliminating restricted chemicals from its
products; 27 were awarded in 2011.
Huawei has contributed to environmental standards organizations on three
continents, as well as to international bodies such as the IEC, ISO, and ITU.
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