Corporate responsibility in China

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China’s corporate responsibility framework is undergoing massive change as social responsibility, rights and sustainable development go hand in hand, say Flora Sapio.

China’s recent endorsement of the UN’s Guiding Principles on Business and Human Rights, and the simultaneous launch of a Guide on Social Responsibility for Chinese international contractors, are significant moves.

Former Chinese President Hu Jintao’s notion of development existing in order to benefit man has enabled this link between the goals of sustainable development and the state’s responsibility to protect, alongside the responsibility of domestic and transnational corporations to act proactively.

This connection has been further confirmed by the presidency of Xi Jinping and is at the core of China’s regulatory framework on corporate responsibility and sustainable growth.

Sustainable goals

China’s harnessing of transnational and domestic enterprises to move closer towards the UN’s Sustainable Development Goals is based on a combination of directives by the Communist Party, state regulation, and standards adopted by industry associations.

This move has espcially come from the highest echelons of China’s political system with the state issuing a ‘Guiding Opinion on Central Enterprises Fulfilment of Social Responsibility’, while for their part industry associations have adopted social responsibility codes.

Work in progress

However this broad regulatory framework is still a work in progress. Thus far, it has been targeted at Chinese SOEs (State-Owned Enterprises) and does not necessarily extend to their suppliers.

Also, it has not yet fully tapped into the potential of those institutions that exist beyond the Chinese state apparatus, and which include groups of the Communist Party of China established within enterprises, and non-governmental organisations based in China.

The former have the duty to guide enterprises in contributing to the goals of sustainable development, and the right to support trade unions, youth and women’s organisations’ efforts to help SOEs pre-empt risk. The latter have a moral duty to support all stakeholders in the fulfilment of their responsibilities, and the right to make representations about the concerns of members of society.

Multinationals

Also, foreign and domestic private multinational corporations and their suppliers still enjoy a complete autonomy in their decisions on whether, and to what an extent, they contribute to the goals of sustainable development, with their choices being driven by profit and risk considerations.

As such, a renewed role for Communist Party groups in apportioning tasks and delegating responsibilities among foreign and domestic private corporations – and their suppliers – may well be what the future has in store.

Unexpected to some, this unconventional solution could enrich the UN Guiding Principles and sustainable development with actionable meanings and concrete possibilities.

Flora Sapio is an Honorary Fellow at the Australian Centre on China in the World, a world-leading institution for Chinese Studies and the understanding of China.

 

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