China's property giants launch green index

BEIJING (Reuters) - China’s largest real estate developers launched a green index on Wednesday to manage their cement, steel and iron suppliers as the world’s second-largest economy steps up its fight against climate change.

Residential buildings are seen in smog during a polluted day in Beijing, China, February 4, 2017. REUTERS/Stringer

China’s real estate and construction sector accounts for 8 percent of the world’s carbon emissions, according to some studies, and is therefore a major contributor to the country’s hazardous smog.

The Real Estate Green Supply Chain Initiative was launched by some of China’s largest property developers including Vanke and Landsea and business associations including the Society of Entrepreneurs and Ecology (SEE).

Seventy-one real estate companies with sales revenue of 1.3 trillion yuan ($188.78 billion) - accounting for 15 percent of sales revenue of the entire sector - have signed up, involving more than 2000 upstream suppliers.

This is the first time an industry in China has worked together to improve supply chain environmental management, according to the Institute for Public and Environmental Affairs (IPE), a non-government organization campaigning for greater transparency. The United Nations Environment Program has called the undertaking a “global first”.

Multinational corporations operating in China have tended to focus on green supply chains because of pressure exerted by global consumers, unlike China’s real estate developers who exclusively target Chinese clients.

But attitudes in China are shifting as people become increasingly aware and concerned about toxic air, water, soil and food - even as the Trump administration in Washington is moving the United States away from environmental concerns.

“We talk about the supply chain, we talk about global brands. Where are the Chinese brands? We continue to get this question from global brands. Today, we can say - Chinese brands have arrived,” Ma Jun, the director of IPE, said at the initiative’s launch.

“To even figure out where the concrete and steel comes from is an enormous feat,” Ma said, adding that many international auto companies operating in China had given up trying to track their steel supply chains, claiming it was too difficult.

The index launch comes as China tries to cut excess capacity in heavy industries.

“We wouldn’t have been able to do this if China wasn’t tackling overcapacity in its steel and iron industries. So the timing is right,” said Qian Xiaohua, head of SEE and director of Sunac, one of China’s largest property developers.

But challenges abound, he conceded, noting China’s real estate industry has grown rapidly amid a booming economy, lax oversight and a fast-changing market.

The joke is that “if we succeed, we deserve to win the Nobel Peace Prize,” Qian said. “But it’s going to be extremely tough to really make this work.”

Additional reporting by Yawen Chen; Editing by Tom Heneghan