Taking up Responsibility

By Yin Pumin

Taking up Responsibility

By Yin Pumin

Chinese enterprises are slowly acting to have better corporate social responsibility programs in place

On May 26, the China National Chemical Corp. (ChemChina), the country’s largest chemical product manufacturer, released its corporate social responsibility (CSR) report in Beijing. The report highlighted the company’s role as the main sponsor of the Chemical Industry Museum of China.

The museum was built to showcase China’s history of chemical development. It is also expected to help disseminate knowledge about chemicals and to facilitate exchanges among professionals from around the world.

The report also presented accomplishments the company had made in its drive toward sustainable development in safe production and environmental protection.

ChemChina, founded in May 2004, is ranked among the world’s top 100 chemical corporations. In 2011, the company made the Fortune Global 500 list for the frst time.

“Responsibility fosters future growth,”said Ren Jianxin, President of ChemChina.

Being hallmarks

The term CSR came into general use in the late 1960s. It is corporate self-regulation that encourages companies to exert a positive and ethical influence on the environment, consumers and society instead of just aiming for profits. The concept was introduced to China by foreign companies in joint ventures in the 1990s.

In recent years, the topic of CSR has become increasingly prevalent around the world. More and more enterprises have gradually become aware of CSR’s importance to their competitiveness and taken actions to improve their social image.

As a rising force in the global market, Chinese enterprises, especially centrally-administered state-owned enterprises (SOEs) that aim to establish world-class brands, have also begun fxing their eyes on CSR. In 2011, 898 CSR reports were issued by Chinese enterprises, representing an 18.2-percent increase from 2010, according to a report released during the Seventh International Corporate Social Responsibility Forum, which was held in Beijing on June 5.

“China’s enterprises have already recognized the importance of fulfilling social responsibilities, and a CSR reporting system has gradually come into form,” said E Defeng, Deputy Director of the Department of WTO Affairs of the Ministry of Commerce.

In November 2011, the Chinese Academy of Social Sciences (CASS) published a report, saying that of all companies in China, stateowned enterprises (SOEs) on the whole have performed far better than private and foreignfunded ones in fulflling CSR.

According to the report, the evaluation was based on the performance of 300 enterprises, including 100 state-owned, 100 private and 100 foreign-funded ones. The index consisted of four items: corporate responsibility management, market responsibility, social responsibility and environmental responsibility.

The average score of state-owned enterprises was 31.7 on a 100-point scale, much higher than private businesses at 13.3 and foreign-funded companies at 12.6.

“Of all SOEs, centrally-administered enterprises perform the best with the highest average score of 43.8 points,” said the CASS report.

According to the report, centrallyadministered SOEs have played a leading role in promoting China’s social and economic development, resource conservation and environmental protection, as well as in combating major natural disasters.

SHOWING COMMITMENT: A journalist drinks purifed water at a water purifcation workshop of Sinopec Beijing Yanshan Co. on May 31, 2011. The company opened its business to the public on the day to show its commitment to social responsibilities

The State Grid Corp., the Sinopec Group and other centrally-administered SOEs have not only fulfilled their social responsibilities through specifc projects, but also made greatefforts to promote institutional innovation.

Last year, Sinopec Group invited 12 people from higher education institutions and the media to supervise and advise its CSR fulfllments.

Earlier this year, the company set up a social responsibility management committee that includes all of the company’s board directors, with Fu Chengyu, President of Sinopec Group, as its head.

“The move is intended to facilitate the overall planning of our social responsibility management work, and promote the establishment of a company-wide social responsibility management system,” said Zhou Quansheng, a senior official with the Publicity Office of Sinopec Group.

POWER SOURCE: Workers clean foating garbage near the Three Gorges Dam in southwest China's Chongqing on October 24, 2010. On June 19, 2011, the state-owned China Three Gorges Corp. issued its corporate social responsibility report for the frst time, pledging to build itself into a world-class clean energy company

At a meeting last November, Wang Yong, Minister of the State-owned Assets Supervision and Administration Commission of the State Council (SASAC), which oversees centrally-administered SOEs, said that centrallyadministered SOEs had done well in at least fve areas in fulfilling social responsibilities. “They make great contribution to state revenue, implement national macro-control policies, spare no effort to ensure stable market supplies, fully support the development of livelihood projects and actively participate in poverty alleviation projects and pair assistance to Tibet and Xinjiang, and play a key role in accomplishing urgent, diffcult and dangerous tasks,” Wang said.

A long way to go

Nevertheless, centrally-administered SOEs’CSR performance still falls short of public expectations.

The CASS report admitted that the overall CSR performance level of the top 100 stateowned enterprises in China is still low, with their CSR development index averaging just 32.8 points. Among these 100 enterprises, only one was rated excellent, 20 good, 21 fairly good and 10 bad, while the CSR performance data of the remaining 47 were unavailable.

Though nearly 20 years has passed since its introduction to China, CSR has not received the attention it deserves, with 70 percent of Chinese enterprises not fulflling their responsibilities and many SOEs unprepared to take these responsibilities, said the CASS report.

“Centrally-administered SOEs should actively perform their social responsibilities, to stabilize and expand employment, promote energy conservation and emission reductions, and play a model role in maintaining social harmony and stability,” said Vice Premier Zhang Dejiang at a meeting attended by heads of centrallyadministered SOEs last December.

Zhong Hongwu, Director of the Research Center of Corporate Social Responsibility under the CASS, said that Chinese companies were less motivated to be more responsible for society. “In addition, we lack an established system to press ahead with the process,” Zhong said.

The SASAC once launched a thematic study on CSR mechanisms for centrally-administered SOEs. It found few centrally-administered SOEs had set clear CSR strategies and corresponding work plans. According to the research group, it is poor corporate governance that causes the stagnation of their CSR programs.

“Performance management is the basic means of integrating CSR concepts into daily management,” said Peng Huagang, Director of the SASAC’s Research Bureau. “However, in reality CSR does not take root in Chinese enterprises’ operation procedures because they seldom include CSR performance in their personal, unit or department assessment. The aforementioned limitations mean that some centrally-administered SOEs remain in a catch-up stage after three or four years efforts despite an early start in CSR work.”

In response, the SASAC has tightened efforts to guide centrally-administered SOEs to turn to a development path with good CSR performance.

In 2008, the SASAC unveiled guidelines on centrally-administered SOEs’ CSR work, urging them to establish a CSR management system.

In a 2010 circular, the SASAC required centrally-administered SOEs to honor their social responsibilities and strengthen relevant information disclosure.

From 2006 to 2011, the number of centrallyadministered SOEs that released CSR reports increased from fve to 76, accounting for about 65 percent of the total 117 centrally-administered enterprises, SASAC statistics show.

According to the China Youth Daily, 92 of 117 centrally-administered SOEs had published their 2011 CSR reports by May 30.

“We will request that all centrally-administered SOEs issue a report on their CSR work in 2012,” Peng said.

Li Weiyang, a senior executive with the State Grid Corp., said that the company has understood social cognition and enterprise self-cognition since the release of its frst CSR report in 2006.

Li said that besides correct understanding and active institutional innovation associated with CSR, centrally-administered SOEs should attach more importance to strengthening communication with all circles of society and enhance their transparency. “There will be nothing called responsibility if there is no transparency,” he said.

Li insisted that transparency is the most important value itself because this is the accumulation of the whole society’s social capital.“An enterprise should think about its capability to promote its social values, the content of its transparency strategy, the audience, content and means of its transparency, and the system to achieve its transparency. It requires a joint effort from the whole society,” Li said.

In May, the SASAC announced that it would establish a special committee to guide centrally-administered SOEs in fulflling their social responsibilities. Meanwhile, an evaluation system to judge their performance has also been brought into SASAC’s schedule.

“The SASAC will further improve the management system of centrally-administered SOEs’ CSR work, guide them to use their advantages to create more value for society, and put them under the supervision of the public,”Peng said.

yinpumin@bjreview.com