Government role should be ‘carefully considered’
Print Edition
GOVERNMENTS and social groups should play a larger role in promoting corporation social responsibility, said Yang Li, professor at the Koguan Law School of Shanghai Jiao Tong University.
“The development of corporate social responsibility should rely not only on the self-discipline of enterprises, but also on the involvement of governments and diversified social organizations,” Yang said in a recent interview.
In the past 10 years, he said, the Chinese government has played a key role in encouraging companies to become good corporate citizens.
In 2006, the government for the first time included the concept into the nation’s Company Law. That was followed by a number of key moves signaling government endorsement of the idea that companies should use some of their profits to help people and the environment in the communities where they operate.
The Ministry of Commerce in 2007 issued rules to restrict socially irresponsible enterprises from conducting foreign trade.
In the following year, the State-Owned Assets Supervision and Administration Commission of the State Council required central-level enterprises to adopt corporate social responsibility as a way of contributing to China’s national development goals.
“Although these efforts have encouraged state-owned enterprises to become active participants in corporate social responsibility, the overall development of corporate social responsibility in China is still deficient,” the professor said.
Yang said general recognition of the concept is not deep yet and has not expanded much beyond the idea that social responsibility equates only with philanthropy. Instead, corporate behavior should be integrated with local communities and all stakeholders.
The professor noted that China’s rapid economic growth has led to rising social and environmental challenges, such as air pollution, soil contamination, overuse of resources and existence of sweatshops in some areas.
“As China embarks on supply-side reform, enterprises should be far-sighted to avoid weakening the country’s ability to sustain growth in the long term,” he said.
Yang suggested the government play a leading role in legislating corporate social responsibility, encourage widespread participation by social organizations, and provide more “soft support,” such as media promotion to encourage best practices.
Should corporate social responsibility be regulated by law? Although there are ongoing disputes about that question, some countries have enacted regulations and legislation to make corporate social responsibility mandatory for all businesses.
In 2014, India required companies meeting certain financial criteria to spend at least 2 percent of their three-year average annual net profit on annual activities that benefit local communities.
The central government of China in 2014 for the first time proposed that China should enhance legislation on corporate social responsibility. A draft bill is now being circulated for comment from experts, industry organizations and enterprises, according to Yang.
“Whether the government should intervene in the supervision of corporate social responsibility should be carefully considered,” he said.
Yang suggested that government can encourage and adopt incentives for model corporate social responsibility, which can be supplemented by mandatory clauses in various laws, including the Food Safety Law and the Environmental Protection Law.
“Although it’s uncertain whether the bill will be approved, at least the legislation process provides an opportunity for the whole society to pay attention to corporate social responsibility,” the professor said.
Yang added that the forces of social organizations, including non-governmental organizations and industry associations, should be strengthened to coordinate and promote corporate social responsibility.
The role of social organizations has remained limited in China, when compared with more developed countries, he noted.
For example, only 300 of China’s more than 2,000 environmental protection non-governmental organizations at present are accredited to litigate environmental public prosecutions.
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