Impact Report on Green SMEs in China, Walter Ge (August 2012)
- 2. New Ventures China: Proving Environmental Entrepreneurship Can Work Identify & Select Environmental Acceleration Access Companies New Ventures China Investors New Ventures has supported Government over 500 and public environmental SMEs in China since 2003 Market
- 3. Table of Content 1 Status Quo of Green SMEs in China 2 Impact Performance Indicators System 3 Analysis on Sample Green SMES 4 Key Findings Key Findings 5 Next Steps
- 4. 1. Status Quo of Green SMEs in China 1.1 Green economic laws and policies Policy “ 十二五规划” — 12 项环境生 态相关指标
- 5. 1. Status Quo of Green SMEs in China 1.2 A power engine for economic transformation Driven by policies Booming of the Golden age for and funding green industry green SMEs Development of Energy Efficiency and Conservation Sector Year 2006 2007 2009 2010 2011 2015 Total industry output 8.2 21.6 58.7 83.6 125 ？ (RMB billion) Source: 2011 Annual Report of China’s Energy-Saving Service Industry
- 6. 1. Status Quo of Green SMEs in China 1.3 potential and impact of green SMEs not well recognized •Potential of green SMEs in energy efficiency and emissions reduction not well received by the government •Lack of proper measuring indicators The overall sector remains under-developed •weak in management •poor access to information
- 7. 2. Impact Performance Indicators System 2.1 4 major issues studied
- 8. 2. Impact Performance Indicators System 2.2 Definition on green SMEs Deliver positive impact on improving the natural environment through innovative technologies, products, and/or business models · Renewable energy · Energy efficiency and conservation · Water resources management · Pollution prevention and waste management · Environmentally friendly new materials and processes · Sustainable land use · Biodiversity protection · Other related green fields
- 9. 2. Impact Performance Indicators System 2.3 methodology Strategies and management Based on triple- bottom line principle records green SMEs' "double Economic Environment Social green" attributes performance al performance performance Features : Measurable Comparable Participative
- 10. 2. Impact Performance Indicators System 2.4 Impact indicators framework First-Level Indicators Second-Level Indicators Third-Level Indicators Strategy & Value proposition Environmental protection and social contribution Management objectives defined in the strategies Management policies Growth and operations model Business Models Products, customers, markets and competitive advantages Performance Economic Basic financial and financing indicators over the most recent three years Environmental Environmental performance created by technologies and products Companies’ internal environmental management Social External: various social contributions Internal: job creation, work environment
- 11. 3. Data Analysis of Sample Green SMEs 3.1 Basic Information Company size Sector distribution Revenue Distribution in 2010 (RMB million) Industry Sector Distribution
- 12. 3. Data Analysis of Sample Green SMEs 3.1 Basic Information Average Age of Sample Companies by Sector (Year)
- 13. 3. Data Analysis of Sample Green SMEs 3.2 Consideration of “Sustainable Development” in trategy Environmental Operations Product Features Management and Management Response Energy Social reputation R&D Water Marketing & Response to Resource challenges Sales Utilization
- 14. 3. Data Analysis of Sample Green SMEs 3.3 Economic Performance 2008-2010 ： Total asset growth rate—204% Revenue growth rate—315% Pre-tax profit growth rate—94%
- 15. 3. Data Analysis of Sample Green SMEs 3.3 Economic Performance 3-year Growth Rates (2008-2010) Number of Sectors Total Asset Revenue Pre-Tax Profit Businesses Renewable Energy 13 303% 189% 96.7% Energy Efficiency and 15 242% 559% Conservation 80.1% Water Resources 7 44% 78% Management 19.4% Pollution Prevention 11 195% 434% 202.1% and Waste Management Growth Rates of Major Financial Metrics by Sector
- 16. 3. Data Analysis of Sample Green SMEs 3.3 Economic Performance Equity Government Company Size % Bank Loans % % Investment Funds 6 35% 1 4% 6 25% Micro Enterprise 2 12% 5 22% 5 21% Small Enterprise 9 53% 17 74% 13 54% Medium Enterprise 17 100% 23 100% 24 100% Total External financing by sample company size
- 17. 3. Data Analysis of Sample Green SMEs 3.3 Economic Performance Company Tax Subsidies % of total Grants % of total % of total Size Benefits 4 20% 2 12% 3 19% Micro Enterprise 6 30% 5 29% 4 25% Small Enterprise 10 50% 10 59% 9 56% Medium Enterprise 20 100% 17 100% 16 100% Total Distribution of Government Support Funds by Company Size
- 18. 3. Data Analysis of Sample Green SMEs 3.4 Environmental Performance (contribution) •Energy saved was approximately 680 thousand tons of coal equivalent, and emissions reduced were 1.77 million tons of CO2 equivalent; •1.14 million tons of solid waste were disposed; •80.50 million tons of sewage were disposed; •20.8 thousand cubic meters of wood were saved; •Approximately 7.2 million mu of land were sustainably used; •The biodiversity of 7 million mu of forest was protected.
- 19. 3. Data Analysis of Sample Green SMEs 3.4 Environmental Performance (internal operations) Green operations: Carbon Emission Water resource management Energy efficiency management Resource utilization efficiency
- 20. 3. Data Analysis of Sample Green SMEs 3.5 Social contribution Job creation Decent work Wages Total ： 5685 career Average ： 102 development Full time ： 5128 work safety Part time ： 557 occupational health
- 21. 4. Key Findings Policy Green Environmental Driven Genes & & social Challenges contributions • green SMEs enjoy • embedded “green rapid growth. genes” for sustainable • great potential • Different policies for contributing development lead to different to green levels of development development. • Financing difficulties are • high barrier for more serious • creating applying for employment government opportunities • Information funds and asymmetry subsidies
- 22. 5. Next Steps Improve Working with Green SMEs Impact the information Impact Role Indicators center of MIIT Model Initiative Indicators Government Initiatives database
- 23. New Ventures China: Creating Environmental & Social Impact via Role Models • To select companies with unique technologies/solutions to address serious environmental and social problems • To select entrepreneurs with humanistic care and acute awareness of sustainability • To select industry/sector-leading companies or those with a potential to lead, which could exert greater and wider impact as role models long-term
- 24. Impact Role Model: Sinen en-Tech •Exclusive developer and provider of high-temperature condensed water recovery technology, reducing energy intensity and water usage •Pioneer in energy performance contracting (EPC) business model in China Impacts and Potentials: •On company level; •On industry level; Pictured above: The Forbes China •Beyond industry level Magazine cover story featuring Yang and Sinen En-Tech
- 25. Impact Role Model: Landwasher •The Landwasher water- free flushing toilet reuses the urine deposited by users to flush toilet and saves precious water resources. Impacts and Potentials: •On rural villages •On residential buildings Pictured above: Landwasher water-free flushing toilet on Beijing Olympic sites