Corporate Social Responsibility in China: Outlook and Challenges

SCA Public Welfare Activity “Control of Desertification and Afforestation”

By Susan Scarlata

I spent the last two years in Hong Kong where I consulted on Corporate Social Responsibility communications projects for various organizations in Hong Kong and mainland China. What is the current state of Corporate Responsibility there? The short answer is that Chinese companies realize they have greater responsibilities as their presence on the global playing field grows. Leaders of Chinese companies and officials of the People’s Republic of China are aware of the need to expand their corporate responsibility efforts.

In terms of the broad understanding of Corporate Social Responsibility in China corporations are realizing their responsibilities and are writing CSR reports and establishing programs directly related to their impact and values. Today in China, more than 100 million people live on $1 a day (BBC). There is much to be done.

As with many nascent social programs, instead of tackling major issues, some companies in China start out with feel-good social responsibility programs. I witnessed one led by a Fortune 500 company that paid for children from impoverished rural villages to come to the city and see a show. The kids enjoyed their night out, but this was not a program designed for long-term impact. There is a leapfrog situation happening in terms of social responsibility.

The presence of multinational companies is pushing the social responsibility agenda. German companies like Volkswagen maintain a large presence there and helped the Chinese establish a social responsibility guide for companies housed under the umbrella of The Golden Bee Development Center for Chinese Corporate Social Responsibility.

An article on Golden Bee notes that the total number of CSR reports in China increased three-fold, from 169 to 330, between 2008 and 2009. State-Owned Enterprises in China also increased Corporate Responsibility Reports from 5 in 2006 to 76 in 2011. An 86 percent increase over five years is an impressive swing that parallels China’s economic rise overall. There is little information about the quality of these reports though –there is no mention of GRI standards or third party audits yet. Considering China’s huge scale, these numbers demonstrate that corporate social responsibility is still a burgeoning standard there, but 330 reports is nothing to balk at.

The international group Business for Social Responsibility (BSR) recently hosted “Social Innovation Week” through its Beijing office and highlighted various successful partnerships between NGOs and businesses in China. BSR aims to “build cross-sector partnerships to enhance the value of social investment in China.”

The winning NGO, Huai He, campaigned against a local company that was polluting the Huai River. The protest attracted enough public attention that one of the company’s investors backed out. The company responded by reaching out to Huai He and began working with them to solve the company’s pollution problems. In what became a fruitful partnership, the company provided much-needed funding and human resources to the NGO for clean-up efforts, it sought input about its processes, and invested in new technologies. Huai He provided expertise, helped the company reduce its pollution and create a positive relationship with the public.

This collaboration resulted in reduced pollution and ended up influencing the local government to adopt an amendment to reduce emissions for the entire industry. Many other partnerships were highlighted during “Social Innovation Week,” including one between The Zhenweining Foundation and Wal-Mart.

Now that social responsibility is on the map in China, the real issue is scale. In a country where the majority of the population does not have access to potable water in their homes, and where industry has boomed with little regulation in terms of clean air or water, there are endless social issues to manage.

On the Golden Bee website officials of the PRC speak of “responsible competitiveness.” Referencing the affect of China’s current stall and slowdown, The Communist Party’s line is that no matter how the overall economy is doing, it still pays for corporations to be responsible in the long term. One official is quoted as saying “irresponsible enterprises cannot escape the heavy toll of the economic crisis.”

Susan Scarlata is a Writer, Editor and Professor living in the Bay Area and specializing in Corporate Social Responsibility.

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