Companies in China are racing to shape strategy around social needs
In the face of an economic slowdown and increased pressure on profits, it would be easy to assume China's business leaders are putting environmental sustainability and social responsibility initiatives on the back burner. Far from it.
For China's local companies, State-owned enterprises and multinational corporations (MNCs), such efforts are accelerating. Many companies are moving from ad hoc social responsibility programs to more integrated approaches, keeping up with regulations and rapidly changing public expectations.
Since 2008, the vocabulary of social responsibility and sustainability has taken root in the popular consciousness. The public response to the Sichuan earthquake and the volunteer spirit created by the Beijing Olympics gave civic engagement and philanthropy momentum. Social media has broadened the conversation, leading to more scrutiny of the contract between business and society.
However, recent events have intensified doubts about whether government and business are doing enough. In December 2015, Beijing issued the first red alert for air pollution, resulting in school closures and restrictions on traffic and outdoor work. This led many to wonder if the country's attempts to balance economic growth and environmental concerns go far enough, and if companies are doing their part to solve quality-of-life issues.
In fact, the "new normal" – the theme of President Xi Jinping's policies during his first three years in office – emphasizes that the economic pressures facing the country require a deepening focus on sustainable development. Guo Peiyuan, General Manager of SynTao, a Chinese sustainability consultant and research group, says the government's current Five-Year Plan "puts a strong focus on innovation and the green economy. As such, MNCs need to embrace the 'new normal' by adjusting their China strategies. At their core, these strategies should aim to become more involved in Chinese society using environmental and social responsibility strategies as pillars for business, establishing trustworthy relationships with Chinese stakeholders."
Increasingly, both Chinese companies and foreign businesses operating in China are being held to higher standards. Recent laws, such as the Environmental Protection Law, have brought corporate responsibility to the regulatory forefront.
Market-based mechanisms are also strengthening. For example, the Hong Kong Stock Exchange has increased expectations for environmental, social and governance reporting from "recommended" to "comply or explain." This move is widely seen as a step toward a compulsory reporting requirement. As a result, sustainability is moving higher on the agenda in boardrooms and companies are looking for ways to link corporate social responsibility (CSR) strategies to business objectives.
