CSR Frameworks in China and Europe Insights for CSR Workshops - 中欧社会论坛 - China Europa Forum

CSR Frameworks in China and Europe Insights for CSR Workshops

Prepared for China-Europa Forum’s CSR Workshops to be held in July 2010

Authors: Joelle Brohier

Date: juin 2010

Executive Summary

Europe and China both have implemented public CSR activities

European governments have since the nineties developed CSR activities

These activities are diverse, according to each country’s specific features and political systems:

  • 1994: the Danish government launched a CSR campaign;

  • 1998: it started The Copenhagen Centre (TCC), an organisation focusing on CSR;

  • 1998: the UK government brought support to the voluntary Ethical Trading Initiative- for improvement of labour conditions in supply chains;

  • 1999: Sweden started to require large companies to include environmental information in their annual reports;

  • 2000: a UK Minister for CSR was appointed;

  • 2001: France passed the Law on the New Economic Regulations (Loi NRE), which makes CSR disclosure mandatory for listed companies.

These public activities have continued to expand, becoming more and more various and sophisticated. There is a mix of mandatory and voluntary activities, incentives and partnerships. Activities show the need for both developing regulations, and having mechanisms engaging businesses positively, on some challenges such as social inclusion and employment, environment, business competitiveness.

The EC has adopted a voluntary approach on CSR. Its activity has so far focused mainly on designing a European CSR policy, providing a forum for exchanges, and engaging businesses on a voluntary basis through projects.

Additionally to this voluntary approach, the European Commission (EC) regulates businesses on labour and environment through Directives from relevant Directorates-Generals.

The Chinese government has more recently (for around five years), but with a strong mandating approach, engaged in CSR. It does so through activities focusing on CSR guidelines, CSR reporting, green requirements and exclusion rules for bank loans and company financing through stock exchanges. The government also uses stock exchanges as drivers for CSR of listed companies.

Very recently, local governments (provinces, municipalities) have developed a strong CSR guidelines activity that interestingly frequently includes evaluation processes.

Other CSR drivers play a necessary role too – more in Europe, and expanding in China

In Europe, NGOs, trade unions and socially responsible investment (SRI) are key drivers for CSR. NGOs engage with companies; and campaign for more accountability and more stringent CSR requirements for companies. Trade Unions along with companies have developed since 1989 International Framework Agreements (IFAs). IFAs engage companies for the respect of labour rights across their global operations. 60 out of a total of 71 IFAs are signed by European companies. The SRI market is very developed (17% of total assets management at the end of 2007). CSR-oriented business organisations such qs CSR Europe also play a positive role in promoting and showcasing best CSR practices.

Chinese business organisations and NGOs are also drivers for CSR, although their role is more recent: business organisations are developing industry-specific CSR guidelines, and CSR evaluation systems. Some industry-specific organisations release industry CSR reports (bank, textile, sport goods). Environmental NGOs publish reports and documents pointing out corporate environmental violations (IPE, Greenpeace China). Doing so, they bring an original and needed support to the central government for enforcing environmental regulations at the local level.

The Chinese SRI market is at an early stage. However, the Chinese government relies on financial organisations for pushing CSR practices: stock exchanges, the China Banking Regulatory Commission, and beyond, the banks.

Company response to CSR and involvement in international CSR initiatives show strong commitment in Europe, and a more recent and developing one in China

Listed companies and large companies have implemented CSR in Europe. In China, such companies, including State Owned Enterprises (SOEs), have more recently started to implement CSR but are making up fast.

European companies and financial institutions are the most engaged worldwide in international initiatives, thus demonstrating a strong commitment to CSR. European companies account for more than forty percent of UN Global Compact signatories, and European financial institutions account for more than forty percent of the three main international responsible finance initiatives: UNEP-Finance Initiative, Principles for Responsible Investment and Equator Principles signatories.

However, CSR implementation is still to develop and improve

Both in China and Europe, SMEs are lagging behind large and listed companies for CSR implementation – though we can assume that due to many CSR activities in Europe targeting SMEs, some progress have been made.

Listed and large companies are, both in China and in Europe, called to improve their CSR practices and performances. In China, the recent “Top 100 Chinese Companies CSR Report” reported that CSR performance of the surveyed companies was weak. In Europe, NGOs are releasing reports alleging companies of poor CSR performance.

Future trends

NGOs, academics and SRI organisations in Europe are calling for the following improvements in CSR practices:

  • More stringent CSR requirements and accountability for companies;

  • Improved CSR practices;

  • More and better transparency, with published indicators comparable across an industry and overtime;

  • More academic research on CSR performance, CSR impacts on company results and on society, CSR integration to core business;

  • Initiatives should focus more on developing responsible practices of individuals: responsible purchases, investment, consumption.

Many recent local and industry-specific initiatives in China include a CSR evaluation component, which is a promising trend. In addition, the role of civil society organisations and investors could contribute to improve CSR practices. The Company Law (revised 2005) include CSR guidance, thus putting emphasis on CSR.

Better enforcement of the law in China will be needed. The Company law, as well as several CSR guidelines put emphasis on compliance with the law as a CSR requirement. Environmental NGOs contribute to this as said previously. Local governments are now required by the law to disclose blacklist of environmental corporate polluters. Similar blacklist provision is planned for product quality law violations.

At last, more focus may be put on labour conditions and wages in the future, consequently to recent strikes and to the governmental commitment to improve them.

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