The Evolution Of Csr In China Management Essay
Nowadays, Corporate and Social Responsibility (CSR) become popular. Business schools offer CSR classes, conferences abound, and companies pay increasing attention to their CSR departments. The European Parliament passed a resolution affirming the importance of CSR, and business leaders increasingly understand that corporations are not just responsible to shareholders, but rather, to society as a whole.. In China, CSR has moved from study to implementation for years. The administration and corporations consider CSR as the important part in their business.
THE EVOLUTION OF CSR IN CHINA
The development of CSR in China has gone through three stages:
The first stage was from the mid 1990s to the early 21st century, during which the CSR requirements were mainly applied to the international supply chain. In this stage, driven by the consumer market, international retailers and brand owners began to pay attention to the CSR issue, establish and implement CSR codes of conduct, standards or systems. Some Chinese enterprises, which had joined the global supply chain, began to accept factory auditing by multinational corporations. The management of these export-oriented enterprises was the first social group contacting CSR concept.
The second stage was from the early 21st century to 2003, during which the CSR concept was introduced to the society, drawing wide attention and debate. At that time, Chinese academic institutions, non-government organizations and international organization in China began to systematically introduce this concept and carry out extensive study and discussions. Under the background of global economic integration and fast growing foreign trade, trade authorities called on all interest parties to pay attention to CSR, so as to avoid the negative impact it may bring to trade. At the same time, government departments began to show concerns to the development of CSR among enterprises. The Ministry of Labor, the Ministry of Commerce and the Chinese Enterprise Confederation (CEC) all created CSR investigation committees to study the development of CSR in China.
The third stage began from 2004. It is a stage of active actions. Chinese government departments, industries and enterprises all have realized that developing CSR is an effective means to build a harmonious society, carry out the scientific approach to development and realize sustainable development. Accordingly, they have taken a series of positive measures to promote the maturity of CSR movement.
THE MATURITY OF CHINESE CSR
According to Mr Gefei Yin, Director and Vice-President of China WTO Tribune and the Development Center for Chinese CSR, the maturity of CSR in Chinese could be summarized as follow :
Firstly, with the development of the concept of CSR, many enterprises consider CSR not only as philanthropy but also responsibility to stakeholders. Responsible competitiveness means that enterprises help solve some social problems by using their professional advantages and finally increase their competitiveness. The Chinese CSR award scheme 'GoldenBee CSR Honor Roll', which will publish its 2008 edition on 5 June 2009, was established in compliance with the concept of responsible competitiveness. One criteria in the ranking system is to see if the candidate enterprise can provide a persuading business case of responsible competitiveness. The evaluation of the business case will contribute 40% to the final score of the enterprise.
Secondly, the CSR practice of Chinese enterprises has greatly improved in three aspects : . First of all, some leading enterprises already integrate CSR into their strategy. For example, Bao Steel has its CSR system, and State Grid publishes the Guideline for State Grid to Implement CSR and takes action. With a comprehensive CSR roadmap, these enterprises present their CSR concept in a systematic way and guarantee the capacity of CSR implementation. Second, the development of the concept makes more enterprises integrate CSR into their daily operations - which responsibilities should be implemented and how to implement them are all clarified and updated accordingly. Third, the professional department in charge of CSR affairs is established within the enterprise. For example, COSCO has its office of sustainable development and risk management.
Thirdly, CSR information disclosure is prominent. The establishment of CSR departments contribute to the information disclosure. According to statistics, from January 2008 to April 2009, there were in total 542 CSR reports published by Chinese enterprises.
At last, Chinese enterprises have started to take their global responsibilities. There are about 202 Chinese enterprises have already joined the UN Global Compact. Chinese enterprises with business operations abroad are also taking their responsibilities in third countries seriously. For instance, PetroChina actively responds to the policy of Kazakhstan government and contributes a lot to their sustainable development. In addition to PetroChina's CSR report, Sino Steel Group also published their Sustainable Development Report-Africa.
Whatare the main drivers or enablers of CSR in the country?
In China, the key drivers at present are government and business customers.
CSR only really came onto the radar in China in 2005, but it has undergone a period of rapid development since then. Before this time, it was viewed with a certain degree of suspicion by the government, who perhaps saw it as a new potential market barrier to Chinese products.
Initially the key driver for CSR in China was pressure from western corporates on their supply chain, for example in the textiles sector. These western corporates themselves were facing pressure from NGOs and consumers. Product safety has been a headline issue – not just internationally (toys and toothpaste) but also domestically (baby milk) – that has affected the “Made in China” brand.
In the last few years CSR has been strongly promoted by the Chinese government. It is aligned with President Hu Jintao’s ‘harmonious society’ policy and this kind of political support has stimulated great progress. In 2005 the British Consulate sponsored a visionary programme to train academics at the national Party School in Shanghai (the China Executive Leadership Academy, Pudong or CELAP) in CSR. Since then, CSR has been integral to the training programmes for senior officials (from Director General up to provincial governor and minister level) and SOE directors from all over China. In May 2008 Prof Jeremy Moon, Director of the International Centre for CSR at Nottingham University, delivered a lecture on CSR to 50 district mayors at CELAP and engaged in a lively debate with course participants. Corporate activity in CSR was initially led by multinationals but increasingly large SOEs are becoming involved. State Grid has launched the first CSR implementation guide for Chinese enterprises. In 2006 the China CSR Alliance was established involving both domestic and foreign companies such as China Merchants Bank, Vanke Group, Nokia and Hewlett-Packard. Their first project was the ‘Six 100 Project’ funding 100 teachers for rural schools, 100 children in rural areas to visit Beijing, 100 new schools in remote rural areas etc.
are there barries to CSR in the country?
China is the biggest country in Asia and has the important impact on the economy, politic, culture of the other Asian countries. The CSR barriers in China reflect the barriers in the Asia country in general. The barriers of CSR in China could be described as followed :
Firstly, the companies are convinced that the “business of business is business” and so they want NGOs do their community development work and the government to fund schools, colleges, clinics and hospitals - after all that’s why they pay their company taxes and VAT!
Secondly. the misconception that CSR is only for the largest and richest foreign companies accompanied by the belief that CSR has no relevance in China for SMEs or small traders or for workshops employing only a few people.
Thirdly, business owners holding the opinion that spending on CSR is an improper use the company’s hard earned profits (especially in a period of worldwide recession). These proprietors also think that their companies should concentrate on making money for their shareholders and focus on giving the investors a good return on their money. They only implement CSR inside its office and factories if it could lead to improve companies’ efficiency and profitability immediately.
Fourthly, The mistaken idea of CSR that it isn’t culturally appropriate in China and the erroneous view that CSR is a Western and Judeo-Christian concept. Business leaders in China who hold this view seem to have confused the name ‘Corporate Social Responsibility (CSR) with the concept of social responsibility.
Barrier D – The misconception that CSR is only for the textile factories or other major exporters because in this view CSR only involves meeting the social compliance conditions imposed by international buyers. The duty to be socially responsible rests on all human beings. International buying houses have a social responsibility to act ethically and to practice CSR rather than simply require it of their manufacturers. All of us want to breathe clean air and have beautiful rivers and pools where fish (or children) can swim without being poisoned. Social Compliance is part of the contract between merchandisers and their factories but Social Responsibility is for us all.
Barrier E – The idea that CSR is really only ‘green washing’ – improving the public image of a polluting company or ‘white washing’ – masking the real nature of a corrupt company, so why should I bother with it? There are many, too many, examples of corrupt entrepreneurs, who own polluting factories, cynically attempting to manipulate their profile in the eyes of journalists and the general public – their customers - and investors by generous and high profile cheque presentations. Owners of these dirty, poorly ventilated, badly lit, dangerous workplaces can really only draw attention to their external CSR projects because they have no ‘in factory’ CSR. Just because some of our corporate sector colleagues abuse CSR does not invalidate it as a concept and as good sustainable profitable business practice.
Barrier F –Barrier G – The mistaken idea of CSR that it isn’t culturally appropriate in Bangladesh and the erroneous view that CSR is a Western and Judeo-Christian concept. Business leaders in Bangladesh who hold this view seem to have confused the name ‘Corporate Social Responsibility (CSR) with the concept of social responsibility. The duty to be socially responsible in business was recognised in Asia long before the terms CSR (Corporate Social Responsibility) or SR (Social Responsibility) began to be used internationally. Similarly people in Asia had human rights before the UN made a Declaration about what these rights should be. To be supervised by managers who choose not to use abusive tactics, to be paid for work done, to respected, to have a safe working environment, access to education and healthcare and a decent place to live are part of basic human rights. The practice of CSR inside factories in all trade sectors delivers these ‘workers rights’ and in return the factory owners and managers should have the right to expect hard work and a peaceful and productive factory environment.
Barrier H – A concern that CSR will force me to change the way my factory operates and that I will have to be inspected to make sure that I provide a safe, clean, well lit and healthy working environment in my factory. It’s not CSR that will force this change it’s the Government and its Ministries and Departments enforcing the Bangladesh Labour Act and the Government applying and inspecting and enforcing the wide range of environmental rules, regulations and laws that already exist in Bangladesh. Well motivated, healthy employees in clean well lit factories can work more efficiently and be more productive than workers struggling in a dirty, poorly lit, chaotic workshop. It is not CSR which will modernise Bangladesh factories and workshops, rather what is needed is a change in the ‘managers mind set’ including the realisation that cheapest isn’t always best.
Barrier I – An incorrect idea that personal morality and religious faith have nothing to do with commerce and so there is no need to be socially responsible in business life. These factory owners are content to bribe or pay speed money and if their workers aren’t happy with their wages, working hours or factory conditions they are willing for them to leave because they believe there are plenty of unemployed people in Bangladesh who will take their jobs for even lower wages. This separation of faith from everyday working life is a particularly Western way of thinking; it is also a perverse view of religion in society. The major world faiths encourage and direct their followers to care for their fellow human beings, particularly those who are not as well off as others, and to care for our planet Earth made by the Creator God. Islam in particular places community responsibilities on business people for example in the obligation for Zakat payments and the distribution of a portion of the Eid-ul-Ajha sacrifice.
Barrier J – The mistaken perception that we can’t afford to do CSR in Bangladesh and so our companies only spend on complying with the minimal standards demanded by our customers. These proprietors also hold the view that because their factories don’t get inspected by Government Officials or by their Bankers then why should they do more than the bare minimum on environmental protection, pay rates or factory conditions? It would be more accurate to say that “we can’t afford not to do CSR in Bangladesh” For export oriented companies this is certainly true because international buyers have ‘ethical retail customers’ who want to know that the products they purchase are not made by children and did not pollute the environment during their manufacturing. This need to satisfy the ethical demands of retail customers rests on our manufacturers, the retailers and their buyers. Merchandisers cannot escape their duty to be socially responsible in the way they buy and the prices they pay. A Bangladesh business that intends not just to survive the next few years but to export and to grow will need to show a provable commitment to CSR and go well beyond a minimal commitment to be socially compliant.
GOVERNMENT ROLE IN CSR DEVELOPMENT
The Chinese government take CSR seriously. It is said that the government is the key driver of CSR in China. It is aligned with President Hu Jintao’s ‘harmonious society’ policy and this kind of political support has stimulated great progress. The role of Chinese government in CSR could be expressed as followed :
The Chinese government places greater emphasis on safeguarding the legal rights and interests of citizens and has established a well-founded and complete legal system, in which, many laws and regulations, such as “Labor Law of the People’s Republic of China”, “Trade Union Law of the People’s Republic of China”, “Law of the People’s Republic of China on the Protection of Rights and Interests of Women”, “Provisions on Special Protection for Juvenile Workers”, “Production Safety Law of the People’s Republic of China”, “Code of Occupational Disease Prevention of the People’s Republic of China”, “Cleaner Production Promotion Law of the People’s Republic of China” and “Regulations on Enterprise Minimum Wage”, all contain CSR elements and requirements. However, China is still in the initial stage of developing a standardized, systematic and widely participated CSR social movement.
In 2005 the British Consulate sponsored a visionary programme to train academics at the national Party School in Shanghai (the China Executive Leadership Academy, Pudong or CELAP) in CSR. Since then, CSR has been integral to the training programmes for senior officials (from Director General up to provincial governor and minister level) and SOE directors from all over China. In May 2008 Prof Jeremy Moon, Director of the International Centre for CSR at Nottingham University, delivered a lecture on CSR to 50 district mayors at CELAP and engaged in a lively debate with course participants. Corporate activity in CSR was initially led by multinationals but increasingly large SOEs are becoming involved. In fact, The government has set up numerous initiatives to research and promote CSR, and has told managers of state-owned enterprises to "understand the importance of CSR" within the context of current Party ideology. In the result, State Grid has launched the first CSR implementation guide for Chinese enterprises. Anh in 2006 the China CSR Alliance was established involving both domestic and foreign companies such as China Merchants Bank, Vanke Group, Nokia and Hewlett-Packard. Their first project was the ‘Six 100 Project’ funding 100 teachers for rural schools, 100 children in rural areas to visit Beijing, 100 new schools in remote rural areas etc.
As with all global practices, these trends suggest that CSR will most likely eventually develop unique “Chinese characteristics”.
what are examples of CSR best practice and worst practice by companies?
In 2008, melamine was detected in the products of 22 Chinese milk companies those account for 20% milk supplies in the country. The incident shocked the public and involves the international reaction about food safety standards in China. More than 20 people were convicted for their role in the toxic milk and two of them were executed. Melamine is a compound used to make plastics, fertilizer and concrete. As the food, it will increase the amount of protein, but cause kidney stones and kidney failure. The melamine in Chinese milk was found at 500 times higher than the maximum allowed.
what needs to change to improve CSR in the country?
Companies need a stable society in which to trade, we need healthy, well educated and compliant workers. It’s in the long term interests of the business sector in Bangladesh to improve our corporate futures by investing in the community – in our workers and their communities - if we are to be able to manufacture and sell increasing volumes of our products in Bangladesh.
Understanding that CSR does not just involve making large and high profile donations to colleges, hospitals, mosques, madrassahs and environmental improvement projects frees up businesses of all sizes to be involved in CSR. There is no need to set aside a particular percentage of profits for distribution to ‘good causes’ in the community around the factory. Improving working conditions for staff in order for them to be able to be more productive, making factories more efficient and so consuming less energy, using fewer raw materials and recycling waste are all CSR activities and can improve a company’s profitability and long term sustainability.
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