Impact Report on Green SMEs in China, Walter Ge (August 2012)

New Ventures China: Proving Environmental Entrepreneurship Can Work

Identify & Select Environmental

CompaniesAcceleration Access

New Ventures China

New Ventures has supported

over 500 environmental SMEs in China

since 2003

Government and public

Market

Investors

1

2

3

Key Findings Key Findings4

Table of ContentTable of Content

Status Quo of Green SMEs in China

Impact Performance Indicators System

Analysis on Sample Green SMES

5 Next Steps

1. Status Quo of Green SMEs in China1. Status Quo of Green SMEs in China

“十二五规划”— 12项环境生态相关指标

1.1 Green economic laws and policies

Policy

1.2 A power engine for economic transformation

Development of Energy Efficiency and Conservation Sector

Driven by policies and funding

Booming of the green industry

Golden age for green SMEs

Year 2006 2007 2009 2010 2011 2015

Total industry output (RMB billion)

8.2 21.6 58.7 83.6 125 ？

Source: 2011 Annual Report of China’s Energy-Saving Service Industry

1. Status Quo of Green SMEs in China 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

1. Status Quo of Green SMEs in China 1. Status Quo of Green SMEs in China

2. Impact Performance Indicators System2. Impact Performance Indicators System

2.1 4 major issues studied


Deliver positive impact on improving the natural environment through innovative technologies, products, and/or business models

2.2 Definition on green SMEs

· 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


2.3 methodology

Economic performance

Strategies and management

Social performance

Environmental performance

Based on triple-Based on triple-bottom line principlebottom line principlerecords green SMEs' "double green" attributes

FeaturesFeatures ::MeasurableMeasurableComparableComparableParticipativeParticipative


2.4 Impact indicators frameworkFirst-Level Indicators Second-Level Indicators Third-Level Indicators

Strategy & Management

Value proposition Environmental protection and social contribution 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

3. Data Analysis of Sample Green SMEs3. Data Analysis of Sample Green SMEs

3.1 Basic Information

Company size Sector distribution

Revenue Distribution in 2010 (RMB million) Industry Sector Distribution


3.1 Basic Information

Average Age of Sample Companies by Sector (Year)


3.2 Consideration of “Sustainable Development” in trategy

Product Features Operations Management

Environmental Management and

Response

R&D

Marketing & Sales

Energy

Water

Resource Utilization

Social reputation

Response to challenges


3.3 Economic Performance

2008-2010： Total asset growth rate—204%

Revenue growth rate—315%

Pre-tax profit growth rate—94%



Growth Rates of Major Financial Metrics by Sector

SectorsNumber of Businesses

3-year Growth Rates (2008-2010)

Total Asset Revenue Pre-Tax Profit

Renewable Energy 13 303% 189% 96.7%

Energy Efficiency and Conservation

15 242% 559%80.1%

Water Resources Management

7 44% 78%19.4%

Pollution Prevention and Waste Management

11 195% 434% 202.1%



External financing by sample company size

Company Size Equity Investment % Bank Loans % Government

Funds %

Micro Enterprise6 35% 1 4% 6 25%

Small Enterprise2 12% 5 22% 5 21%

Medium Enterprise9 53% 17 74% 13 54%

Total17 100% 23 100% 24 100%



Company Size Subsidies % of total Grants % of total Tax

Benefits % of total

Micro Enterprise

4 20% 2 12% 3 19%

Small Enterprise

6 30% 5 29% 4 25%

Medium Enterprise

10 50% 10 59% 9 56%

Total 20 100% 17 100% 16 100%

Distribution of Government Support Funds by Company Size


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.


3.4 Environmental Performance (internal operations)

Green operations:

Carbon Emission

Water resource management

Energy efficiency management

Resource utilization efficiency


3.5 Social contribution

Job creation Decent work

Total ： 5685

Average ： 102

Full time ： 5128

Part time ： 557

Wages

career development

work safety

occupational health

• embedded “green genes” for sustainable development

• Financing difficulties are more serious

• Information asymmetry

• green SMEs enjoy rapid growth.

• Different policies lead to different levels of development.

• high barrier for applying for government funds and subsidies

• great potential for contributing to green development

• creating employment opportunities

Policy Driven

Environmental & social

contributions

4. Key Findings4. Key Findings

Green Genes &

Challenges

Improve Impact Indicators

Working with the information center of MIIT

Green SMEs

Impact Role

Model

InitiativeIndicators Government

databaseInitiatives

5. Next Steps5. Next Steps

• 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

New Ventures China: Creating Environmental & Social Impact via Role Models

Pictured above: The Forbes China Magazine cover story featuring Yang and Sinen En-Tech

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;•Beyond industry level

Pictured above: Landwasher water-free flushing toilet on Beijing Olympic sites

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

Impact Report on Green SMEs in China, Walter Ge (August 2012)

Technology

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