More firms adopt social responsibility strategies

In recent years, many Chinese private enterprises have started to develop a social responsibility strategy.

The Declaration of Social Responsibility Commitment was a joint statement issued by 26 private enterprises, including Longchang Cement Manufacturing Group Co Ltd from Zhaoqing in Guangdong province.

The enterprises pledged to serve the country with full strength, operate with integrity, treat employees well and preserve the environment.

Their goal is to build a positive profile of Chinese private enterprises to improve employment relationships and ultimately seek a balance among society, enterprises and employees.

CSR motives

This phenomenon does not go without suspicion. Why are private enterprises now attaching more importance to social responsibility? Is this a form of lobbying or advertising or merely putting on a show?

Undeniably, the purpose of devoting resources to social responsibility will vary. We cannot ignore those who regard this as a commitment to just gloss the surface.

However, we must not forget the power of the market.

In recent years, manufacturers and retailers such as Nike, Adidas and Levi Strauss have implemented production guidelines for worldwide suppliers.

These guidelines highlight the prohibition against using child labor, a ban on forced labor, the regulation of minimum salaries and other issues.

Meanwhile, as labor standards such as SA8000, WRAP and AVE have prevailed, companies that fail to be standards-compliant will soon lose their orders.

According to Ma Ying, director of the Asia Department of Social Accountability International (SAI), although few multinational corporations have been certified as SA8000, they regard SA8000 as a standard when seeking partners.

"The monetary value of procurement carried out indirectly under the SA8000 standard amounts to approximately $200 billion every year," Ma said.

It is manifest that globalization provides challenges and opportunities for corporate social responsibility. Therefore, those who want to capitalize on this golden opportunity should take immediate action.

A decades-old idea

The concept of corporate social responsibility (CSR) was first introduced by Oliver Sheldon in 1924.

CSR policy basically means that businesses should embrace responsibility for the impact of their activities on their communities, environment, consumers, employees, and all other members of the public sphere.

As early as the 1930s, renowned economic professors Adolf Berle and E. Merrick Dodd had already led a spirited debate on the issue of whether corporations should undertake social responsibilities.

In terms of issues like the company's functionality and role, and who is the trustee of the manager, Berle regarded companies as sheer for-profit economic organizations in which all the corporate powers belonged to stockholders.

By contrast, Dodd advocated that companies should embrace social responsibilities since companies were greatly influenced by public interests when allocating private properties. Thus, companies should be considered organizations endowed with both functions of seeking profits and serving the society.

This debate lasted for more than two decades and ended with the prevalence of Dodd's standpoint.

Thus, CSR policy has been conventional since its introduction.

In contemporary society, companies in developed countries have recognized that they should practice social responsibility for employees, consumers and their communities while still seeking to maximize profits.

Responsibilities include production safety, occupational health, abiding by business ethics, protecting the legitimate rights and interests of employees, protecting the environment, preserving natural resources, supporting charities, contributing to public welfare, protecting disadvantaged groups and other activities.

Building credibility

Recently, serious scandals concerning corporate behavior have sparked heated public attention.

Incidents such as the milk powder scandal and mining disasters have battered the credibility of manufacturers.

According to the April 22, 2004, Reference Information report, as of mid-April, there were approximately 40,000 workers whose fingers, hands or even arms have ever been crushed or cut off by machines in China. Just one county in Zhejiang province contributed more than 1,000 of these accidents.

To fulfill social responsibility is an inevitable topic for Chinese private enterprises.

Since the regulatory system still leaves much to be desired, Chinese private-owned enterprises need to fully understand the causal relationship between undertaking social responsibility and sustainable operations.

The author is deputy dean of Lingnan (University) College at Sun Yat-sen University and director of the Research Center for Corporate Social Responsibility at Lingnan College.

(China Daily 11/02/2009 page10)