CSR: Be nice
December 18, 2008 | BY
clpstaff &clp articles &Companies urged to embrace ethical practices
New guidelines on corporate social responsibility (CSR) may not be binding, but companies will need to take them seriously if they want to succeed in China.
The Guidelines on Corporate Social Responsibility Compliance for Foreign Invested Enterprises were issued by the Chinese Academy of International Trade & Economic Cooperation (CAITEC) in August 2008. They lay out the government's expectations of a CSR-compliant company and make recommendations about its responsibilities and obligations.
Many of these responsibilities would be impossible to enforce by law. Clare Pearson, CSR manager for Asia at DLA Piper, acknowledges there is no obligation for companies to follow CAITEC's Guidelines. But, she says, they are written in a way that suggests they could become legislation in the not-too-distant future.
“I think CSR is going to be the issue next year. The third wave of development under the 11th Five-year Plan is going to be corporate citizenship,” she says.
Pearson points to the experience of companies that voluntarily supported the Beijing Olympics, and reaped great financial and reputational benefits.
“If you keep your ear to the ground, you will anticipate what the government wants you to do,” she says.
The government has been giving other indications of its direction. In December 2007, the State-owned Assets Supervision and Administration Commission of the State Council issued its Guiding Opinion on Performing Social Responsibilities by Centrally-governed Enterprises which informed state-owned enterprises of the importance of being “human-oriented [and] responsible to stakeholders and environment”.
And over the past few months the state-run media appears to be publishing more CSR-related stories. One example appeared in the China Daily in November: an article describing the results of a global survey carried out by PR firm Edelman and highlighting the apparently strong emphasis on social responsibility in China.
“Commitment to helping others – and loyalty to brands and companies that share in this commitment – was a sentiment most visibly expressed by Chinese,” the article said.
The right kind of CSR
The concept of CSR is not well-defined; there are many interpretations of the expression, including one that is based on financial donations.
“There will always be a possibility for international businesses to try to tick the CSR box simply by paying money to charitable causes,” says Vincent Connor, head of Pinsent Masons' Asia Pacific offices. “But in these economic times, that kind of CSR comes under threat, and involving oneself in more long-term CSR partnerships in Asia is the more sustainable and rewarding approach.”
Pearson agrees that the Chinese government is not looking for acts as simple as giving money to charities or developing internal policies. Foreign companies should be promoting local workers, choosing supply chain partners with good CSR records. They also need to change their mindset in regard to their intellectual property – by avoiding going after everyone who infringes their rights.
“Don't sue the locals: you'll get no sympathy and you'll get no clients,” says Pearson. “If people like you, they'll buy your product.”
(This article is part of the New directions for China in 2009 special feature)
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