Sustainable Transformation of Tobacco in China

SUSTAINABLE TRANSFORMATION OF TOBACCO IN CHINA
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Abstract
Tobacco consumption is a global public health crisis that causes millions of deaths every year. However, the social and environmental impacts of tobacco cultivation and production are not talked about enough. Consequently, the importance of studying the ways tobacco companies can successfully implement sustainable transformations across the entire lifecycle of tobacco production cannot be understated. Expanding the investigation of tobacco from a public health perspective to a social and environmental sustainability perspective is critical to addressing such issues as climate change, human rights, tobacco farmers’ livelihood and welfare, and waste. This study employed a qualitative research methodology to investigate the sustainable transformation of tobacco in China. The study aimed to answer the two research questions: (1) What are the social sustainability practices implemented by Zunyi Tobacco Company in Guizhou Province in line with China Tobacco's sustainable transformation strategy? and (2) What are the environmental sustainability practices implemented by Zunyi Tobacco Company in Guizhou Province in line with China Tobacco's sustainable transformation strategy? Several managers of Zunyi Tobacco Company in Guizhou Province were interviewed with the aim of providing critical insights into the company’s social and environmental sustainability efforts. The study determined that Zunyi Tobacco Company has employed various social sustainability practices in line with China Tobacco's sustainable transformation strategy. These initiatives mainly focused on improving farmer livelihoods and welfare as well as promoting and protecting human rights. On the other hand, the environmental sustainability practices implemented by Zunyi Tobacco Company in Guizhou Province mainly revolved around combating climate change effects and reducing waste. The company is intent on improving the livelihoods and welfare of its farmers by providing fair prices for their produce, supporting them in diversifying income streams, increasing their productivity, and enhancing farmers’ access to basic needs. Zunyi Tobacco Company is also opposed to child labor as well as forced labor. As relates to environmental sustainability, the tobacco company has implemented measures to reduce water and energy consumption, increase usage of green energy, cut back on greenhouse gas emissions, and eliminate unnecessary waste.
Table of contents
Introduction
1.1 Introduction and Background
It is widely accepted that tobacco is harmful to the sustainable development of the environment. This harm can be divided into several levels: first, the physical harm caused by smoking to smokers and others. Second, the environmental damage of tobacco production in terms of air, water, and soil pollution. Third, and most often overlooked, are the social harms caused by tobacco production, such as labor health problems and gender inequality. In addition to causing over seven million deaths every year, tobacco has severe environmental consequences that are tied to its cultivation, processing, and distribution. While the prevailing focus as relates to tobacco is the direct morbidity and mortality impacts of both first- and second-hand smoke on people’s health, understanding the environmental impacts of tobacco production is critical because they are rarely included in tobacco mortality estimates (WHO, 2017). Moreover, other critical development metrics such as economic stability, gender equality, and food security are often excluded in debates about how tobacco affects social and economic development. The ecological footprint of tobacco leaf production is tied to deforestation of large tracts of land for cultivation, massive land and water use, and the application of environmentally harmful pesticides. Tobacco curing often entails further deforestation for wood to cure the tobacco leaves. During tobacco product manufacture, greenhouse gases are emitted along with waste during the manufacturing process. On the other hand, consumption of tobacco products results in air pollution, while the post-consumer waste of cigarette butts and packaging materials pollutes the environment.
The world is beleaguered by various environmental challenges, including a declining proportion of arable soil and a supply of clean water and air. These resources are necessary for humans to live, and as populations continue to grow, there is a growing need to preserve the planet’s precious resources (WHO, 2017). The subsequent environmental effects of tobacco products are already evident throughout the globe. For instance, China, the leading manufacturer of tobacco products, is currently experiencing a loss of around 16,000 hectares of forest and woodland every year. Other big producers such as India and central-southern African countries are witnessing the disappearance of entire ecosystems. Most of the leading tobacco leaf producing countries are also experiencing undernourishment from declining arable land to support sufficient food crop production. Unfortunately, there are significant gaps in existing research about the relationship between tobacco and the environment. Most of the data on the environmental costs of tobacco is self-reported by the tobacco companies themselves, and there is a dearth of objective and comprehensive research on the metric tons of greenhouse gases released into the air annually or the nature and quantity of waste produced during manufacturing as well as post-consumption process. This study will investigate the sustainability practices implemented by Zunyi Tobacco Company to limit the harms of tobacco environmentally and socially.
1.2 Research Statement and Objectives
The purpose of this study is to examine the ways in which the Zunyi Tobacco Company in Guizhou Province has aligned with China Tobacco’s sustainable transformation strategy. More specifically, the research will aim to answer the following research questions:
* What are the social sustainability practices implemented by Zunyi Tobacco Company in Guizhou Province in line with China Tobacco's sustainable transformation strategy?
* What are the environmental sustainability practices implemented by Zunyi Tobacco Company in Guizhou Province in line with China Tobacco's sustainable transformation strategy?
1.3 Sustainability Challenges
The United Nations Development Program (UNDP) defines sustainable development as development that is geared towards ending poverty, protecting the planet, and ensuring that everyone is enjoying peace and prosperity. The sustainability challenges in the transformation of businesses in the tobacco sector revolve around environmental degradation, human rights, gender equality, and economic development. Tobacco growing and curing is a resource-intensive process with considerable negative impacts on land and agriculture (WHO, 2017). The cultivation of tobacco generally results in the significant and largely irreversible destruction of trees and biodiversity. Tobacco farming is the major cause of land degradation in many low- and middle-income producing countries such as India, Jordan, Cuba, and Brazil. In addition to the extensive use of toxic agrochemicals during cultivation, tobacco production is responsible for massive greenhouse gas emissions. Containing these environmental effects is a serious sustainability challenge in the transformation of tobacco manufacturing companies. Another relevant sustainability issue concerns human rights: studies indicate that child labor is common in many low-income producing countries. The issue of child labor is tied to economic development in that contract farming (the common production arrangement between tobacco companies and small-scale farmers) is associated with low pay.
Smallholder tobacco farmers tend to earn very little, and the labor-intensive duties of tobacco farming often involve every contributing household member, including children. Tobacco farming is less profitable than other cash crops, and many farmers face immense economic struggles. The contract system used by most companies has been blamed for trapping small-scale farmers and even leaving them impoverished. Poverty is a significant social and economic development that tobacco-producing companies have to contend with. Besides, tobacco farming is mostly male-dominated, with little gender equality in terms of either production or income.
1.4 Significance of the Study
The study is significant to the tobacco sector because it will help highlight some of the ways tobacco companies can successfully implement sustainable transformations across the entire lifecycle. Broadening the study of tobacco control from public health impacts to include the social and environmental challenges involved is critical to transforming the less highlighted issues of economic and social development. The costs of the environmental damage caused by tobacco products are not always clear. Therefore, tobacco companies are often poorly informed of how they are contributing to climate change, social inequality, and declining economic productivity. More importantly, tobacco-producing companies may be unaware of more sustainable ways of cultivating, processing, and distributing tobacco products to minimize the true costs of environmental damage. Therefore, this study is critical to raising more awareness of the social and environmental impact of tobacco products and ways of limiting the same. Zunyi Tobacco’s sustainability strategy is successful since it focuses on limiting both the social and environmental impacts of tobacco farming. It should be copied by other tobacco companies, especially those in China, which share the same social and cultural environment. The study also proposes the welfare theory to support the sustainability efforts by Zunyi Tobacco company.
2.0 Literature Review
2.1 History of the Tobacco Sector in China
Since the late Qing period, tobacco has been a popular commodity in Chinese culture, when the country's smoking culture was characterized by handcrafted 'native' pipe tobacco and snuff. Cigarettes, therefore, became an extraordinary success when foreign firms, particularly the British-American Tobacco Company, infiltrated the Chinese market and began high-volume mechanized and standardized cigarette production. These foreign firms competed with the numerous small workshops that manufactured hand-rolled cigarettes in the tobacco-producing areas of the country. Before the founding of the CNTC, the nation’s tobacco industry was characterized by a myriad of individual tobacco establishments ranging from production to wholesaling. However, the institution of the state-owned enterprise in 1982 consolidated all companies in the tobacco industry, covering the plantation of tobacco, selling and allocation of leaf tobacco, as well as production and distribution of tobacco products. The Chinese government authorized the CNTC to act as the state tobacco monopoly in all areas of tobacco production and distribution.
It is responsible for overseeing all provincial-level tobacco companies in all municipalities except the Tibet region. At its inception, the entity had over 100 cigarette factories and curing plants, as well as more than 2,000 leaf tobacco stations and wholesale cigarette departments. The CNTC has consolidated the tobacco industry to include 33 provincial tobacco firms, 17 tobacco industrial companies, 57 cigarette industrial corporations, and more than 1,000 commercial business and national companies. In addition to establishing the CNTC as the business entity of the tobacco monopoly, the government also instituted the State Tobacco Monopoly Administration (STMA) in 1985 as the government's regulatory arm. Consequently, the Chinese government plays the conflicting roles of both owner and regulator of the tobacco industry (Hendlin & Bialous, 2019). CNTC serves the biggest local tobacco market share in the globe, producing more than a third of the world’s cigarettes. The country's 270 million smokers consume a majority of the cigarettes produced by CNTC (Tobacco Tactics, 2021). CNTC’s overwhelming domestic market share is largely the result of heavy regulation by the Chinese government: imports and local production of foreign brands are strictly limited in China to allow local tobacco companies to flourish.
Despite the sheer scale of the CNTC, there is very limited research on its activities: as a state-owned entity, there are annual industry reports or shareholder meetings. On the other hand, there is more information on Zunyi Tobacco Company in Guizhou Province, the focus of this study, and a subsidiary of the CNTC. China Tobacco Guizhou Industrial Co., Ltd. Zunyi Cigarette Factory, the parent company of Zunyi Tobacco Company in Guizhou Province, was approved by CNTC and reorganized into a shareholder system in July 1, 2008. It operates as a wholly-owned subsidiary of China Tobacco and focuses on the manufacture and marketing of tobacco and associated machines and parts. Zunyi Tobacco Company in Guizhou Province is one of the five factories within the conglomerate. Although the company expects continued expansion of the Chinese market in terms of both volume and value of tobacco products, there are several challenges the company has to overcome.
The company's first major issue relates to the regulatory structure that undergirds the extensive tobacco industry system. Both the CNTC and STMA comprise of three divisions: CNTC head office, provincial-level tobacco monopoly administrations, along with accessorial departments (Fang, Lee and Sejpal, 2016). While this central planning of the entire tobacco industry is functional, it results in coordination problems between tobacco farmers, factories, distributors, and retailers. The current organizational system has been blamed for preventing enterprises such as the Zunyi Tobacco Company from the privilege of determining their own course. All corporations under the umbrella body of CNTC must follow policy, and this often results in conflicts of interest. Besides, STMA has been blamed by farmers for interprovincial protectionism and also hindering the individual interests of provinces' tobacco industries. The Covid-19 pandemic also affected the company’s distribution channels, particularly the long-term and cooperative partnerships Zunyi Tobacco Company had formed with its key customers and suppliers.
Moreover, the Covid-19 pandemic resulted in significant reductions in tobacco consumption throughout Asia. Therefore, the company is faced with the challenge of strengthening its connection with suppliers and customers (China Tobacco International (HK) Company Limited, 2021). However, the biggest challenge is related to the social and environmental challenges associated with tobacco production. Zunyi Tobacco Company is faced with the challenge of successfully implementing a socially and environmentally sustainable transformation of its business processes and activities in line with China Tobacco's sustainable transformation strategy. Another instance of sustainable transformation of science, technology, and sustainability concerns the use of technology to ensure effective water stewardship. Tobacco-producing companies are using more water-efficient production processes to minimize the number of resources used in their operations (Kaufman, 2020). Integrated work systems can help factories optimize not only overall water usage but also detect leakages. Implementing a range of water recycling initiatives such as reusing the water from manufacturing processes for other utilities is another water conservation strategy used by tobacco companies.
The welfare of Tobacco Sector Workers, Poverty Alleviation, and Sustainability
The first instance of how tobacco companies are ensuring sustainable operations in the tobacco sector relates to the use of the ‘best practices’ manual that sets out the minimum performance levels required of tobacco leaf suppliers in matters pertaining to sustainable agriculture, environmental management, and human rights. By conducting yearly assessments of suppliers along with recurrent on-site evaluations, tobacco companies encourage best practices and drive progressive development across their leaf supply chains. Another useful way of promoting sustainability best practices in tobacco production is through developing industry-wide collaborations with other tobacco-producing companies (WHO, 2017). Although there is limited collaboration between tobacco companies, there is an opportunity for sharing of best practices between firms that span the entire crop’s lifecycle from cultivation to production to distribution and even packaging (He, Takeuchi and Yano, 2012). Besides, aligning with critical external labor standards like the International Labor Organization (ILO) is critical to bolstering the sustainability of supply chains, particularly in matters pertaining to human rights, gender equality, and economic development (BAT, 2020). Another example is the alignment of company practices and activities with the UN Sustainable Development Goals.
The UN Sustainable Development Goals give strong focus to environmental impacts and risks as well as continual improvement of production processes to mitigate environmental damage. Tobacco companies are increasingly applying standards and criteria to a wide variety of UN Sustainable Development Goals focus areas, categorized under the central themes of human and labor rights, climate change, water, soil health, water, crop and governance, natural habitats, and farmer livelihoods. Implementing technologies that allow monitoring of suppliers' compliance with these themes is integral to the sustainable transformation of tobacco in China (Hendlin & Bialous, 2019). In some companies, information at the farm level is gathered using digital monitoring tools to ensure that every small-scale farmer is complying with UN Sustainable Development Goals focus areas. The results of supplier evaluations are used to form the basis for continuous improvement.
A dialogue for improvement of production practices and activit...