Historically, MNCs have led the way on the implementation of integrated approaches to sustainability in China. Now, as the economic boom stabilizes and profits fall, there is added pressure on them to show how they are "giving back."
In MNC boardrooms, the question is not, "Should we show our commitment?" but rather, "How well are we showing that our commitment aligns with government priorities and social needs?" This conversation is growing, but there is still room to improve. While more MNCs are publishing China-focused corporate citizenship reports, less than 8 percent are translated into Chinese.
In Chinese companies, CSR programs still tend to be seen as an add-on, rather than central to value creation. But that is changing quickly. According to the China WTO Tribune, the number of CSR reports published in China rose from one to 898 in just 10 years (2001 to 2011).
"Good reputation and a strong brand are just as important as solid financial performance," says Zheng Dongshan, senior vice-president of China General Nuclear Power. "After the Fukushima accident in Japan, the public's suspicion and resistance toward nuclear power plants was unparalleled. It was vital to improve the openness, fairness and frequency of our disclosure mechanism."
In response, Zheng's company was among the first in China to establish a nuclear and radiation disclosure platform, to ensure the public received accurate and timely information. That also reduced the risk that inaccurate public information could harm the company's reputation.
A barrage of networks and forums, sponsored by advisory organizations such as Golden Bee and Collective Responsibility, have emerged to further increase awareness of environmental and CSR issues. Chambers of Commerce – important platforms for both multinational and Chinese companies to share information and best practices – have also put corporate responsibility high on their agenda, in response to members' needs.
In all this increased awareness, the key components of an integrated business program are beginning to emerge, linking core values, operations and a management system that addresses social needs.
Leaders in this space in China include companies such as Intel, General Electric, PricewaterhouseCoopers, KPMG, HSBC, China Mobile and Chinese appliance maker, Gree Electric. Many MNCs are now beginning to localize their CSR programs to align with China-specific issues and needs.
UK tea marketer Twinings is a good example. Young workers moving to cities created a labor shortage among China's rural tea farmers. Meanwhile, the remaining older farmers overused fertilizers and pesticides, resulting in environmental problems, soil degradation and reductions in quality.
To address this, Twinings focused on poverty alleviation efforts all along its supply chain. A key step has been training and education to highlight the relationship between nature, tea production, economic benefits and a more harmonious society. The move encourages more young people to become farmers and helps reduce the use of fertilizers and pesticides. And as the tea quality improves, profits rise.
China is on the path to a more sustainable future as social responsibility becomes a pillar for the economy and the country as a whole. The government's 13th Five Year Plan outlines strategic priorities, including Made in China 2025, entrepreneurialism and the continued anti-corruption campaign. These are designed as a sophisticated and home-grown path toward sustainable growth.
Boards that can help China on that road, by demonstrating a real understanding of responsibility concerns and working with the government to implement localized programs, stand to succeed in the "new normal."
About the authors: Brunswick Partner Lu Jianzhong heads the Shanghai office and leads the Business & Society practice in Asia. He advises on sustainable business strategy and corporate social responsibility. Tong Zhao is a Partner in Hong Kong and advises on corporate reputation, capital markets, M&A and crisis communications. The views do not necessarily reflect those of China Daily.
