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Focus: Corporate Social ResponsibilityCSR Best PracticesCompanies that want to improve their corporate social responsibility programs in China may learn from the experiences of othersby Brett Gerson Many foreign companies that seek to implement or expand corporate social responsibility (CSR) programs in China face significant transparency, accountability, and partnership hurdles. The experiences of several leading multinational corporations (MNCs) with well-established and successful CSR programs in China illustrate some important best practices. One of the most vital—and basic—tasks a company should complete before setting up a CSR program is to clearly define the program's goals and determine how success will be measured. An MNC's headquarters typically defines broad principles and goals for the company's CSR efforts worldwide. These principles and goals generally align with the company's overall business model and industry. For example, some MNCs in the agricultural sector focus their CSR efforts on environmental issues while MNCs in biotechnology focus on global health concerns. MNCs that offer a broad array of products and services may devote CSR resources to multiple causes. The most successful CSR programs in China embody company-wide CSR goals while allowing for China-specific adaptations. For instance, MNCs may need to tailor their projects when dealing with the PRC government's large bureaucracy, or they may need to adapt environmental initiatives to suit China's environmental challenges, such as pervasive and severe pollution. MNCs should also keep in mind that some CSR efforts, such as political-development exercises, are far less appropriate in China than they would be in some other countries. In fact, government officials are unlikely to tolerate such programs. Weave CSR into the corporate structureInvolve top executivesOne of the key characteristics of successful CSR programs is the involvement of the company's top executives. Executives should lead by example, be visible in their CSR participation, and encourage all employees to embrace and embody the company's CSR-related principles. Additionally, executives should encourage employees and managers to participate in efforts to give back to the community while stressing the importance of CSR participation in all in-house communications. Divide responsibilities, create oversight committeesIn China, larger MNCs with a variety of CSR programs often divide oversight among various company departments. For example, a company's corporate communications department might oversee community outreach efforts while the legal department oversees environment, health, and safety (EHS) programs. Even if CSR programs are departmentalized, the MNC should maintain communication among all departments. In a large company, the head of China operations generally oversees all programs and organizes a CSR committee that includes executives from each department and meets regularly to coordinate CSR-related efforts. A smaller company with limited resources and fewer programs may instead designate a key manager to report directly to the head of China operations. Many companies find that the government relations director is a good person to oversee CSR programs because programs related to the three main categories of CSR—community outreach and education, EHS, and environmental protection—require significant interaction with PRC government bodies to be successful in China (see CSR Categories). Establish communication linksThe CSR committee (in larger firms) or manager (in smaller firms) should have direct and frequent communication with employees involved with CSR in the home country. The committee or manager thus can ensure that all CSR initiatives are aligned with the company's overall CSR initiatives and that funds are being spent efficiently. Appoint managers to oversee every project locationIn addition to an executive-level CSR committee or manager at the China headquarters, a company should establish a mid-level CSR position at each China office or manufacturing plant. This employee can supervise the company's local CSR programs and report to the China CSR committee or manager. For instance, if a company has operations in Beijing; Chengdu, Sichuan; and Shanghai, each location would ideally give a mid-level employee the responsibility for overseeing CSR to ensure maximum accountability and communication between the local China operations and company headquarters. These mid-level CSR managers should report directly to the CSR manager at the China or Asia-Pacific headquarters. Establish community outreach councilsCompanies would do well to establish community outreach councils (COCs) at each location in China to help initiate, organize, and administer local CSR programs. COCs typically consist of employees from all levels. Ideally, participation in a COC is voluntary. Most companies in China find that local employees are enthusiastic about participating in CSR programs because it is their community that the programs seek to improve. Select projects carefullyIt is important to conduct research on local needs so that, for example, a company does not rebuild a school when the local community is in much greater need of a new hospital. Companies should consider the following questions when selecting a CSR project:
Get employees involvedA financial services company may help most by creating a microlending initiative or a financial education program that teaches local citizens how to manage their money, while an agricultural firm could help local farmers increase their crop yields through educational programs. Some CSR programs naturally attract high employee participation because the programs appeal to their personal interests. Other times, however, a company may need to encourage employees to participate in the CSR programs. Companies can boost employee participation in CSR-related activities in a number of ways:
Select partners carefullyMany foreign company operations in China lack the infrastructure and staff to undertake CSR projects alone. As a result, some companies work with other organizations—usually international nongovernmental organizations (NGOs) or domestic Chinese organizations—to help implement their CSR initiatives (see NGO-Business Partnerships). MNCs should carefully evaluate potential NGO partners, whether international or domestic. For example, even if a potential partner is well-known and respected, MNCs should speak with its leaders and invite them to the company's facilities and other locations where the potential project will be carried out. MNCs should also ensure that their executives articulate exactly what they expect from the NGO and what the NGO can expect in return. International NGOsInternational NGOs that operate in China generally have a "host" government body that oversees their work in-country. Although this does not prevent such organizations from operating with relative freedom, it can pose unique transparency and management challenges depending on the nature of the relationship between the NGO and the government and the NGO and the MNC. (Because it is difficult to acquire official backing, many smaller international NGOs have registered in China as for-profit businesses.) In general, international NGOs are useful resources and can help implement a company's CSR-related objectives in target communities and train company employees in CSR-related tasks. International NGOs—particularly those with lengthy track records in China and links to the PRC government—are generally accountable, trustworthy, transparent, and extremely diligent. (For a list of international NGOs operating in China, see the China Development Brief [www.chinadevelopmentbrief.com/dingo].) Domestic NGOsMost domestic NGOs in China are quasi-governmental organizations or government-organized NGOs directly supervised by a PRC government organ, in part because China lacks a legal framework for the establishment of nongovernmental and nonprofit entities. (China has been drafting a Civil Associations Law for a number of years, but this law does not appear on the National People's Congress Legislative Calendar for the 11th Five-Year Plan [FYP, 2006-10] and is thus unlikely to be completed in the near future.) The China Association for NGO Cooperation (CANGO, www.cango.org) serves as an umbrella organization that aims to link the top NGOs in China with foreign counterparts and donors. CANGO can help MNCs find CSR partners and keep companies abreast of all CSR-related news in China. PRC government-organized CSR programs in China primarily encourage charitable donations or other forms of philanthropy. For example, if a natural disaster hits or a school needs textbooks, Chinese NGOs and government-linked charities may request donations from MNCs. Participating in such government-sponsored efforts is worthwhile for companies, but these short-term drives are not substitutes for CSR initiatives that require long-term commitment, employee involvement, and other resources and responsibilities. Domestic NGOs with which companies form successful partnerships tend to be selected using techniques similar to those used to select commercial suppliers. The China CSR programs of large MNCs are evaluated according to Western standards and thus require measurable results and transparent accounting. Because Chinese NGOs are not always accustomed to these standards, foreign company executives and employees of the most successful programs are deeply involved in decisionmaking and supervision. Companies should ask any potential Chinese NGO partner the following questions:
Consider partnering with educational institutionsMany companies focus their CSR initiatives on improving education in China. Aside from scholarship programs, companies have structured some CSR projects as competitions between universities, requiring students to work in teams and submit proposals on projects to benefit their surrounding communities. Many companies work with vocational and technical schools to improve their curriculum and develop practical skills such as computer training, leadership development, and basic finance. These skills help students become more productive members of the workforce. Relate CSR efforts to government development goalsIt is important that companies' CSR efforts relate to China's social development goals, which are outlined in official government documents, such as the national 11th FYP, and in provincialand county-level statements. Issues that China hopes to address during the 11th FYP period include improving access to and quality of social services—particularly health and education—fostering innovation, and improving environmental conditions in China. Because these areas are broad, many CSR-related activities will likely fall under at least one category. After an MNC has reviewed local development plans to identify overlap among its business goals in the China market, its global CSR activities, and local development priorities, the company should communicate to PRC government officials exactly how its CSR initiatives relate to government benchmarks. In some cases, companies may want to align the language of CSR-related company communications with government goals and visions. At the provincial level, companies should highlight the positive impact of their CSR initiatives on working conditions, employee morale, the surrounding community, and the environment. Companies may wish to invite PRC government officials to CSR-related events and award banquets to ensure that the officials see the company's positive impact on the community. Some companies hold quarterly meetings between high-level company managers and local government officials that include CSR as a topic of discussion. Turn CSR efforts up a notchBecause stakeholders—both in China and around the world—emphasize the growing importance of responsible corporate citizenship, EHS, and the environment, companies in China will likely maintain or expand their CSR efforts in the foreseeable future. Indeed, companies are already going beyond legal compliance and occasional charitable giving by developing programs with surrounding communities to improve working conditions, provide educational opportunities, and help the local environment. CSR CategoriesCorporate social responsibility (CSR) in China is often divided into community outreach and education; environment, health, and safety (EHS); and environmental protection.
—Brett Gerson Media OutreachCompanies should plan ahead when presenting their corporate social responsibility (CSR) efforts to the media. Many companies require their CSR departments to include a media plan for each CSR project, detailing how the project will be reported and communicated to all stakeholders, including the media, the local community, employees, corporate headquarters, and various government agencies. Once a CSR committee or manager is designated in China and community outreach councils are in place, all CSR-related information, ideas, and news can be channeled throughout the corporate structure. Corporate communications, public relations, and external affairs managers should be informed of all CSR projects in China. One of the key tasks of the communications executives should be to connect company values and goals, expressed by CSR efforts, to the brand image of the company through marketing, events, and media. This will ensure that the goals and results of all CSR projects are disseminated within the company and, of course, to the media, nongovernmental organizations (NGOs), and governments. Executing this plan throughout the project boosts transparency and maximizes project impact because greater exposure typically leads to more participation. Companies will also find it helpful to customize reports for industry-specific media outlets to tie CSR efforts to topics that their audiences are most concerned about. For example, a biotechnology company that initiates a science development program for students may wish to notify science-related media outlets about the project, rather than all general newspapers or magazines. In addition, companies may want to consider linking CSR initiatives to marketing campaigns to enhance a company's overall brand image. (Companies should, however, avoid linking CSR initiatives so closely to their marketing efforts that an action intended as altruistic is viewed merely as a publicity stunt.) Marketing and corporate communications departments can work closely with CSR project leaders to maximize positive exposure. Companies should be careful, however, to set clear rules regarding the use of their logo, trademarks, brands, and company name by NGOs or other CSR project partners. Companies may also want to take steps to ensure that internal communications about CSR projects are not leaked to the press. —Brett Gerson NGO-Business Partnerships: The Case of the WWF and IKEA
In 2002, IKEA Group and the World Wide Fund for Nature (WWF) began a partnership to promote responsible forestry in priority regions around the world. The partnership took off with a brainstorming workshop at which IKEA and WWF representatives jointly set priorities for the collaboration. The countries chosen for inclusion in the project were selected on the basis of their importance to WWF's conservation priorities and IKEA's wood sourcing. Together, the two organizations have planned and implemented a series of projects in Bulgaria, China, Estonia, Latvia, Lithuania, Romania, and Russia. The projects are important steps in implementing IKEA's forest action plan and in achieving WWF's conservation targets. The long-term goal of the partnership is to ensure that all IKEA wood products are made from certified and well-managed forests. China is playing an increasingly important role in international timber markets. With only 18 percent of its land area covered by forests, according to the PRC National Bureau of Statistics, China is a relatively forest-poor country. Most of its forests were cleared centuries ago, and over-harvesting in recent decades has depleted many of the remaining forests of mature timber trees. In 1998, China banned commercial logging in much of the country. As a consequence, China's import demand for forest and wood products is now the largest in the world, and consumers in other countries are using a growing proportion of the wood processed in China, much of which originates in the Russian Far East and Southeast Asia. This dynamic underlines the importance of not only encouraging sustainable forestry within China, but also ensuring that businesses in China source wood from sustainable forests. The WWF-IKEA partnership identifies priority high-conservation-value forests, conducts training and education, encourages legal compliance in domestic and overseas forest supply chains, provides sustainable forest-management training to forest protection and management personnel, and promotes the implementation of forest certification—a process that determines whether a forest or woodland is managed responsibly in accordance with the standards of a third-party body, such as the Forest Stewardship Council. So far, the project has trained hundreds of PRC forest officers and scientists, as well as personnel from forestry-certification bodies and wood-processing businesses, in responsible forestry and certification. The partnership has also helped certify 420,000 hectares of forests in Northeast China. The PRC government has embraced the concept of forest certification for sustainable forest management and will develop a national forest certification system in the next few years, which will help promote sustainable forest management nationwide. In 2006, WWF and IKEA launched the second phase of their partnership. In the next three years, the two organizations will continue to encourage responsible forest management in China. In addition, the project will seek to curb illegal logging in Russia and reward legal forestry trade between Russia and China. The project will provide training on how to identify illegally sourced timber, analyze Russian and PRC customs procedures and methods on timber trade, and provide recommendations to customs authorities and other stakeholders on how to better verify wood supplies and compile relevant statistics. The WWF-IKEA collaboration is only one example of the partnerships that are emerging in China and the rest of Asia. Companies have the opportunity to establish themselves in leading positions on issues of sustainability, thereby reinforcing positive perceptions among employees and the general population alike. —Carine Seror Carine Seror is a marketing manager with the World Wide Fund for Nature China in Shanghai. 
Copyright 2007 US-China Business Council |
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