Corporate Social Responsibility in
China
Chris Marquis
Conference on Civil Society and Nonprofits in China
January 22, 2011
Copyright © President & Fellows of Harvard College.
Topics
1. Why has CSR in China become increasingly important
recently?
2. What are some recent examples of CSR in China?
a)
Corporate Philanthropy in Response to Wenchuan Earthquake
b)
Increasing Sustainability and Transparency of Chinese
Companies
3. Future Questions
CSR as Recent Focus of Government
1.
“Unlike in the US or Europe, in China, it is the government who
currently sits at the top of the CSR pyramid”
(ChinaCSR.com, 2009).
2.
Historical Perspective: Prior to 1984, SOEs offered many social
services traditionally provided by governments. In 1984, this
changed when the Central government launched reforms that
separated much social functions from business enterprises.
3.
4.
Increasing exposure to and importance of global norms
More recently: A number of policies to encourage CSR among
large companies…
2006 as a Turning Point
1. Article 5 in the amended “PRC Company Law” required companies to “be
committed to social responsibility”
2. Sixth Plenum of the 16th CPC Central Committee stated that companies
should “conduct extensive activities to build harmony, promote a
harmonious situation for all, and focus on enhancing the social
responsibility of citizens, enterprises and all kinds of organizations.”
3. Central Government released ”the Outline of the 11th Five-Year Plan for
National Economic and Social Development”, requesting an increase in
energy efficiency and the enhancement of environmental protection.
4. On January 4, 2008, the State-owned Assets Supervision and
Administration Commission of the State Council (SASAC) promulgated
“Guidance for Large SOEs on their Social Responsibility Obligations”
recommending the 128 large SOEs under its supervision proactively fulfill
CSR requirements and set an example for others.
Increasing Importance of Other Stakeholders
1. Investors: Stock exchanges
• Shenzhen Stock Exchange in 2006: “CSR Guide for Listed
Companies”
• Shanghai Stock Exchange :“Notice for Listed Companies to Enhance
CSR Work” (2006) and “Guide for Listed Companies to Release
Environmental Information” (2008)
• Social Responsibility Index (SRI) from the Shanghai Stock Exchange
on August 5, 2009.
2. Multinational Customers: More recently, many export-oriented
Chinese companies began to follow international CSR standards
with a focus on labor compliance and environmental protection at
the request of their multinational customers.
3. General Public: A series of public incidents attracted public
attention to CSR issues
• 2008 Sichuan Wenchuan Earthquake and donations
• Melamine-tainted milk scandal
Topics
1. Why has CSR in China become increasingly important
recently?
2. What are some recent examples of CSR in China?
a)
Corporate Philanthropy in Response to Wenchuan Earthquake
b)
Increasing Sustainability and Transparency of Chinese
Companies
3. Future Questions
Wenchuan Earthquake
Major earthquake (8.0) occurred in
Sichuan province on May 12, 2008
–
69,227 people dead;
374,176 injured;
18,222 missing as of 07/21/2008
(Zhang et al., 2009)
–
About 4.8 million people homeless;
economic loss over 20 billion U.S.
dollars (AIR Worldwide Corporation)
Corporate Response to the
Earthquake
1. Corporate Response to Wenchuan Earthquake:
Firms contributed to a variety of nongovernmental organizations involved in
earthquake relief
2.
–
–
Some firms were praised for their
contributions (e.g. the beverage company
Wanglaoji)
–
Some were criticized for not giving enough
(e.g. the real estate company Vanke)
Example: Aluminum Corporation of China
Limited (CHALCO) CEO on their response
“After the 5.12 earthquake, our company has played an active role
among state-owned central enterprises, supporting the earthquake
relief through various ways such as cash donation and in-kind
donation, as well as sending in the medical teams with ambulance
and large construction machines…total value 690million RMB”
Wenchuan Earthquake and Developing Civil Society
1. Media coverage and public commentary suggested that this
was truly a turning point for civil society support of CSR in
China.
• Special topics on corporate donation were established on internet
sites including Sina, Sohu, Netease, Yahoo-China, QQ, and Baidu.
For instance, the Sina site covered donation information for more
than 600 companies in a highly timely and complete fashion
(Huang et al. 2008).
• Internet users publicized lists and rankings, including lists of “iron
roosters”
2. Chinese scholars have noted the public attention to the issue
of CSR: “against the backdrop of the market transition, whether
firms, as the basic economic unit, should take social
responsibilities, have gradually started to be noticed by the
general public” (Wang 2006, p. 72).
What Factors Led Companies to be More Likely to Give?
1. We studied the donation behaviors of a sample of 613 large
publicly listed Chinese firms following the earthquake
2. Internet activism by general public has a main effect on
corporate actions (number of posts, listing of companies in
“iron rooster” lists), and also accentuates firm vulnerability.
3. Firm vulnerability to image loss, which stems from a higher
need for organizational legitimacy (private ownership),
potential culpability (real estate industry), and higher social
and political standing (political connections and
reputation), leads decision-makers to respond to movement
demands.
Topics
1. Why has CSR in China become increasingly important
recently?
2. What are some recent examples of CSR in China?
a)
Corporate Philanthropy in Response to Wenchuan Earthquake
b)
Increasing Sustainability and Transparency of Chinese
Companies
3. Future Questions
0
100
200
300
400
500
Growth in CSR Reporting of Chinese Firms
2005
2006
2007
Year
2008
2009
Why are Chinese Firms Issuing CSR Reports?
1. 2006 marked a milestone in China’s CSR development as the
Central government promoted CSR more actively.
2. The approximately 1500 listed companies in China became
an important part of the movement towards sustainable
business. When companies applied for listing on one of the
exchanges, they had to obtain certificates from local
government entities in charge of environment, taxation and
labor to prove that they were responsible companies.
3. More global examples. MNCs increasingly are issuing
China-specific CSR reports or translating their English CSR
reports into Chinese to demonstrate their contribution to
local markets and to get preferential treatment from the
government.
Study of CSR Reporting of Chinese Firms
1. Research Questions


What leads Chinese public firms to be more likely to issue CSR
reports?
Is CSR reporting in China mainly symbolic, or is it substantive?
2. Sample: Firms on the Shanghai or the Shenzhen Stock
Exchanges during the period 2006-2009 (N= 1553; data
mostly from China Stock Market Financial Database
(CSMAR))
3. Two stage regression analyses


Predicting CSR Report Issuance (1/0; N= 5560 Firm-Years)
Predicting Quality of CSR Report (from RKS CSR Ratings; N= 791)
Model and Key Findings
Stakeholder Pressures
· Government issues
policies about CSR
reporting
Organizational Response
· Firm’s issue CSR reports
Stakeholder Dependence
· Political Connection to
National Congresses
· Political Legacy
· Financial Resources
Response is Substantive
· Firms have more or less
substantive CSR reporting
Stakeholder Monitoring
· Bureaucratic Connection
· Local Government
Development
Topics
1. Why has CSR in China become increasingly important
recently?
2. What are some recent examples of CSR in China?
a)
Corporate Philanthropy in Response to Wenchuan Earthquake
b)
Increasing Sustainability and Transparency of Chinese
Companies
3. Future Questions
Future Questions
1. Institutionalization of CSR in China: What are the key business
and social benefits?
2. How will the development of civil society mechanisms influence
future CSR?
• The internet and organizing capability
• Increasing accountability and transparency standards
• Developing NGO infrastructure
3. How to simultaneously balance attention to government? How
does governmental pressure interact with civil society
mechanisms?
Thank you!
Chris Marquis
cmarquis@hbs.edu
Copyright © President & Fellows of Harvard College.
Key Findings
1. Our results point to a complex process whereby there are a number of political,
organizational, and financial contingencies that affect CSR reporting.
•
Main effect of private companies being more likely to issue reports was not supported at
conventional levels of statistical significance,
•
CEO membership in political councils (the NPC or CPPCC), political legacy and financial
performance variables all affect the likelihood of firms issuing a CSR report. Further, we also
found statistically significant interaction effects between privately controlled firms and their
political legacy, measured by age and their financial position measured by slack resources.
2. We also examined the extent to which companies produced reports with greater
substantive content, which we assess by a rating of the reports which includes
measurement of issues such as comprehensiveness, and extent of detail and
transparency.

Another type of governmental pressure, bureaucratic embeddedness, whether the CEO was
a government official, was a highly significant predictor of substantive CSR reporting. We
believe this is a result of such ties being much tighter than the symbolic political council
memberships and so expose the corporation to greater monitoring. Further, location in
areas with greater governmental development also led to an increase in substantive CSR
reporting.