Working together to make a difference: CSR in China

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With the season of giving upon us, corporations find themselves having to both consider employee bonus packages for their employees as well as some sort of charitable giving ahead of the end of the tax year. With this in mind, we have decided to publish an excerpt from our upcoming China Briefing 2008 Regional Business Guide series that focuses on corporate social responsibility.

The following text was provided by the World Wildlife Fund.

Corporate social responsibility trends

In a world of global business with its tangled web of manufacturing, supply chains, and customers stretching across the world, corporations are exposed to an enormous diversity of cultures, expectations and values. Issues such as biodiversity, ethics and accountability, social and economic development and community impacts are becoming real considerations and pose material challenges to businesses and their reputation.

These changes are rooted in growing scrutiny by consumers, non-governmental organizations, communities, governments and investors, primarily in North America and Europe, but now increasingly in Asia. They expect business to manage its impact on and interaction with the natural environment and society in a responsible way and contribute to sustainable development. Large parts of a company’s market value are based upon non-tangible assets including reputation, brand, strategic positioning, and external relationships. All of these could be put at risk by a company’s poor environmental and social performance, so managing these expectations makes clear business sense.

Managing these issues has given rise to the concept of corporate social responsibility (CSR).

General elements of corporate social responsibility
CSR covers many areas, broadly defined by the United Nations Global Compact as:

  1. Human rights: supporting and respecting the protection of human rights
  2. Labor: eliminating abuses and discrimination in fully owned, contracted and supply factories, and ensuring all employees have fair and safe working conditions
  3. Environment: working to reduce emissions and waste, and to minimize the use of natural resources such as water, energy and input material
  4. Corporate governance: implementing good financial management to prevent bribery and corruption and promote the development of honest, robust internal management processes

For many companies interested in developing a CSR strategy, a simple test is to ask yourself: would you be happy for your children to grow up next to your factory, eat the vegetables grown in the field next door and drink the local drinking water? The people (stakeholders) who impact your business – consumers, government, local communities, investors, NGOs, media – are asking more or less the same questions on behalf of their own children. Ideally, everyone should have the same answer: yes.

Stakeholders want sustainable development, not development at any cost. A good CSR strategy would address these expectations for the mutual benefit of all parties involved.

Many wonder whether CSR can work in China. Our answer is yes. In fact, it already is working in China. In addition to overhauling China’s environmental laws and standards, the Chinese government has placed great emphasis on a people-centred and environment-friendly approach to economic development. In many ways, the concept of CSR is not new in China. Chinese society has long recognized the importance of maintaining harmonious relations based on shared and mutual benefits.

A recent survey by WWF indicated that 85 percent of 182 large Chinese companies think traditional Chinese philosophical concepts like “union of nature and man” could positively influence the environmental mission and strategy of both Chinese and international companies.

In the past, CSR activities in China were typically undertaken by foreign companies. More recently, however, both local operations of foreign companies and leading Chinese companies have initiated China-specific CSR programs.

Social contribution and involvement has become an important element of CSR in the past year. According to the latest HuRun Report, which tracks philanthropic activities in China, the top 50 Chinese companies donated US$520 million (US$10.2 million on average) between 2003 and 2005.

Rather than simply hand out money, companies are now working with partners to identify and then fund projects that address specific environmental concerns. More and more NGOs are engaging in partnerships with companies, helping them to integrate CSR into their management strategy and process.

The recent WWF survey also disclosed that 53 percent of the 182 large Chinese companies surveyed would be willing to engage with such NGOs like rthe WWF in discussions about how sustainable development can be promoted.

China still has a long way to go in terms of corporate responsibility development, and if any real progress in tackling conservation challenges is to be achieved, companies should soon further their awareness towards CSR strategies.

For more information on the World Wildlife Fund, please visit their website. To preorder China Briefing’s 2008 Regional Business Guides series, please contact sales@china-briefing.com.

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