Global trade spurs tie-ups with NGOs
The terms 'sustainability' and 'responsible business model' have become part of official and public discourse on the mainland. However, structural changes in government policies and business operations that foster more tangible sustainable development have yet to happen.
Brian Ho Chi-kuen, director of CSR Asia's China offices, said corporate social responsibility practices on the mainland tend to focus on 'obvious tasks, such as CSR reports, donations and campaigns. However, their CSR practices are not related to their core business, so there is no guarantee of a CSR budget. It could easily be cut when profits trickle'.
The good news is that increasing international investment and trade volumes are providing an impetus to CSR development in the country, while state enterprises, large companies listing abroad and those that rely heavily on overseas client bases are getting more sophisticated in their CSR models.
Government policies, as seen in the latest five-year plan, have also brought attention to corporate responsibility with the aim of fostering 'inclusive economic growth' and 'sustainable development'. And a handful of local enterprises, such as China Mobile, are delivering a consistent, sustainable CSR model.
Ho notes, however, that strict government regulation of NGOs could hamper the progress of business-community partnerships.
According to the Ministry of Civil Affairs, the number of registered 'social organisations' on the mainland, most set up by the government, had reached 230,000 by the end of 2008. However, scholars estimate the number of NGOs at three million if you include those operating without a licence or with a business licence.
But Ho said most NGOs that operate unlicensed or without a proper licence could be marginalised in their CSR efforts.
'How influential can NGOs be? How much bargaining power do they have when it comes to corporate policies? It would be great if the central government could loosen up the criteria for NGO licences.'
Foreign firms with enough local understanding sometimes choose non-legitimate NGOs as project partners, Ho said. They are also more likely to carry out community projects that assess and improve the overall education and service needs of the local community.
Guangzhou, for example, was the beneficiary of the latest CSR project by luxury resort group Banyan Tree and NGO Habitat for Humanity.
The group has asked buyers of Banyan Tree Private Collection memberships to donate US$10,000 from each individual perpetual membership sold. The donations will be matched dollar for dollar by the company. The initiative is aimed at the building of 100 homes by Habitat in Guangdong and the Philippines over the next year.
The group set up the Global Banyan Foundation last year. 'It is independent, but it is part of Banyan Tree,' said Claire Chiang, senior vice-president of Banyan Tree Holdings. 'It is the most tangible commitment by the company. It dismisses the presumption that in good times, with the extra money, we will help; in bad times, we don't.'
A fund-matching scheme, the Green Imperative Fund, was initiated in 2001. It invites every guest to donate US$1 to US$2 for every night they stay. The hotel will then match the donation dollar for dollar and contribute at least 1 per cent of profit towards the group's CSR fund.
The group's 2009 CSR report recorded an accumulated sum of US$4.9 million in CSR funds, out of which US$2.3 million had been dispersed for projects ranging from health, tree-planting, marine life research and conservation, recycling projects, to education and youth training. Two full-time CSR directors were hired to oversee the CSR and sustainability teams, which comprise resort managers.
'It definitely costs,' Chiang admitted, adding that environmentally friendly technologies could also be expensive. 'But would you say this is a position you can do without? It is really about engagement with different stakeholders for a longer return on investment.'
Following a proposal by the local CSR committee in the Maldives, it funded a campaign there to provide blood tests before marriage in order to raise awareness of a rare genetic blood condition that leads to disease.
'I don't like the word charity. It is people business ... we encourage sustainability in order for us to function well and with credibility as a viable business,' Chiang said. 'In the past three years there were a lot more CSR efforts in the industry. Whether or not some people do it for marketing or PR gimmicks, I will not judge. The fact that they are thinking about it, learning how to do it and marketing it is a good thing.
'The question is: how consistently are they doing it, and how many years are they going to commit to?'