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Home > Brief News > 2014

2014

Observations & Measures on CSR Performance of Overseas Chinese Enterprises (2)

 
  1. Corporate Social Responsibilities and Background for International Practices
Corporate Social Responsibility (CSR) defines the social responsibilities that a company should undertake towards the stakeholders and environment in which their business operates. The definition of CSR was pointed out according to the basic principles of sustainable development for business operations, which requires the enterprise to consider not only their financial and operational issues, but also their influence towards the society and natural environmental where they are based in. Here “stakeholder” means the individuals and groups, including employees, clients, suppliers, community groups, their parenting company or attached companies, business partners, funders and shareholders. American scholar David Davis has given out his set of views on CSR, which has been called the “Davis Model”.
 
The model includes:
  1. CSR originates from the social rights movement. Since enterprises have significant influence on issues like equal employment of minorities and environmental protection, therefore the society will require enterprises to solve the social issues by using their influence.
  2. Enterprises are supposed to be an open dual-system, which means they can receive information from the society and they should let society understand its operations. To ensure the stability and progress of the whole society, enterprises have to maintain consistent, honest and open information communication.
  3. Besides the economic revenue, every activity, product and service of a company has to include the consideration of its social costs and revenue. This is to say, that the operational decisions of a company should be not only based on their analysis on technological feasibility and economic revenue, but also on their analysis of impact to the society, both in short-term and in long-run.
  4. The social cost relating to each activity, product or service should be transferred to each consumer. The enterprises are not supposed to do all good deeds benefitting society with only its own capital and manpower.
  5. Same as an individual, enterprises as a legal entity should be involved in solving social issues, which might be beyond their normal range of responsibilities. This is because the progress and advancement of the whole society will eventually benefit every member of the society, including the corporate entity. 
 
Although CSR was first pointed out by the western countries, it has become popular in China in recent years. Fortune (Chinese Edition) has been releasing its CSR ranking in the recent three years. Forbes also added one criterion on CSR performance in their business ranking. From those publications we can see the importance and attention on CSR in both western and Chinese society. The UN is also an important organization in promoting business to perform social responsibilities. The former UN Secretary-General Kofi Annan during his tenure had made significant adjustment of the UN working focus to transfer the focus from maintaining sovereignty of national members to protecting rights of citizens. Given the fragility of globalization and the gap among countries are widening internationally, the disparities within one country are also widening due to inequitable dissemination of wealth. Especially the unbalanced development of some companies have brought huge threats to the ecological environment and planetary safety. Kofi Annan has challenged the international business leaders and called on their constraints on business behaviors and undertaking more social responsibilities.    
 
In January 1999, Kofi Annan proposed the Global Compact in the Davos World Economic Forum, which was later formally launched at the UN HQ in July 2000. The Global Compact calls for the companies to abide ten principle rules in respects of human rights, labor standards, and environmental protection.
 
The main principles of the Global Compact include:
  1. Business should support and respect internationally acknowledged human rights.
  2. Business should not involve in any actions that disregard or violate any human rights.
  3. Business should support the freedom of association and acknowledge the rights of collective bargaining in term of wages and other issues.
  4. To eliminate all forms of forced labor.
  5. To effectively prohibit child labor.
  6. To eliminate any discrimination on employment and industry.
  7. Business should be prepared for environmental challenges.
  8. Business should undertake more environmental responsibilities initiatively.
  9. Business should encourage the innovation and promotion of environmental friendly technologies.
10. Businesses should work against corruption in all its forms
 
We can see from the above that either Davis Model or the Global Compact emphasize specially on the protection of civil rights, which essentially reflect the respect and protection to human rights and are in line with the human-oriented philosophy internationally acknowledged. From the Davis Model we can see that the operation of an enterprise involves employees, clients, suppliers, community groups, parenting company and attached companies, business partners, funders and shareholders, etc. As it is deeply related to citizens, therefore CSR performance obviously relates to its business development. The business operation and governance will be influenced by public opinion, furthermore, the overseas strategy and sustainable development will also be influenced.
Let’s take the Myitsone Dam Project of China Water & Electricity Corporation in Burma as an example. The project was stopped due to environmental and migration reasons. The real challenges the Chinese enterprises are facing are their public relations management capacity and strategies, their communication ability in a diversified and open society, their countermeasures in overseas investment and how to reconsider and balance the investment environment. Those significant issues may decide the survival of the enterprise.