ABSTRACT

 

This case discussed the environmental impact of China’s food delivery industry.  It tracks the increase in takeout per capita and the urgency around changing consumption behavior.

 

SEEING

 

400 million.  That is the amount of food delivery orders processed each week by China’s leading food delivery platforms - Baidu Waimai, Ele.me, and Meituan Waimai.  Each day, that is over 57 million orders.  While economically speaking this may bode well for delivery companies, local restaurants, and food suppliers, environmentally speaking it means something quite different.  It is estimated that among each of the three aforementioned companies, more than “65 million food containers, 20 million pairs of disposable chopsticks, and 20 million plastic bags” are consumed every day, with little if any of it being recycled or otherwise sustainably disposed of.  It is likely, when carry-out and other types of takeout orders are taken into account, these numbers are even higher.  By a large margin, China leads the world in the amount of takeout food it consumes.  The industry – valued at RMB 166 billion as of 2016 – has grown 800% since 2011, with little signs of stopping.

 

It also leads the world in the amount of household waste it generates.  According to the World Bank, China generates some 520,000 tons of household waste every day, a large percentage of this waste being from food delivery.  This is almost 1/3 more than India, and more than twice that of the United States.  Such consumption behavior has not come without consequences.  According to Sixth Tone,

 

Food delivery waste is a microcosm of China’s worsening pollution problem. The nation’s cities are besieged by mounting piles of garbage, while the country’s creaking waste management systems struggle to keep up.

 

Cities are growing incapable of controlling the waste their inhabitants produce. In 2016, reports of trash dumping across provincial borders drew widespread public attention. In an effort to cut costs, more than 20,000 tons of waste produced in Shanghai were quietly dumped on Xishan Island in nearby Suzhou, Jiangsu province.

 

Even more serious is the plastic waste dumped directly into the ocean, causing virtually irreparable harm to aquatic ecosystems. According to data published in the journal Science, China is the No. 1 offender, responsible for almost one-third of all oceanic plastic waste. Pollutants ingested by fish are making their way back up the food chain and into humans, leading to increased risks of cancer and birth defects.

 

Compounding problems is that a lot this waste is not recyclable (let alone biodegradable).  It is doomed for the landfill, or worse if it is illegally disposed of.  That said, it is important to note that it is not as if China’s government is void of regulation on this front.  Article 6 of the Environmental Protection Law of the People's Republic of China states that:

 

“All units and individuals shall have the obligation to protect the environment.  Local people’s governments at various levels shall be responsible for the environmental quality within areas under their jurisdiction.  Enterprises, public institutions and any other producers/business operators shall prevent and reduce environmental pollution and ecological destruction, and shall bear the liability for the damage caused by them in accordance with the law.  Citizens shall enhance environmental protection awareness, adopt low-carbon and energy-saving lifestyle, and conscientiously fulfill the obligation of environmental protection.”

 

While this certainly obliges most, if not all, of Chinese society to work towards environmental ends, and serves as an attempt by the government to orient public morality to include sustainability-related objectives, it leaves open the question of enforcement.  In light of the negative externalities resulting from the growth of China’s food delivery and takeout culture, enforcement indeed is a question in need of attention, especially because the lack of it has real consequences for the future of the country.

 

JUDGING

 

Sustainable development is a concept that concerns just that, the future of a given country and, ultimately, the world.  In 1987, the United Nations published a report titled Our Common Future – also known as the Brundtland Report – from which emerged perhaps the simplest and most enduring definition of the term “sustainable development”:

 

“Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs.”

 

Drawing from this definition, the question of consumption takes on a dual meaning.  While it is necessary to consume for our own needs, it is likewise necessary to consume in a way that does not lessen the ability for future generations to do the same.  In other words, all consumptions decisions, however seemingly small and insignificant, have societal effects, and cannot be made without generating moral consequences.  When the question of consumption is viewed in this way, our decision making must be tempered by and oriented toward that which is, at the very least and to the extent possible, not destructive to society.  Although it is easy to view any one or another consumption decision as morally neutral, given how quickly they are often made and how routine they often are, it is tougher to deny the moral insignificance of individual consumption decisions when they are considered en masse.  For example, when Meituan Waimai uses “20 million pairs of disposable [wooden] chopsticks” as part of their daily order fulfillment, it is estimated that some 6,700 mature trees are felled; extended across a full year of business operations, that amounts to 2.5 million mature trees.  These numbers represent just one of many such delivery platforms.  Given that each pair of chopsticks corresponds to one takeout meal ordered, each person ordering a meal is contributing to the felling of mature trees in China (or wherever they may source their timber, if it not produced domestically).  If such trees are being felled at a rate faster than they are being grown, then ordering takeout food from Meituan Waimai is an unsustainable consumption decision, and would be at odds with the fulfillment of the ideal outlined in the Brundtland Report.

 

That said, consumers are not the only ones that must assume the consequences of their decisions.  Businesses, and the people who run them, must also make decisions that have societal consequences.  If the only takeout options available to consumers are unsustainable ones – in other words, ones that use unsustainable material inputs or generate externalities that cannot be mitigated or otherwise offset in some way – then businesses are making it harder for China to develop sustainably.  Using plastic bags, tubing, and containers – usually made from low-density polyethylene – for takeout orders, knowing that China’s recycling infrastructure is still developing, that many consumers will not consider the environmental impacts of the trash they dispose of, and that the enforcement of plastic bag bans has been ineffective at best, businesses such as Baidu Waimai are neglecting their responsibility to manage their environmental impact.  Given the obligations outlined in Article 6 of the Environmental Protection Law, this would be, technically speaking, in defiance of law.

 

Moreover, as businesses exist and operate in society, and form an integral part of local communities, they have inherent social responsibilities.  What they provide to the consumer marketplace is, in turn, what the consumer marketplace has to choose from.  Therefore, what they offer and how they offer it matters, not only legally, but also morally.  This is basis for what is known as Corporate Social Responsibility (CSR), the idea that a business has a moral duty to work towards sustainable ends – whatever that might mean or look like for a given firm – so as not to exploit manpower, indiscriminately use up limited resources, or pollute carelessly.  The avoidance of harm to society is only one half of the CSR equation, however.  The other half is service-oriented.  It involves strategically giving back to the communities in which a business operates.  Such work includes employer-sponsored volunteer hours for employees, partnerships with relevant non-profits, and philanthropic activity.  The most successful companies in the CSR space have achieved an alignment between their social goals and their strategic business objectives.  Firms in China, including those in the food delivery industry, can and should embrace such CSR strategies, as this would encourage better consumption behavior on behalf of the public and support the government’s social agenda. 

 

While the morality of production and consumption decisions by individual consumers and producers is important, there is a cultural dimension to be considered as well.  Underlying the growth of the takeout industry in China, at least in part, is a growing obsession with convenience.  Ordering takeout to be delivered to a consumer’s doorstep is much easier and faster than going grocery shopping, cooking a meal, and then cleaning the dishes afterwards.  In other words, the convenience of ordering takeout, despite the effects the fulfillment of such convenience is having on society and the environment, is being prioritized over more laborious, albeit more sustainable, forms of dining (e.g. cooking at home).  However, personal convenience is not necessarily in line with the goals of sustainable development.  While Ele.me may enable people to fulfill their own needs quickly and satisfactorily, the method of fulfillment may not be contributing to the ability of future generations to do so in the same way or to the same degree.  As Chen Ronggang of Sixth Tone put it:

 

“If we continue to saddle the environment with the remains of our quick-and-easy takeout hot pot, our environment will, one day, bite back.”

 

ACTING

 

What can consumers and businesses do to comply with the Chinese government’s Environmental Protection Law and align with the vision of sustainable development defined in the Brundtland Report?

 

Nielsen, a global marketing research firm, published a report in 2014 called the Global Survey on Corporate Social Responsibility.  They found that 55% of online consumers were willing to pay more for products and services being offered by companies with a social and/or environmental mission.  Similarly, a Cone Communications Social Impact Survey found that 89% of consumers in the US would switch brands – assuming similar quality and price points – to support one with an explicit social mission.  While this is good news, and indicates the potential of businesses and consumers to work together towards social ends, many consumers who express such sentiments and intentions in surveys oftentimes do not act accordingly.  This is sometimes called the “attitude-behavior gap”.  The explanation as to why this gap exists, at least in part, surrounds price and quality.  Consumers almost invariably choose products that either match their budgets or fulfill their quality expectations, regardless of whether the firm supplying the product has a social mission.  While this is reasonable consumption behavior, it leaves a lingering contradiction between how consumers would like to consume and how they actually consume.  This has two significant implications.

 

One, consumers are not, as they say, “practicing what they preach”.  However, before moralizing over their alleged hypocrisy, it is important to understand the context in which consumers make their consumption decisions.  As mentioned earlier, businesses determine the range of product and service options available for consumers to choose from.  They also are responsible for the degree of transparency they provide to the public, say, concerning their sourcing methods, and the kind of material inputs they use in production.  While consumers have an obligation to conduct a certain amount of due diligence, so as not to support immorally run or incompliant firms, they are pragmatists first.  Consumers will buy and use what works and satisfies their needs.  If it happens to fulfill a social goal in the process, all the better.  CSR is therefore not about “purifying the intentions” of consumers so that they will patronize social businesses on principle, but about accommodating consumers’ altruistic impulses by enabling them to buy products or services – at their desired price point and quality level – that simultaneously support their social interests.  This is the basis for social innovation.

 

Orienting existing product lines to align with a social objective (for example, Unilever is committed to 100% sustainably sourced palm oil by 2019 – as of 2017, they were at 50%) is one way to close the “attitude-behavior gap” of consumers without requiring that consumers even change brands.  Social entrepreneurs should see the attitude dimension as a competitive advantage against larger firms that may take longer to transform their product lines.  Thus, it is important to note that having a social mission alone is not enough to attract consumers, at least according to rationale behind the “attitude-behavior gap”.  While consumers may readily admit they would – in a perfect world – support socially conscious businesses, price and quality are what ultimately matter.  But that is not to say that social businesses cannot have high quality and/or competitively priced products.  Quite the contrary.  They can and should.  The point is that businesses cannot rely exclusively on having a social mission, however well branded and communicated, for sales.  The true value of a social mission lies in the value it adds to an already excellent product or service. 

 

For companies like Baidu Waimai, Ele.me, and Meituan Waimai, there are a number of opportunities that they could respond to, even proactively.  In the China Youth Daily survey referenced above, 40% said environmental education should be strengthened; 86.4% said they would support stronger environmental regulation on businesses – particularly in use of plastic bags.  Takeout delivery platforms should not assume that these numbers will not rise, or that consumers will continue current consumption habits despite changing or evolving attitudes.  Companies should see this data as an opportunity to begin pushing out educational material on how they are addressing environmental concerns related to their operations.  They should also see it as a way to anticipate, or even work with, the government in either drafting new environmental regulation or enforcing current regulation.  Such efforts should be handsomely rewarded.

 

DISCUSSION QUESTIONS

 

What are the moral issues involved in this case?  List and explain them.

 

Do you think consumers have a responsibility to choose sustainable or socially oriented brands?  Why or why not?

 

What is the role of government regulation in shaping markets for sustainable and socially innovative products and services?

 

Do you think it would be smart for firms to adopt a social dimension into their business strategies?  Why or why not?  Do they, in fact, have a moral obligation to do so?

 

If you were to advise any of the three major food delivery platforms in addressing their environmental impacts, what would be your recommendations?