PROSPERITY WITH INTEGRITY

China’s remarkable development has been accompanied by considerable
harm to public health, social development and environment. As a
result, Chinese governments and the public increasingly are demanding
that business improve their performance on public health,
environmental protection, worker safety and social development.
Whether an act of leadership or follow the leader it is prudent for
companies, international and domestic, to respond to these calls for
action.

We wrote this practical guide to help forward looking business leaders
and CSR staff shape more effective business strategies through better
understanding of  meaningful CSR and the expectations of stakeholders
in China and around the world.

We hope that this publication will inspire, motivate and effectively
guide business to work with government, academics and civil society
for positive change, moving from marketing based CSR to
society-focused practices. It is a blueprint for a program of CSR and
sustainability that will benefit both company and society. Grateful
thanks to SynTao, a leading CSR consulting organization in China, for
partnering with us on this great project and to the important
contributions from outstanding colleagues in business, government and
academia .

Harmony Foundation of Canada November, 2012

 

EXECUTIVE SUMMARY

In recent years companies from around the world have flocked to China, attracted by its large market and rapidly growing economy, cheap labour and low standards for environment protection, health and safety. That’s about to change… dramatically.

 

By October 2011 there were over 730,000 multinational corporations (MNCs) registered in China. Although MNCs brought the concept of Corporate Social Responsibility (CSR) to China, studies show under-performance both in comparison to their practices in developed countries and rising Chinese expectations. 

 

While CSR is relatively new in China, it has developed quickly. Both Chinese governments and the public increasingly demand that business improve their performance on public health, environmental protection, worker safety and social development. Regulatory compliance and image marketing will be inadequate.

 

In practice, however, it matters less what motivates improved performance and more how one responds effectively and in practical ways that benefit society as well as business.

The primary purpose of this guidebook is to help CSR practitioners and business leaders to make that transition and to:

• understand the public’s view of CSR and the benefits of substance over appearance,
• gain knowledge of the current state and trends of CSR in China that lie ahead,
• develop meaningful CSR programs which meet societal and business needs,
• build long term community relationships through productive partnerships, as well as
• learn from successful experiences and best practices.

Chapter one delivers a brief history of CSR and makes a compelling case for society oriented CSR – Transformational CSR, an approach to align business values and behaviour with the expectations and needs of stakeholders.

 

Chapter two examines CSR in China – history, state of the art, laws and regulations, as well as CSR performance of MNCs and challenges going forward.

 

CSR development in China has gone through three stages since the 1990s –introduction, observation and development. Now the Chinese government wants to use CSR to address social and environmental issues as part of economic reforms and promote stable and harmonious development.

 

At present, there are over 30 CSR relevant national laws, regulations and guidelines in China. Chapter two highlights the most important ones directly addressing CSR, as well as guidelines from Chinese business associations and stock exchanges. The most widely used CSR reporting guidelines in China for MNCs are the UN Global Compact and Global Reporting Initiatives. Alternatively, the framework most commonly used by SOEs in China is CASS CSR2.0, developed by the CSR Centre in Chinese Academy of Social Science (CASS).

 

Finally, chapter two looks at internal and external CSR challenges facing MNCs in China, including poor coordination with local branches and suppliers, failure to address more stringent regulations and increasing public expectations, inadequate integration of CSR and sustainability in planning and decision-making and weak community relations.

 

Chapter three begins by making the business case for CSR in China. Subsequently it provides practical information on how to analyze current practices and improve CSR by engaging stakeholders, including government, employees, media, NGOs, business partners and customers. Recommendations address vital topics including how to:

• improve cooperation between headquarters and branches,
• improve CSR through human resources,
• conduct self-evaluation on CSR,
• improve community engagement,
• improve philanthropy,
• find and work with capable NGO partners, as well as
• improve CSR reporting.

 

Case studies presented in the guide focus on the positive, offering examples of companies whose CSR strategies and sustainability programs have increased both corporate and societal benefits.

 

Options Going Forward

Every society reaches that moment of reckoning and China is no exception. Seriously contaminated food, water and air and the consequent damage to public health and the environment have led to rising social unrest and political action. The demands for a higher level of performance on labour, health, environment and social development are growing louder and will result in concrete actions by government and the public. It would be prudent to respond proactively to these calls for action.

Each company, therefore, has its own decisions to make, continue business as usual, risk being compelled to change and left behind or align its business strategy and sustainability outcomes to meet the needs of society. Forward-looking companies successful over the long-term, motivated by ethical business principles, operate with social and environmental responsibility as core values. They will earn far greater possibilities to enhance their competitiveness and brand approval by advancing the overall conditions in the communities where they operate and the world within which they live and work.

This publication may have been written for MNCs operating in China but it is much more. It is a blueprint for success for transnational or state owned enterprises in China or anywhere in the world. Our hope is that senior business leaders, as well CSR practioners, will find this guide useful in better shaping business strategies and practices based on a sound understanding of CSR and a renewed commitment to partner with society to achieve a more sustainable future.