Corporate Eye

Is China the future of CSR? | CSR Around The World

One of the acronyms which has gained common currency over the past few years is BRIC : meaning Brazil, Russia, India and China.  But have you ever wondered who coined the acronym in the first place?

Step forward Jim O’Neill, Chairman of Goldman Sachs Asset Management, who invented the term some nine years ago when trying to predict what the world would look like in 2050.

With China now the second largest economy in the world, Brazil and Russia in the top ten and India knocking on the door at 11, his prediction that they would dominate the traditional G7 by 2050 seems to be coming true faster than he imagined.

This is why, writing in Project Syndicate, he has revised the original prediction and now believes that by 2020 the BRIC countries’ economies will outweigh the US with up to two thirds of that block coming from China.

Aside from the simple financial influence this will have upon markets and commodities, what will it mean for the way business is done and, in particular, the currently growing CSR movement?

To try and get to the bottom of this I asked Richard Brubaker, Founder and Managing Director, Collective Responsibility and Adjunct Professor of Responsible Leadership, China Europe International Business School, about his experiences of CSR in China.

A Wholly Different Society

The first thing Richard explained to me is the completely different framework which surrounds business and society in China.

“In China, the standards surrounding CSR and CSR reporting are still in their infancy,” he said, “And largely depend on the issue that is being considered, and the enforcement of any regulations.

“So, while China has a very strong set of labour laws and regulations, the enforcement of those regulations will largely depend on the strength of the firm, the connection of the firm to the local government agencies, and the need for those government agencies to put economics first.”

This is the nub of the difference in China.  Despite all the market-centred initiatives which have taken place over the past few decades, the State still has firm control of the country’s economy through the successive Five Year Plans.

These define central government’s growth expectations, which are then filtered down through various government agencies to businesses.  They in turn have to place meeting those expectations at the heart of their business strategy, a strategy which will often be determined with the active participation of the agencies in question.

Mandatory CSR Reporting

However, this shouldn’t be taken as meaning that there is no regulation in China on non-economic matters: far from it in fact.  As Richard pointed out, China’s labour laws are in fact very strict (if different from our own) and arguably provide more employee protection than the US’ and some other countries.

The same pattern can be seen emerging for CSR reporting.

“For CSR reporting, a set of regulations was released 18 months ago,” Richard continues, “But besides requiring firms to issue CSR reports, they did not necessarily do much to help firms effectively do this.  So, while a lot of firms are now reporting, they are only doing so to fulfil their obligation rather than to effectively present the conditions within the firm.”

Of course, without providing an adequate incentive scheme or laying out parameters for companies to report against, requiring them to produce a CSR report seems to be a pretty toothless law to introduce.

However, it’s interesting that CSR reports have been made mandatory in the first place and may be indicative of a slow change which is starting to seep through Chinese business and culture as a whole.

From Earthquake to Charity

In 2008 the Wenchuan earthquake rocked southern China.  Figures remain in a state of flux, but it’s thought that up to two thirds of the 15 million people living in the area were made homeless and nearly 70,000 people died.

Of these deaths nearly 20,000 were children whose schools collapsed because of poor building practices.  The country was scandalised and the ensuing three days of official mourning is thought to be the largest outpouring of grief since Mao Zedong died.

Several days later the state television network hosted “The Giving of Love”, a four hour telethon which raised over $200 million in personal and corporate donations, including $1.5 million from actor Jackie Chan and $13 million from the television station itself.

Suddenly, in a country where all aspects of economic and social policy are traditionally state controlled, business ethics and philanthropy became the talk of the land.

So, To The Future …

This doesn’t mean that China’s state control of all things social and economic is about to change.  But it does mean that citizen participation is becoming more common.  General philanthropy is becoming more widespread and an interesting study by Michigan State University has pointed to how residents in Beijing are actively pre-sorting their recycling because of a moral imperative (rather than a commercial one).

As this trend grows, it may be that CSR evolves in a different way to how we’re used to it in the West.

“CSR is a foreign management practice in China, and that hinders its uptake,” explains Richard. “Were ‘CSR experts’ to move away from this largely intangible umbrella term, you would find that progress is being made along the various silos, and that there is more interest in certain areas (each of which) is seeing improvement over last 5 years.”

This area-centric form of CSR could well become the norm in the coming years, in fact CSR as a term could even become redundant.  Instead you could have the different facets interwoven separately into a business; instead of being an A+ GRI company you could be an A in finance, B- in environment, A+ in human rights, C in transparency .. and so on.

This is a tantalising glimpse into what the future may hold for worldwide CSR, and it’s worth taking on board, and it’s not just because of the financial figures provided by Jim O’Neill.

Robert Reich, Professor of Public Policy at the University of California at Berkeley, recently hit the nail on the head: “China is eating our lunch. Why? It has a national economic strategy designed to create more and better jobs. We have global corporations designed to make money for shareholders.”

Now, as a CSR professional, which of those two options would you prefer?

Picture Credit: At The End of a Fruitful Talk by David Woo under Creative Commons Attribution No Derivatives License.

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A former CTO, Chris has a broad and varied background. He’s been involved with blue chips, consultancies & SMEs across a wide variety of sectors and has worked in Europe, the Middle East and Australia. In 2007 he decided to combine his knowledge of business and IT with his passion for all things sustainable and has been busy writing ever since. However, his greatest ambition remains to brew the perfect cup of coffee.