CSR - China Seeks Responsibility. Towards Responsible Competitiveness
The context
China, the world's fastest developing economy, is emerging on the global market scene and CSR is rising in popularity in today’s China as responsible business is becoming a need to ensure competitiveness. The Government considers corporate social responsibility practices in line with the “Human first” spirit of the Scientific Development Initiative and a contribution to build up a “Harmonious society”.
CSR standards and their auditing and certification programmes have been widely implemented largely driven by the increasing expectations of multinational corporations that their suppliers and operations in developing countries take appropriate measures to protect human rights. Procurement policy based on international CSR standards and codes of conduct by multinational corporations have been seen by Western Countries as effective tools to improve the work conditions in China. But there is a long path ahead. On the company side CSR is often seen as a burden because of the higher cost of social and environmental concerns in the short-term as many companies have not a long-term view. CSR awareness among Chinese companies is still low and the creation of a knowledge base and its diffusion through training programmes can be identified as a key step in the CSR agenda.
Problems and questions
First of all, what is CSR? Many companies don’t have a clear understanding of the concept.
The commonly accepted notion of CSR refers to the triple bottom line (the so called “3 Ps”: People, Planet, Profit) and the EU Green Paper defines it as “a concept whereby companies integrate social and environmental concerns in their business operation and in their interaction with their stakeholder on a voluntary basis”.
Which is the best approach to CSR in China? Should it be voluntary or mandatory? Undertaking a voluntary action in term of Corporate Social Responsibility, has been meant as doing something
beyond the compliance to law which is assumed to be fully respected. The cases of illegal behaviours by company are very frequent and we often find ignorance of basic rights among workers. CSR in China means in the first instance to enforce applicable Chinese law. Western companies' sourcing practices can contribute to the problem when, for example, large orders are made with short deadlines, the lowest possible prices are demanded, and orders are changed at the last minute. Factory owners are afraid to lose business if they refuse orders, even if they have to violate the law to complete an order.
Are standards and codes really effective? Codes imposed on factory owners raise costs, so owners have a financial incentive to ignore code requirements. Factory owners are becoming increasingly adept at circumventing inspections, through practices such as double bookkeeping and coaching of workers. As a result, inspectors are often deceived and "clean" audit reports often do not reflect reality. The Chinese government prohibits the existence of independent trade unions, leaving workers without representatives who can discuss violations with management.
Which standard to adopt? The flourish of thousands codes of conduct and CSR project contributes in creating a big confusion around the buzz word “CSR”. Each company tends to create is own and measuring the real effectiveness becomes more difficult.
The social responsibility international certification standard SA8000 is not publicly supported by the Chinese government although China is the second country per number of certified facilities. The high number of certification issued is, in most cases, due to the requirements imposed by multinational companies to the factories in their supply chains. The creation of a national standard is against the current trend of harmonization and integration of available standard and certification schemes, such as aimed by the ISO working group which China is participating to. A new Chinese social responsibility standard, CSC9000T, has been drafted for the textile and apparel industry and it has already raised many questions in the Western world and the ITGLWF (International Textile Garment and Leather Workers Federation) is very critic about it.
Possible steps to follow
The rising number of conferences about CSR in China hold worldwide is a fact: the interest for a sustainable approach to business in China is growing up in and outside the country. The Global Compact Summit in Shanghai (30th Nov. – 1st Dec. 2005) could be considered a milestone in the process of building a dialogue on key topics as labour condition and environmental stewardship in order to establish good practices.
International conferences are an opportunity for business leaders from different countries to meet and share their experiences and ideas: they are part of a continuous learning process, made of specific actions at different levels.
Which actions could be concretely undertaken? Which could be the steps to follow?
The dialogue plays a crucial role in spreading awareness and partnership-based projects could provide a high value contribution to build a culture of social responsibility through stakeholder engagement. Education and training on key issues is the fundamental base for this important cultural change. Web sites, forums and survey covering CSR issues also provide a important contribution in building and spreading awareness.
The following scheme (referring to the triple bottom line concept) includes a set of possible actions.
People
Key issues: Health and Safety; Working hours; Salary; Bargaining; Fighting corruption; …
Actions: Education of workers on China Labour Law; Training sessions involving both managers and workers; Community involvement (not as an alternative to compliance but as a way to increase sensitivity to social issues);Campaign/Advertisements to communicate the message that legal behaviour pays;Incentives for compliance;Awards for citizens denouncing case of corruption;…
Actors: Government, NGOs, workers, management, students.
Planet
Key issues: Waste management – reduce, recycle and reuse; Limiting pollution (e.g. emission trading...); Energy; …
Actions: Training on Environmental Law; Information campaigns on the media; Education through conferences; Education Labs in schools; …
Actors: Government, NGOs, consumers, companies, students.
Profit
Key issues: Long term view; Reputation; Responsible investments; Responsible competitiveness; …
Actions: Long term strategies (opposed to short term results which currently most Chinese companies look at); Implementing the actions listed for the people and planet dimension; Increasing management systems implementation effectiveness through: training programmes for local auditors; protection for workers telling the truth when asked about their conditions; creations of committees; …
Actors: Companies, government, civil society.
Finally, implementing CSR practices increases China’s competitiveness in the international markets, where the concept of competitiveness itself is evolving to a responsible competitiveness pattern. China is now facing a great internal and external challenge affecting global sustainability. Will China be a winner?
Diana Severati, March 2006
China, the world's fastest developing economy, is emerging on the global market scene and CSR is rising in popularity in today’s China as responsible business is becoming a need to ensure competitiveness. The Government considers corporate social responsibility practices in line with the “Human first” spirit of the Scientific Development Initiative and a contribution to build up a “Harmonious society”.
CSR standards and their auditing and certification programmes have been widely implemented largely driven by the increasing expectations of multinational corporations that their suppliers and operations in developing countries take appropriate measures to protect human rights. Procurement policy based on international CSR standards and codes of conduct by multinational corporations have been seen by Western Countries as effective tools to improve the work conditions in China. But there is a long path ahead. On the company side CSR is often seen as a burden because of the higher cost of social and environmental concerns in the short-term as many companies have not a long-term view. CSR awareness among Chinese companies is still low and the creation of a knowledge base and its diffusion through training programmes can be identified as a key step in the CSR agenda.
Problems and questions
First of all, what is CSR? Many companies don’t have a clear understanding of the concept.
The commonly accepted notion of CSR refers to the triple bottom line (the so called “3 Ps”: People, Planet, Profit) and the EU Green Paper defines it as “a concept whereby companies integrate social and environmental concerns in their business operation and in their interaction with their stakeholder on a voluntary basis”.
Which is the best approach to CSR in China? Should it be voluntary or mandatory? Undertaking a voluntary action in term of Corporate Social Responsibility, has been meant as doing something
beyond the compliance to law which is assumed to be fully respected. The cases of illegal behaviours by company are very frequent and we often find ignorance of basic rights among workers. CSR in China means in the first instance to enforce applicable Chinese law. Western companies' sourcing practices can contribute to the problem when, for example, large orders are made with short deadlines, the lowest possible prices are demanded, and orders are changed at the last minute. Factory owners are afraid to lose business if they refuse orders, even if they have to violate the law to complete an order.
Are standards and codes really effective? Codes imposed on factory owners raise costs, so owners have a financial incentive to ignore code requirements. Factory owners are becoming increasingly adept at circumventing inspections, through practices such as double bookkeeping and coaching of workers. As a result, inspectors are often deceived and "clean" audit reports often do not reflect reality. The Chinese government prohibits the existence of independent trade unions, leaving workers without representatives who can discuss violations with management.
Which standard to adopt? The flourish of thousands codes of conduct and CSR project contributes in creating a big confusion around the buzz word “CSR”. Each company tends to create is own and measuring the real effectiveness becomes more difficult.
The social responsibility international certification standard SA8000 is not publicly supported by the Chinese government although China is the second country per number of certified facilities. The high number of certification issued is, in most cases, due to the requirements imposed by multinational companies to the factories in their supply chains. The creation of a national standard is against the current trend of harmonization and integration of available standard and certification schemes, such as aimed by the ISO working group which China is participating to. A new Chinese social responsibility standard, CSC9000T, has been drafted for the textile and apparel industry and it has already raised many questions in the Western world and the ITGLWF (International Textile Garment and Leather Workers Federation) is very critic about it.
Possible steps to follow
The rising number of conferences about CSR in China hold worldwide is a fact: the interest for a sustainable approach to business in China is growing up in and outside the country. The Global Compact Summit in Shanghai (30th Nov. – 1st Dec. 2005) could be considered a milestone in the process of building a dialogue on key topics as labour condition and environmental stewardship in order to establish good practices.
International conferences are an opportunity for business leaders from different countries to meet and share their experiences and ideas: they are part of a continuous learning process, made of specific actions at different levels.
Which actions could be concretely undertaken? Which could be the steps to follow?
The dialogue plays a crucial role in spreading awareness and partnership-based projects could provide a high value contribution to build a culture of social responsibility through stakeholder engagement. Education and training on key issues is the fundamental base for this important cultural change. Web sites, forums and survey covering CSR issues also provide a important contribution in building and spreading awareness.
The following scheme (referring to the triple bottom line concept) includes a set of possible actions.
People
Key issues: Health and Safety; Working hours; Salary; Bargaining; Fighting corruption; …
Actions: Education of workers on China Labour Law; Training sessions involving both managers and workers; Community involvement (not as an alternative to compliance but as a way to increase sensitivity to social issues);Campaign/Advertisements to communicate the message that legal behaviour pays;Incentives for compliance;Awards for citizens denouncing case of corruption;…
Actors: Government, NGOs, workers, management, students.
Planet
Key issues: Waste management – reduce, recycle and reuse; Limiting pollution (e.g. emission trading...); Energy; …
Actions: Training on Environmental Law; Information campaigns on the media; Education through conferences; Education Labs in schools; …
Actors: Government, NGOs, consumers, companies, students.
Profit
Key issues: Long term view; Reputation; Responsible investments; Responsible competitiveness; …
Actions: Long term strategies (opposed to short term results which currently most Chinese companies look at); Implementing the actions listed for the people and planet dimension; Increasing management systems implementation effectiveness through: training programmes for local auditors; protection for workers telling the truth when asked about their conditions; creations of committees; …
Actors: Companies, government, civil society.
Finally, implementing CSR practices increases China’s competitiveness in the international markets, where the concept of competitiveness itself is evolving to a responsible competitiveness pattern. China is now facing a great internal and external challenge affecting global sustainability. Will China be a winner?
Diana Severati, March 2006
Labels: CSR
posted by Diana Severati at
9:58 PM
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