By the end of 2011 there were over 2,500 Canadian companies in China. Like most western companies they have benefitted from permissive labour, health, and environmental standards and yet not one Canadian company is found among the top Corporate Social Responsibility (CSR) rankings in China. With China Canada’s number two export destination this is an increasingly dangerous approach.
Changing Reality in China
There are now over 30 national laws and regulations related to CSR in China; as well guidelines from stock exchanges, industry association and leading institutes. As social and environmental deficits and public expectations for improvement rapidly rise, the Chinese government has begun to use CSR to address environmental and social deficits. More than 400,000 registered NGO’s and close to 3 million grassroots groups place companies under even closer scrutiny.
What Can Canadian Companies Do to Trade Responsibly with China?
Healthy, prosperous, educated communities are the best places to do business and investors, customers, staff and other stakeholders increasingly favour responsible companies. They recognize that integrity and accountability are more likely to lead to economic success and want meaningful investment in society not wasteful image-building campaigns.
China is no exception and each Canadian company has a critical decision to make: continue operating as usual and risk market share and reputation or to align its business strategy and sustainability outcomes to meet the needs of society.
Canadians have benefitted from China’s remarkable economic development, and those who benefit carry a responsibility to invest in social development and environmental protection as they do at home.
What can your company do?
1) Develop and contribute expertise and technology to help create clean and green solutions. China’s current 12th Five Year Plan emphasizes reducing energy use and carbon emissions and protecting water.
2) Stop selling harmful products and technologies. Selling millions of pounds of tobacco or coal fired power-plants to China with little regard for public health or the environment is irresponsible.
3) Abide by highest international human rights, health and environmental standards. In January 2013, CCTV, China’s largest TV network, reported that KFC’s supplier uses 18 types of antibiotics raising chickens (it doesn’t do so in the USA and Canada). KFC is now facing a severe public relations crisis in China.
4) Contribute to meeting China’s national priorities articulated in the 12th Five Year Plan (2011-2015):
- Poverty alleviation, especially in rural and agricultural areas.
- Building a resource saving and environmentally friendly society. Government is regulating environmental impacts more strictly, and the public is paying closer attention to performance of international companies.
- Developing a skilled population. Providing training and investing in education for staff and civil society development.
- Promoting community self-governance and improving the mechanisms for safeguarding people’s rights.Support participatory governance and encourage staff volunteer programs.
5) Respond to local key stakeholders
While government relations are important, companies need to respond to the expectations and concerns of other stakeholders, e.g. business partners, media, NGOs, customers and employees, and differences in cultures, economic conditions, and stakeholder values while respecting international requirements.
6) Strengthen community engagement through substantive society-oriented CSR initiatives. For example:
7) Work with develop capable local NGOs. NGOs enjoy close relationships with local communities and understand local needs and concerns. They provide invaluable insights for CSR initiatives and can help implement them successfully. The key is to distinguish Government Organized NGO (GONGOs) from independently organized NGOs, and to find reliable partners based on their credibility, capacity, and local relations.
8) Implement strategic philanthropic programs. Disaster relief is important; however successful companies also invest continuously in education, social development, culture, and environmental protection.
9) Adopt transparency, accountability, and honesty in reporting.
In brief, Canadians want their companies to do well and to contribute to our prosperity but not as the result of irresponsible development which damages the environment and public health, exploits the poor and ignores the needs of future generations.