Corporate responsibility can enhance credibility
Qin XiaoyingChina Daily  Updated: 2006-03-02 05:47

Three very different stories I heard recently have impressed me deeply for the same reason: the understandings of corporate responsibility they contained.

First, a Danish businessman told me that he has to fill three forms and send them to his company's head office every year. One is a form stating assets and liabilities. The second is a financial statement. The third is form assessing the firm's corporate responsibility.

The corporate responsibility form is a novelty to many Chinese entrepreneurs, though they are of course familiar with the first two.

In the second story, the leader of a Chinese firm that invested in an African mine tried his best to pass the buck after a mine disaster. A senior Chinese Foreign Ministry official, who happened to be present and could not tolerate the irresponsible attitude any more, snapped: "Please bear 'humanism' in mind!"

Third, I was told by a friend of mine who works at the Working Committee of Taking Care of the Younger Generation that a substantial portion of their funds come from a donation by a big domestic company.

The three seemingly unconnected stories point to one question: Chinese enterprises, while pursuing profits, should make efforts in advancing corporate responsibility.

Chinese enterprises have been through two phases since the late 1970s when China began its reform and opening up. First, they earned and saved money, and second, they expanded. In economic terms, primary accumulation and resources reorganization.

It is now imperative for Chinese enterprises and entrepreneurs, now possessing sufficient economic strength and experience, to enter into a new phase "enterprise citizenship." This means that the enterprise as an economic entity should enjoy the rights enjoyed by the average citizen, and also fulfil its obligations and responsibilities to society just like the average man in the street.

It is hard to imagine an "enterprise citizen" just turning away from society and shunning its obligations after it has reaped fat profits by tapping resources that belong to the whole of society. There will be grave consequences if Chinese enterprises lack awareness of "enterprise citizenship" and remain ignorant of their social obligations and responsibilities.

As a matter of fact, some morbid occurrences frequently seen today are closely associated with this lack of "enterprise citizenship" awareness.

We see frequent defaults on payment to migrant workers, many coalmine disasters, use of child labour, discrimination against female workers, worsening environment arising from illegal over-tapping of natural resources, harmful food made from substandard materials, and so on.

Behind all this is an exclusive pursuit of profits by companies, who are giving up on credibility and corporate responsibility and cutting production costs to an unreasonable minimum, helped by other factors such as lax supervision from relevant government departments and corruption.

We are now promoting a market economy. But a market economy does not mean a market society. All people who possess working capabilities are instrumental to a certain degree. But humans are not machines without blood, flesh, feelings and ethical codes

There should be absolutely no room for "sweat shops" now that we are engaged in the building of a harmonious society based on the principle of people coming first.

Enterprises' obligations fall into two categories internal obligations and external ones.

Internal obligations include reasonable systems of working hours, rest and leave, proper relationships between labour and management, labour rights, improvement of working conditions, various kinds of social security guarantees, pay increases, sexual equality, support for female workers during pregnancy and child birth.

External obligations can be sub-divided into three aspects. First, enterprises should extend their tools such as telecommunications and information technology into backward areas, and their work should tilt in favour of disadvantaged groups.

Second, enterprises should stick strictly to ethical codes and behave themselves, trying to bring about harmony between humans and humans, humans and society and humans and nature.

Third, enterprises should do their best to support undertakings of common good.

In the final analysis, social obligations and responsibilities will not feel like a heavy burden on the back of enterprises if the importance of fulfilling them is brought home. Moreover, the fulfilment of these obligations and responsibilities constitutes a powerful engine for the future development of the enterprise. This is because the implementation of the obligations helps elevate an enterprise's reputation and boosts its image among citizens, helping promote its brand. This is a priceless intangible asset of an enterprise.

The raising of the issue of corporate responsibility and the shaping of enterprise citizens are an expression of the inherent logic of China taking the road of a "new-type industrialization," and also an expression of social justice.

We witnessed the birth of the UN Global Compact in 1992, which contains nine corporate obligations including abolishment of child labour. We were glad to see the release of the Beijing Declaration on Chinese enterprises' social obligations and responsibilities signed by more than 100 Chinese enterprises in September 2005, and also the Declaration of Enterprise Citizenship in November of the same year.

Now, I would like to ask Chinese entrepreneurs: Can you confidently fill out the form for your social obligations when it is put on your desk today?

The author is a researcher with China Foundation for International and Strategic Studies.

(China Daily 03/02/2006 page4)

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