Doing good means doing well, too

Corporate social responsibility, or CSR for short, has a lot of synonyms. It is sometimes called "corporate stewardship", "corporate citizenship", "corporate governance", "business ethics", "corporate community involvement" or "social entrepreneurship".

Whatever term one prefers, business executives have overwhelmingly made it a major consideration in their corporate decisions, according to William Valentino, who cited a January 2005 survey that sampled the opinions of 130 CEOs across the globe.

Valentino, general manager, corporate communications, Greater China, Bayer (China) Limited, was the honorary chairman of the 11th China Daily CEO Roundtable held on Friday in Beijing. He touched on various aspects of CSR, from concept to application.

Business and society are not distinct entities, rather, they are interwoven, he emphasized. Business obviously needs to make money. "Doing well" means operating profitably in the financial sense. But maximizing shareholder value is just the immediate goal. There are "deeper values" which lie in the realm of "doing good."

Beehive analogy

Valentino compared a society to a beehive, and individuals like bees working in unison. The way they behave and collaborate will form and shape societies. As someone has defined it, CSR means a commitment to improve community well-being through discretionary business practices and contributions of corporate resources.

Citing a four-part model, Valentino illustrated that CSR comes into play in a whole scheme of interaction between business and society. On a basic level, a business has to have "economic responsibility". In other words, it has to be profitable. On the second level, it has its legal responsibility because, like every individual or organization, it has to abide by the laws of the country where it is located. Beyond that is ethical responsibility as companies have to follow behaviour and norms that society expects of them. On the highest level is discretionary responsibility, which means that corporations would assume voluntary roles for which society does not provide clear-cut expectations. "It is something you don't have to do, but doing it would be for the greater good," he said.

Business ethics come down to individuals, Valentino said. "You cannot say that in cases like Enron, Tyco, WorldCom, the companies were bad, but they were run by people who made bad decisions."

On a positive note, E. Allan Gabor, governor of AmCham China and chairman and general manager of Pfizer Pharmaceuticals, gave the example of a Chinese doctor who was called on to fly to Thailand within 24 hours of last year's catastrophic tsunami in the Indian Ocean, not knowing when he would be able to come back. "Even though he represents his organization, it was an individual act," Gabor said.

The rising concerns about ethics and values have been shaped, or "driven", by several factors: r-ecent corporate scandals are weighing heavily on the minds of executives as Valentino continued to cite the Economist Intelligence Unit White Paper. "Companies are increasingly aware that they are being watched and reported on by media and by the public."

Eberhard Schrempf, president and CEO of BMW-Brilliance Automobile Ltd, stresses the 3-R strategy of its company's CSR initiatives: Resources, Reputation and Risks.

Competitive advantage

"For many years, community development goals were philanthropic that were seen as separate from business objectives, not fundamental to them; doing well and doing good were seen as separate pursuits. But I think that is changing. What many of the organizations represented here today are learning is that cutting-edge innovation and competitive advantage can result from weaving social and environmental considerations into business strategy from the beginning," Valentino quoted Carly Fiorina, former CEO of Hewlett Packard as saying at a 2003 conference.

In other words, "doing good" can help "doing well". "Doing good" can bring benefits to the corporate image in the minds of the customer, investor, employee and the community. This perception, coupled with corporate identity, contributes to the making of corporate reputation.

Valentino defined "philanthropy" as a direct contribution to a charity or cause in either cash or kind, which is the most traditional of all social initiatives and is usually approached in a responsive and ad hoc manner. CSR, on the other hand, involves taking a more strategic approach by choosing a focus and tying philanthropic activities to the company's goals and objectives.

Scott Kronick, President of Ogilvy Public Relations China, gave the example of a client, who, two years ago considered giving a million yuan to a charity. "It had nothing to communicate beyond its daily operations," he said, but the charity they wanted to donate to had no strategic link to their business.

The opposite example came from Robin Chi, CEO of Metropolitan Life Insurance Company, China Region. Last year, when he heard over the radio that Beijing's blood banks were running short of types A and B blood and the city was organizing a blood drive, he offered 10,000-yuan policies to 10,000 blood donors. "On that day, 46 news organizations showed up to cover the event. A little something you do with heart and sincerity may go a long long way," said Chi.

George Yuen, chief executive of The Better Hong Kong Foundation, offered this advice: "Don't try to use CSR as a project or event to cover up weaknesses. What you say should be backed up by facts and action."

This was echoed by William Valentino, who used the Latin term "facta non verba" (actions above words) to describe the same principle.

Companies like Bayer are taking proactive action. Bayer is a member of the Global Business Coalition on HIV/AIDS , a group of 170 companies operating in 138 countries committed to fighting the AIDS pandemic. By harnessing core strengths of the business community, it aims to accomplish the mission of decreasing the number of people dying from AIDS and supporting those affected by the virus.

Bayer also sponsors a public health and HIV/AIDS media studies programme at Tsinghua University, thus improving the platform for healthcare reporting in the long run.

However, there are projects in its charity portfolio that do not seem to match its business strategy. For example, it has a "micro-finance" project, which is a partnership with Mercy Corps and the China Foundation for Poverty Alleviation (CFPA) to fund a micro-finance project for farmers in Fujian Province.

"We are not a bank, but it's good for the society," he said. More relevant is the Special Olympics, to be held in Shanghai in 2007, which Bayer is actively involved in with sponsorship and promotion.

Chinese context

Once a business can justify CSR programmes when there are no incentives from the government such as tax breaks, it should choose a social issue to support, select an initiative to address the issue and implement programme plans. Then there should be evaluation, said Valentino.

There was almost a consensus that companies should not be shy about publicizing their good deeds. "There's nothing wrong about making it public," said Ogilvy's Kronick. "The public should know that Pfizer pledged more money to tsunami victims than the US government during the early stage of disaster response."

As Henry Wang, corporate planning director of Shell (China), said, Shell has quantified CSR in its key performance indicators. "For our joint ventures, we want to balance our social, economic and environmental responsibilities."

Edward Tse, managing director of Booz Allen Hamilton Greater China, said that Chinese companies have been socially responsible, but "for different reasons" and usually in a narrow sense. They tend to focus on employees rather than the bigger community. As Chinese companies expand overseas, they'll have to realize that there is a set of universal values that corporations should observe.

When Jason Li, general manager for sales and marketing, Insurance Australia Group, asked how CSR can be aligned with traditional Chinese values, Valentino responded that Chinese values such as family and community are "very much in place" when a corporate citizen expands its values to include the community and the environment.

Zhai Qi, executive secretary-general of the China Business Council for Sustainable Development (CBCSD), reveals that Chinese companies such as Sinopec, FAW and BaoSteel have actually started their own CSR programmes with a view to promoting Chinese companies' social responsibilities, including those of SMEs.

Luan Liying, assistant resident representative of the United Nations Development Programme (UNDP), echoes that her agency has cooperated with 60 Chinese companies in different cities on CSR programmes; and that over 60,000 Chinese companies are already members of the China's Glory.


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