Corporate social responsibility, or CSR, is creating a buzz in China's business world like never before. From NGOs to government institutions to the private sector, everyone's talking about it.

At the 27th China Daily CEO Roundtable luncheon "Corporate social responsibility and innovation," held at the InterContinental Financial Street Beijing Hotel on Wednesday, over 40 CEOs and senior executives from Fortune 500 companies explored its most effective applications for businesses and its implications for China.

Creating a harmonious society was recognized by delegates as a driving force behind the growth of CSR. First put forward during the Fourth Plenary Session of the 16th Central Committee of the Communist Party of China (CPC) in September 2004, it was not until last month during the sixth plenary session that the authorities put "creating a harmonious society" in a more prominent position by providing specific principles, rules and regulations of what a harmonious society should be.

"Just two years ago, no one was talking about CSR, but now government and business leaders are seriously looking at it," said William Valentino, general manager of Corporate Communications, Greater China,Bayer (China) Ltd and honorary chairman of the CEO Roundtable. "The concept of a harmonious society is really China's rephrasing of the concept of CSR, sustainable development and human rights in China."

As outlined in the draft of the Resolutions of the CPC Central Committee on Major Issues Regarding the Building of a Harmonious Socialist Society, there are still many problems in China that are detrimental to social harmony. These problems were acknowledged by the roundtable delegates, including the widening gap between urban and rural areas, public healthcare, employment and education systems, environmental pollution, immature laws and regulations, and corruption. "Look at China. Its social and environmental burdens outweigh its rapid economic growth in the last 25 years," said Valentino. "The burden is so great that economic development will stop somewhere if we do not try to do something about it," he added.

Business, social commitment

In the last two years, integrating social and environmental benefits with business profitability has become a popular strategy of local and international companies. Valentino cited the Fortune 500 companies 25 years ago that no longer exist today because they failed to adopt a strategy of sustainability. "We are talking less about the economy and more about what we should do for society and the solutions we can provide," said Valentino. "The social contract has been moved from the industrial to the private sector because great wealth, power and influence are now in this sector. We should be leaders in the CSR movement."

Although CSR is still a new concept for most Chinese companies, they are catching up with their international counterparts and learning from them. "International companies have long-established CSR standards and common practices, but it is a new concept in the banking sector and we have kept on improving ourselves," said Ma Li, executive vice-president of the Shanghai Pudong Development Bank (SPDB) and keynote speaker at the CEO Roundtable. The SPDB's CSR efforts include creating an environmentally friendly office, educational programmes and micro-financing for industries relevant to social welfare.

Corporate social innovation

At which point does innovation come into CSR? "We're looking at new core competencies that companies develop that are new values to produce innovation," said Valentino. "Innovation is trying something that's never been done before. You begin to look at the issues, realize its impacts on your markets and employees and do something about it within the context of CSR. It's a value-added approach because you are innovating to find how you can do things to get a pay-off from both sides." In Bayer's definition, "It is not just corporate social responsibility but corporate social innovation that drives us to create systemic change towards sustainable development."

Deloitte's school mentoring programme, where staff volunteered to mentor disadvantaged children for an hour a month, provided a good example of such innovation. After a year, the children had gained a great deal of confidence while staff learned to solve problems more creatively without guidelines. Deloitte Director P.C. Lim shared the company's experience with roundtable delegates: "CSR doesn't have to start with money. It's the management's commitment, good partners and planning it out."

It's not charity

Many companies in China still have the misconception that CSR equals charity, said Tong Shumeng, assistant to the dean of Peking University's Market Economy Academy, drawing on the newly released China CSR Survey 2006. The survey summarizes results from 890 companies including multinational, private and State-owned firms. "They think CSR is for big foreign corporations, adds to costs and is not integrated with corporate culture and brand-building," Tong said.

"Many people think CSR is giving money away and saying 'we're doing a good thing, we feel good so we're a good company,'" Valentino agreed. "But CSR is really about creating an impact in society where you need it. It's an opportunity for learning how to create value for your business."

"We had only a vague idea about CSR, so our efforts stayed on charity activities. But now we have become more conscious about what we should do from the perspective of a responsible company," Ma said. This June, the SPDB became the first in China's banking industry to issue a CSR report, which thrust the bank into the spotlight. "We want to be under public supervision and be at the centre of their attention."

Taking action

Actions speak louder than words. This is also true for CSR.

"It (CSR) is not PR it's based on actions, on what you do, who you do it with and how you do it. It's the impacts you create and what you are contributing to the solution. This is also where innovation comes in," Valentino said.

Bayer issues annual CSR reports about its values, ethics and CSR projects. "Companies need to put words into actions. Even the smallest of projects can create an impact on the society, and every individual makes a difference," he said. Bayer launched its Tsinghua-Bayer Public Health and HIV/AIDS Media Studies Programme with Tsinghua University in November 2004. It also collaborates with UNAIDS, MercyCorps and the Special Olympics on various CSR projects. "Good partners can help us understand the problem and direct us in finding the right impacts. And the more people you work with, the greater the impact, the greater the results."

Win-win situation

The emotional appeal of CSR can have tremendous benefits on corporate identity and integrity when done in a sustainable way. "We live in a very interconnected world. It should not be a give-and-lose situation but a win-win one," said Valentino.

The SPDB began its initiatives to conserve natural resources in 1997 by introducing advanced technologies to create an online, paperless office. It also set up a care website through which it collects donations for HIV patients. Money collected from the website was donated to 142 orphans with HIV in Henan Province for treatment. And the bank plans to give another 1 million yuan (US$126,670) to children with HIV in the next three years through the website. "We have invested a lot of money, but we have also reduced our costs and risks and improved management efficiency. We also enhanced our image and branding, which would have a long-term effect," said Ma.

Long-term process

As the China CSR Survey 2006 shows, many Chinese companies still have misconceptions about CSR although they are aware of its significance. CSR needs more public attention as well. Of the 12 sectors investigated, service industries including banking and telecommunications are more sensitive to CSR, while the steel and energy industries are less conscious of the negative impact their activities have on society and the environment. "For them it is a long road ahead," said Tong.

"Chinese corporations are waking up as they realize CSR is necessary for their companies' long-term sustainability," Ma said. "They are beginning to have innovative plans and actions to improve the environment. And they realize it's an ongoing process too, not just giving money away."

Source: China Daily