Hong KongBy: Omar Romero-Hernandez, Lecturer & Senior Research Advisor

Over the past year, a series of Corporate Social Responsibility (CSR) issues – including, but not limited to, human rights violations – have kept China in the international headlines. These incidents have served as a booster for foreign and domestic companies to expand upon or implement new CSR programs in China.

Many managers inside transnational companies are eager to develop CSR programs that can be implemented at their China-based factories, but don’t know where to start.  Perhaps they felt inspired but then became confused as to whether or not their established, North American approach to sustainability would apply in China… and then grew overwhelmed.

During a recent trip to China, I had the opportunity to interact with high-level decision makers from several industry sectors, including metal mechanics, computing, beverages, and service providers. During my visit, which was geared towards developing and incorporating insights into my Corporate Sustainability teaching at Haas, I observed that most CSR initiatives in China center around awareness-raising of issues, as opposed to sustainability as value creation (the most common US-based approach).  Not all executives in China are familiar with the term “CSR”, but herein lies the opportunity: they are all aware of the need to tackle environmental issues and avoid the human rights violations that may damage their company’s reputation and brand value abroad.

For those wanting to take action and build a strong CSR program in China, I recommend starting by asking the following basic questions:

  1. Has your (US-based) company defined a differentiated CSR strategy for your global partners? Where might your China-based CSR projects align with the corporate sustainability strategies already in place?
  2. Have you mapped and then engaged stakeholders to assess needs at the local level, in China? While your employees in and around Shenzen may have a high need for education, NGOs around Guangzou may emphasize the treatment of migrant workers, while local citizens of another community may be concerned about access to safe drinking water.
  3. What synergies can you build between your own sustainability goals and those of the Chinese government? This is a critical question, as the government has the global influence and the cash to quickly embrace strategic projects.  Most companies I  visited reported that, to this point, they are constantly aware of government signals published in national, provincial and county level statements.

Traditionally, the government has encouraged corporate responsibility in China to revolve primarily around charitable or philanthropic projects. Last year, however, private-sector opportunities came to light as the Chinese government stated its clear goal to improve access to and quality of social services, and particularly health and education, fostering innovation, and bettering environmental conditions. This view is changing rapidly with new emphasis on human factors and capacity building.

It is clear that setting an actionable, customized and therefore strategic CSR focus in China requires a large number of qualified professionals with open eyes toward international success projects. Universities are playing a role in this movement; through my conversation with Professor Dennis Fan, Associate Dean of CUHK Business School, I learned about the school’s recent actions and was quickly brought up to speed on his perspective with this advice: “learn from the best, engage outside, get back with the recipe”. For example, 50 students were awarded scholarships to research CSR in 9 countries across 4 continents, with opportunities to study the application of CSR in different parts of the world, as well as understand its tremendous impact on numerous cultures. With the support of this scholarship program, college senior Rex Ho studied the practices of strategic CSR in US firms and aimed to introduce the CSR models to China, during his exchange studies at UC Berkeley. While this is one of the most ambitious projects, other universities are following a similar track.

Last, but not least, an important component of a successful CSR program is the amount of resources that can be applied to it and the rise of new business and financial models. I will address this topic and others in my next CRB blog post post.  For now, just remember to make sure you read the signals before engaging with CSR initiatives in China.  And for those of you out there leading the charge in these areas, please write in and tell us what’s working!