HK attempts to clean up its act

PUBLISHED : Wednesday, 23 July, 2008, 12:00am
UPDATED : Wednesday, 23 July, 2008, 12:00am

Hong Kong's efforts to improve its corporate social responsibility (CSR) activities have improved considerably over recent years. But, according to experts, there is still a great deal more to be done.

Richard Welford, deputy director of the corporate environmental governance programme at University of Hong Kong, said while a handful of Hong Kong companies had taken a leading role in implementing CSR policies, many Hang Seng-listed companies had done little towards addressing the issues.

'When you look at the amount of CSR, environmental and sustainability reporting conducted by Hang Seng-listed companies there is very little evidence of a willingness to move in a CSR direction compared to other mature societies. Of the 100 biggest companies listed in Hong Kong, the number that issue any type of CSR or environmental report can be counted in single digits,' said Professor Welford, who is also chairman of CSR Asia, an organisation that monitors CSR issues and helps companies develop and implement related policies.

He added that in Britain, 'about 90 per cent of the 100 largest companies produce various reports' on the subject.

Professor Welford said in Malaysia and Indonesia legislation was being implemented that would require companies to produce CSR and environmental reports. However, this had yet to happen in Hong Kong. Environmental issues were one area where Hong Kong companies were beginning to pay more attention and looking for ways to improve performance.

'We are seeing a growing number of companies taking a longer-term view on environmental and climate change issues and in some cases taking a lead. There are some companies based in Hong Kong that are doing some really progressive things and others that are not, the percentage is split fairly evenly,' he said.

With no universally accepted definition, CSR generally refers to companies conducting business in a manner meeting or exceeding the ethical, legal and public expectations, mindful of the impact of their business practices on stakeholders, which include employees, shareholders, investors, suppliers, consumers and regulators, and non-government organisations.

'Hong Kong companies are good at philanthropy, but CSR is not only about giving money away it also includes how money was made in the first place,' Professor Welford said, adding that often there was a lack of awareness relating to CSR issues, which could be addressed through business schools and MBA programmes.

He said when investing or developing a new business on the mainland it was no longer enough to just conduct financial due diligence. A more robust approach was required to evaluate other issues, such as climate change, supply chains, labour laws, employee welfare, ethics, and the impact a business had on the wider community.

'Forward-thinking companies understand that they can do business in ways that bring benefits to their company as well as to communities. Whereas traditional community investment often referred to large enterprises' charitable activities close to head office, community investment today means much more than this,' Professor Welford said. He said, increasingly, consumers and stakeholders were not so concerned with how companies gave their money away, but wanted to know how companies made their money and the impact on communities throughout the value chain.

Shalini Mahtani, founder and chief executive of Community Business, a non-profit organisation that works with companies on CSR issues, said for a growing number of companies CSR was no longer an afterthought or public relations function, but a concept that required leadership and human and financial resources.

Ms Mahtani said an indication of how far CSR awareness had developed in Hong Kong could be measured through her enterprise. 'When we launched our organisation in 2003, we were knocking on doors to get people interested, but these days we work with more than 40 companies, and increasingly companies are coming to us for help with their CSR efforts,' she said.

In spite of the positive improvements Ms Mahtani said she would like to see the issue of work-life balance taken more seriously. 'Hong Kong people have a reputation for working long hours, which is often seen as a competitive advantage. However, the results from our latest survey reveal that 27 per cent of those interviewed would consider leaving Hong Kong to achieve a better work-life balance.'

She said firms with high employee turnover rates stood to lose valuable resources in addition to money. This could be particularly expensive if the high turnover rate was for middle or high-level positions.