Back in 2007, some giant companies in the clothing industry, including H&M, Gap, Nike, and Adidas, met in Guangzhou with a Chinese environmentalist, Ma Jun. Ma had a blunt message for them: The West’s voracious fashion habits were killing fish stocks and rendering the water along China’s coastline undrinkable, as their suppliers’ factories spewed out chemicals, like the indigo dyes used to make denim jeans, to meet the demands of Western clients.
“Some of their suppliers were not even complying with the basic environmental standards in China,” Ma says. “We had a serious situation, with 2.5 billion tons of textile wastewater. The rivers were good for no use.”
The companies’ response was prickly, Ma recalls. Yes, the situation sounded bad, they admitted, but how could they scrutinize hundreds of factories? “They said, ‘In China, we don’t know who is polluting and who is not, so we just buy from the cheap ones,’” Ma says. “I told them, ‘We happen to have a list of violators.’”
Ma did not set out to convince companies that change was needed; most already agreed. Instead, he wanted to undercut their main argument—that it was logistically impossible for them to monitor suppliers half a world away.
A former investigative journalist, Ma, who’s now 53, had grown tired of hearing horror stories from fishermen in the Yangtze River delta, whose livelihoods had withered as production in apparel and other sectors rocketed. He had collected evidence of the pollution for his 1999 book, China’s Water Crisis. If he could gather data on a massive scale, he thought, it might compel Western companies to hold accountable factories deep in their supply chain—something they claimed they wanted to do—or at least force them to explain to shareholders why they were failing to do so.
So was born Ma’s Beijing organization, the Institute of Public and Environmental Affairs, or IPE. Today, IPE’s lists—of both violators and do-gooders among factories in China—are longer than ever. And so is the list of multinationals that are relying on the group’s information, even if they don’t always act on what it reveals to them.
No one is off the grid
Unlike many environmental groups, IPE from the start set itself one task: collecting data. Over time, IPE has broadened its mission to cover nearly two dozen industries and to track air pollution and greenhouse gases as well as water pollution. But from the beginning, it has positioned itself less as an activist group and more as a tech tool for both government and businesses, seemingly protecting it from any official crackdowns. (The organization’s data does not deal with explosive issues like the suspected use of forced Uyghur labor for cotton production in Xinjiang province, which drew outrage from H&M and Nike earlier this year, sparking boycotts in China against those companies’ products.)
Ma’s strategy has clearly worked for some businesses. IPE lists 55 multinational companies as part of its Blue EcoChain System, including tech giants like Apple, Amazon, Intel, and others, and apparel companies like H&M and Gap, who receive automatic updates about their suppliers. Any violation or audit of a supplier in China generates an automatic email to clients, even those headquartered thousands of miles away, like Levi Strauss in San Francisco. In an email to Fortune, Levi Strauss chief sustainability officer Jeffrey Hogue calls IPE “a trusted and valued partner. We’re grateful for their collaboration over the years.”
Since Ma’s 2007 meeting in Guangzhou with clothing companies, IPE has grown from monitoring a small number of cases to curating a vast database that, by his estimation, now includes figures for about 10 million companies. Of those, about 1.28 million have been found by local authorities to have violated environmental regulations. Much of the data is displayed in what IPE calls its Blue Map, which includes hundreds of factories involved in denim-jean manufacturing. That’s a category that Western apparel companies have long deemed difficult to monitor, and whose environmental toll is high; the UN estimates it takes about 1,000 gallons of water to make a single pair of blue jeans.
By tapping into government and company sources, IPE connects the thousands of complaints filed by local residents with the fines imposed by China’s local Environmental Protection Bureaus, or EPBs, all of which are listed in public records. That means execs as far away as Boston or San Francisco can track their suppliers in real time—on a mobile app—and see how they rank, with the least polluting marked as blue dots, and the most polluting as red ones. IPE now tracks 21 industries, including solar-panel manufacturers, automakers, and pharmaceutical companies. And in 2019 it launched a carbon map to monitor greenhouse gases across China. It also monitors real-time data that measures air pollutants from about 50,000 factories.
IPE also provides a blueprint for others on how to monitor global supply chains. “This is the first map of its scale,” says Leonardo Bonanni, founder and CEO of the New York City–based supply-chain tracking company SourceMap. “The fact that IPE’s data is so readily accessible makes it really unique.”
Bonanni launched his own supply-chain tracking company in 2009, beginning as a doctoral student at MIT, when he realized that Big Data could finally be used to make supply chains transparent. His first client was the banana giant Chiquita. “For decades before the internet, you could not be expected to know who your suppliers were,” he says. “But now there is no one—no farm, no mine—that is off the grid.”
That also makes it possible for U.S. companies to act against bad suppliers—and equally impossible for them to claim ignorance, as they did to Ma back in 2007.
Ma describes an instance when Gap and four other companies ordered a dying factory in the Yangtze River delta to stop dumping chemicals into the local water system, or risk losing their business. The factory overhauled its wastewater system at a cost of millions, according to Ma. And in the rest of China, he says, there are signs of change. About 28% of water-monitoring sites were categorized by the Chinese government as being in a severe state in 2006. Last year, that figure was less than 1%.
Though it is impossible to measure, one reason for the improvement could be added scrutiny from afar by big clients. Gap’s senior director of supplier sustainability, William Lee, told Fortune in an email from Hong Kong that the company uses IPE data to demand environmental upgrades from factories in China, and then to check that the changes have been made. The company also vets potential new suppliers against IPE’s maps, identifying those that could pose environmental risks. “Our suppliers have been supportive in addressing issues,” Lee says.
Talk is cheap
That was not always the case. For years, Ma faced deep hostility from Chinese factories, which saw his work as an existential threat to their business. “Some were angry, and there were threats to sue us,” Ma says. “From day to day, we were not sure we could continue. But none of this litigation ever happened. They realized it would be very hard to fight us. This is official data.”
Nowadays, being confirmed by IPE data as a clean supplier could mean good business. But the organization’s approach has not always yielded such easy victories. Indeed, the data shows not only signs of progress but also how poorly multinational companies have performed in trying to turn the green pronouncements made by execs at headquarters into reality on the ground.
IPE’s Corporate Information Transparency Index, or CITI, developed with the U.S. Natural Resources Defense Council, ranks 611 businesses according to how hard they push suppliers in China to cut emissions and waste, and how openly they engage with groups like IPE.
Beyond the 10 best companies on the list—topped by Levi Strauss, European fast-fashion retailer C&A, and Cisco—the score drops off sharply. Even the consumer giant Unilever, which has staked its reputation on a drastic green overhaul, sits at No. 160, in part because of its lack of responsiveness to questions about its supply chain. (Unilever told Fortune that supply-chain traceability was “essential” to the company; its 12 mandatory requirements for suppliers includes doing business “in a manner which embraces sustainability and reduces environmental impact.”) The message of IPE’s ranking: Ignore environmentalists at your peril.
“Maybe CEOs are serious about their carbon commitments, but they don’t seem to have any idea about the real work that is required to meet it,” says Linda Greer, IPE’s global fellow in Washington, D.C., who helped design the ranking, and who pushes U.S. multinationals to use the Blue Map. Greer has spent considerable time in China examining companies’ supply chains. “Talk is cheap,” she says. “And there is a lot of talk, and very little action.”
Ma has not been put off by companies’ slowness. There he sees progress, even if it’s incremental. After IPE began tracking Chinese-owned factories in Vietnam, a major site for clothing manufacturers, Gap and Target spotted violations among its suppliers there. A rollout in India is next. And after that, Ma hopes to go global, creating a map that would track air pollutants and carbon emissions across the world.
In China, the financial risks of doing business with polluters are becoming clearer. The Postal Savings Bank of China—with tens of thousands of branches—has begun evaluating loan applicants against IPE data. “We have seen real big changes,” Ma says, comparing the present to the early years in the 2000s, when he faced threats of lawsuits. For suppliers in China, the user-friendly maps offer “a path toward solutions,” he says. “We give them the chance to disclose how they are trying to fix the problem.” With their clients watching from across the world, their survival could depend on it.
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