VIEWS: CSR in China

This November I spent a week in Shanghai, giving a workshop to Fortune 500 companies on "EHS and Strategic Sustainability Planning". It was my first trip to China, and my first opportunity to speak in depth with senior EHS managers operating in Asia. What I experienced there reinforced what I'd read about corporate social responsibility in China.

1. Multinational corporations (MNCs) and local business are held to two different standards.

One of the most interesting take-aways from my trip to China was the consensus among Fortune 500 companies that they are held to a higher standard than their Chinese competitors—in fact, a MUCH higher standard. Time and time again I was given examples of how a multinational company would be required by the Chinese government to meet regulations more stringent than EU standards, while their local competitor over in the next town was allowed to completely ignore even the most basic environmental precautions.

Lesson: The social and environmental impacts of globalization will hit big companies first, and multinational companies will need to be prepared to go above and beyond local "best practices" when introducing new factories in China.

2. Corporate social responsibility is too new to have much traction.

My workshop was officially titled "EHS and Strategic Sustainability Planning: Creating Competitive Company Value as A Good Corporate Citizen" and included topics like:

§ Sustainability in a Chinese Context

§ Wal-Mart and Sustainability: Implications for China's Supply Chain

§ Communicating Sustainability Performance

The first day opened with a session on environment, health, and safety (EHS)—where I talked primarily about the importance of having the "three Ps": policy, programs, performance. The next session was called "Beyond EHS" and talked about the emerging CSR issues that companies will need to address in order to keep up with larger sustainability trends. This session included things like diversity, human rights, unionization, community relations, and stakeholder engagement.

During this session, I was met by a lot of blank stares, and even some giggles. Because as far as the EHS has come in China, issues like diversity and human rights still don't make sense there. It's more than a matter of cultural context; these operations simply do not see a business case for promoting "soft" CSR issues. Not yet, at least.

Lesson: MNCs need to pay more attention to "soft" CSR issues, and make sure that adequate resources are devoted to issues beyond environment, health, and safety. This is ESPECIALLY true for companies that have global standards for CSR—because it's only a matter of time until they get caught operating with different standards.

3. Culture shifts are the key obstacle to long-term sustainability.

The final lesson I took away from my trip is that—while there are many obstacles to implementing a broader sustainability agenda in Chinese operations—cultural context is the most challenging. For MNCs moving into China, it's not just a matter of setting up the same programs, standards, and goals as at the headquarters location. If the employees don't understand the logic behind sustainability requirements—if they don't feel engaged and empowered in the process of making the facility a more responsible business entity—then CSR simply doesn't work.

Lesson: While global CSR standards are great, companies need to be aware of what a huge impact culture plays on the ability of a facility to "buy-in" to sustainability. New operations, in particular, need to make sure that enough time and energy is spent educating employees about the "why" behind CSR programs and performance goals.