“For leading EU companies, CSR has become one of the key pillars in company strategy and a fundamental part of business practice,” said Bill Valentino, chairperson of the European Chamber’s CSR Working Group.
To signify the important role of CSR, the European Chamber established a CSR working group a year ago. Uniting the top EU companies, the working group serves as a platform for discussion beyond the supply of goods and services.
It brings together the key stakeholders to discuss experiences in China, exchange of best practices, approaches and expectations of CSR and, where possible, participants have collectively sought solutions to critical challenges. One of its main purposes is to raise the awareness of CSR among all stakeholders.
Benefits for all
CSR has benefits for all stakeholders. Overall CSR initiatives contribute to a better society helping, for example, provide more hygienic conditions in rural schools, training local officials how to deal with HIV/AIDS or siphoning gas from waste disposal sites for re-use.
In the long-term CSR is about better management of resources to secure long-term growth and development for everyone. CSR initiatives, however, require major short-term investments that are often difficult for companies to accept, and rely on all parties being prepared to compromise their own interests, in order to reach agreement.
In the past CSR activities in China have been driven by large European multinationals, but this has changed. Leading Chinese companies, such as Sinopec and COSCO, were founding members of the China Business Council for Sustainable Development, which works to promote sustainable development in China.
And, in the wake of the recent mining accidents, the rising concern about HIV/AIDS and the pressing need to reverse environmental degradation, the Chinese Government is taking action and recognizing the added value of CSR initiatives in addressing social needs at the local level, and helping bridge the gap in government welfare and community programmes.
A key concern for members of the CSR Working Group is the current legal and regulatory environment in China.
Chinese labour laws are well developed and compatible with international standards. Nevertheless, the lack of implementation at a local level raises much concern.
Improving the conditions for employees in the companies and in the supply chain is essential for retaining staff and promoting long-term growth. Better training and management practices will promote the welfare of the workforce and in particular their safety.
European companies are working with their local partners to implement health and safety codes that meet international standards and to adopt international practice to improve the record of accidents in the work place.
Another concern is the lack of tax incentives for companies engaged in CSR.
In Europe tax breaks are offered to companies who work with Non-Governmental Organizations (NGOs), which encourages companies to cooperate with grass roots organizations.
In China there are no such incentives. The majority of grass root organizations in China seldom register as NGOs and are therefore forced to register as business organization without tax breaks.
The lack of tax incentives, the difficulty in getting registered and getting official receipts inhibits the development of grass roots organizations, a key stakeholder in CSR practices.
Under the CSR Working Group, task forces have also been established to deal with specific issues, such as Clean Development Mechanism (CDM).
Part of the Kyoto Protocol, CDM is one of the three mechanisms for trading emissions credits internationally.
Although China has no limit on emissions, CDM projects can be a source of emissions credits for countries that will not meet their targets. China is estimated to be one of the biggest CDM markets worldwide.
For the time being, according to Article 11 of the CDM Interim Measures, only Chinese enterprises and enterprises with majority Chinese share of 51 per cent are eligible for CDM project development in China. This measure ensures that Chinese equity ownership of CDM projects is sufficient to enable the Chinese shareholder to manage the enterprise.
Members of the task force are very interested to develop CDM projects in China and contribute to the reduction of greenhouse gases, sharing their experiences of CDM projects in other countries such as Brazil, Morocco and Republic of Korea. They are reluctant to invest in a project that prohibits them to retain control of their investment and contribute their management expertise and keenly await re-drafted CDM Measures.