Wednesday, November 09, 2011

Corporate Social Responsibility with Chinese Characteristics

Corporate social responsibility has become an important component of the social norms whose parameters shape corporate governance beyond law.  Yet even as corporate social responsibility, as a concept, goes global, it retains certain important regional differences. 

(From Olympics: Beijing’s clean air claim challenged by scientists, Telegraph, 9 Nov. 2008 ("Buildings are shrouded in haze and smog in Beijing's central business district July 18, 2008 Photo: Reuters"))

These differences touch on the specific fields of corporate social responsibility that are emphasized within a particular culture.  I have explored this with respect to Japan.  See, Larry Catá Backer,Japanese Approaches to Corporate Social Responsibility (企業の社会的責任) and Global Human Rights--Between the Law-State and Corporate Culture, Law at the End of the Day, Sept. 14, 2010.

My research assistant Shing Kit Wong (Penn State School of International Affairs, expected '12) has begun to explore the socio-cultural and political bases of  corporate social responsibility and the human rights impacts of corporate behavior, in China.  His preliminary finding are posted below

(From Business for Social Responsibility: China Water Report, June 3, 2008 ("Business for Social Responsibility (BSR) issued a report in April on ”Water Management in China’s Apparel and Textile Factories.” "))


Corporate Social Responsibility in China
 By Shing Kit Wong
Master of International Affairs Candidate

Since 1990 Chinese human development index has climbed 20 percentage points, but social development in China had lagged behind its economic development. UNDP Resident Representative in China, Khalid Malik, warned that China would be facing the challenges of unsustainable development in 2005 as the “United Nations Development Programme--Human Development Report” and the “Development of China Corporate Citizenship Survey Report” was released. The tradition objective of most Chinese corporate as an economic organization is to make money and the pursuit of profit maximization. Nonetheless, as the corporate develop and grow, the social responsibilities are always neglected. Most prominent problem of Chinese corporate in general is in the following areas: corporate disregard for their own social security, avoiding taxes and social contributions, and inconsiderate the issue of unemployment and environment issues. Corporate only concern about making profits selfishly, while fail to provide correct information of products or services with the lacking awareness of provision of public goods and turning a blind eye to the public welfare.
            In the traditional view of various economic theories, the operations of the market price mechanism lead to individual economic interests and welfare of society as a whole between the spontaneous unities. This process does not require the price mechanism or any other power to interfere. Nonetheless, profit-driven activities from corporate in China unavoidably cost the up-rising of the so-called "external" problems. On the other hand, competition between corporate and the rapid developing process of different enterprise led to all kinds of social problems in China. Thus, regulations of corporate and enterprise is continually defined and modified in order to keep up with the current social situation.

In the process of development, social problems caused by corporate profit-driven activities are mainly for the characterized in the following six aspects:
1.     Integrity of product. Due to the underdeveloped legal system and regulations, a number of companies are driven by economic interests and became regardless of the interests of consumers, and producing very low quality good get high profits.
2.     Integrity of Transaction. Two of the main performances with the lack of integrity are commercial fraud and commercial bribery in business transactions in the market.
3.     Labor-Management Relations. Internal antagonism and confrontation between employers and employees associated with the development of a modern market economy. Confrontation and conflict between employers and employees not only affect the normal production and business activities, but also endanger the social stability and economic development. In order to ease the contradiction between employers and employees, the Western countries have passed legislation to protect labor rights. With the Western market economy and legal system continue to improve protections of labor rights and welfare has also been rising.
4.     Gap between wealth and poor. In the Western countries, such problem in the mid-19th century was very serious, but situation was relieved through the governmental social welfare system and corporate charitable donations. In modern Western society, a variety of different public interest organizations and foundations dedicated to different areas of social issues, social stability and sustainable development to make a positive contribution. In China, after 30 years of market economy, there is a certain disparity between rich and poor presentation. In the corporate charity, the legal system and policy development is lagging behind such philanthropic culture.
5.     Environmental Issue. The overall level of productivity in China is still low and the extensive mode of production in some regions and industries are still dominant under the conditions of industrialization and modernization. Many enterprises reduce cost by releasing wastewater and waste without any treatment, resulting in a series of environmental problems. In response, China issued the “Environmental Law” in 1985. Although China's environment has improved after 20 years of comprehensive management, it did not fundamentally put an end to the vicious pollution incidents.
6.     Issue of Wasting Resources. The rapid development of modern economic enterprise on the existing resources lead to excessive energy consumption and thus led to the current energy crisis around the world that different countries are facing together.
At the present stage in China, actively promote corporate social responsibility is significant. China is a society with Confucian tradition and ought to emphasize the personal and social organizations of social responsibility. In addition, China as a socialist country, the core value principles include the pursuit of social justice and to achieve workers and peasants, urban and rural, regional coordination and sustainable development, creating nature, human and social harmony, and so on. The principle of socialist values ​​and the basic concept of corporate social responsibility are a high degree of unity, and this positive corporate social responsibility is also the core values ​​of China as a socialist country. The positive corporate social responsibility is also China’s integration into economic globalization, international division of labor in the world, and vigorously development of foreign trade. As China’s economic system is accumulate with the Western countries, different social problems, foreign or domestic cannot be solved only by government alone. Corporate social responsibility is an indispensable power needed to be involved in social problem-solving. With the development of economy and the establishment of enterprises through research and development technology, the accumulation of human resources, control of information, and gradually master the large number of social resources. This formation of a relatively strong position of corporate has the ability and obligation to bear the social responsibility. In the concept of sustainable and stable market in the economic environment, production and operation of enterprises are into all aspects of social life, long-term development in the process of gradual accumulation of resources to achieve large-scale growth. It has become the market’s strong economic and social units.
Because these corporate did not think of social responsibility, a serial of scandals and phenomena including the shortage of labor, the high incidence of food safety scares (the infamous Chinese toxic milk scandal), serious environmental pollution and numerous mining accidents awakened the Chinese government that not only scientific and economic developments were urgent, but also the building a harmonious society and elimination of these societies discord. In contract, Chinese entrepreneurs seem to suffer from a “social sympathy for apathy syndrome”, or even do everything possible to avoid social responsibility. If the situation did not change in time, not only would it hurt long-term interests of corporate, it could even destroy the business and the society. Therefore, the voice of all corporate fulfilling their social responsibilities continued. Prior to the scandals, the Ministry of Commerce and relevant ministries were developing “the Standards of Business Ethics in China.” This means that the Chinese government was already aware of the necessity to regulate corporate behavior in China, while Chinese corporate are also beginning to be concerned about business ethics.
On the other hand, corporate social responsibility has become an international trend, in which the European Union, the United States, and Japan have all developed. If China is not keeping up with this international trend, Chinese corporate would be excluded or even rejected in the arena of international trade. Therefore, China is taking corporate social responsibility as its own development goals as well in recent year.
CSR in China (Thought from Communist Party and Scholars)
Corporate social responsibility (企业社会责任) in China is generally broken down into community outreach, environmental health and safety, environmental protection, and education. Community outreach refers to the actions that corporations take to improve the living standard of for those living in the communities in which they operate. Environmental health and safety refers to the efforts that corporations make to ensure their employees work in a safe, comfortable, and properly regulated workplace. Environmental protection activities include all efforts that corporations take to ensure that their impact on the environment is minimal. Examples include using clean energy, safely disposing of waste material, and minimizing energy consumption. Lastly, improving education, from the primary level through college, is an excellent way to give back to local communities by most corporations. It is corporate responsibility to improve the skills of current employees, expand the talent pool, and strengthen future recruiting efforts. Corporate social responsibility in China is mainly developed from those areas.
Since China, as a Sino-society, is fundamentally different from Western countries, the implementation of corporate social responsibility in China focuses on the cause of social problems that the nation is facing and reflecting the requirements of the socialist system. It also penetrates the Chinese traditional culture, values ​​and business ethics, and thus consists of very distinct Chinese characteristics. The development of corporate social responsibility model with Chinese characteristics focus on the formation of features in the following four aspects: (1) the attention and promotion of corporate social responsibility from central and local governments; (2) to promote corporate social responsibility via Chinese traditional civilization with the close integration of business; (3) an active role of non-governmental organizations to promote corporate social responsibility; and (4) to make business and responsibilities corresponding assistance in becoming an important characteristics.
            At the current stage in China, implementation of corporate social responsibility is mainly coming from government agencies. They develop the standard of corporate behavior and the guidelines corporate social responsibility for action with a clear target, regulate liability actions, responsibility for performance evaluation, and actively guide and promote the development of this corporate social responsibility with Chinese characteristics. This type of government as the main force of the actuator mechanism to implement corporate social responsibility reflects the current phenomena of “Big Market and Strong Government Model” and East Asian model of economic development characteristics, which differ than European and American countries functioning in a developed market mechanism and mature corporate culture on the basis of voluntary corporate social responsibility initiative. As the development of corporate social responsibility in China is young, many corporate value and objectives, responsibilities and other aspects of the content are not understood well, thus the choice of action in such development are often in a blind state. This often results in mistaken investment in corporate responsibility and social problems that does not correspond to expectations and resulted in waste of resources. Currently, Chinese non-governmental organizations focus on this corporate responsibility development and provide guidance to corporate to properly fulfill their social responsibility. In comparison with Western countries, Chinese NGOs is very limited in contribution to the cause as they are still not mature enough yet. Nevertheless, some of the more active NGOs’ actions did vigorously promote the Chinese corporate social responsibility with healthy development.
            As an ancient civilization, Chinese economy and society is not lack of business ethics, business conduct and self-discipline. Many ancient businesses are adhering to the “justice system benefits and faith-based” commercial principles with brilliant and lasting success. Influenced strongly by Confucianism, Hong Kong and Taiwan raised rapidly after World War II under the traditional Chinese culture with the modern market economy. After the reforms, China committed to build a socialist market economy with Chinese characteristics. Market system and development in the cultivation of the spirit, thus the standard, or framework, develops under the respect of Chinese traditional culture of business ethics, honesty, kindness, faithful and other commercial values ​​in the socialist market economy under the conditions of corporate social responsibility in a positive role.
In order to build a harmonious and orderly society, Chinese believes that it requires maximization of mobilizing all labor, knowledge, management, capital and technology, energy, and exploration the source of all social wealth. Corporate have the advantages in resources from the all sizes of business organizations. Thus, in the process of building a harmonious society, they have a unique and unmatched status. In the developing economy, one of the main Chinese corporate social responsibilities is to help solving the employment problem. Boao Forum for Asia Secretary-General, Long Yongtu (), once stated that the esurience of employment is the key to social stability and a basic condition to deal with the financial crisis. In addition, many corporate strived to obtain international certifications such as ISO9000, ISO140000, and ISO8000 in order to prove that they have reached the international standards. The standard specifies mainly address the labor problems and stress that the corporate need to ensure clean and sanitary working environment of workers, eliminate safety hazards, not using child labor, and effectively protect the vital interests of the workers. Many corporate enhance their social responsibilities to obtain ISO8000 international certification not only to attract labor resources, but also to encourage them to create more value and a good corporate image, reputation and trust in order to achieve their long-term business objectives.
To achieve such objective, Chinese scholars stresses what is known as dual responsibility of corporation. First of all, corporate should fulfill its financial responsibility for the great wealth of the people's material life, the rapid and stable development of the national economy. The most direct way is to maximize profit, which can be achieve by increasing sales, reducing costs, and the right decisions to ensure the legitimate interests of stakeholders. Secondly, make corporate ought to comply with all laws and regulations, including environmental law, consumer law and labor protection laws, completion of all contractual obligations, leading credit management, legal operations, and acceptance of the warranty promise. Additionally, corporate should enhance its employees and business communities in such idea in which creating a legal-bidding society. Thirdly, the ethical responsibility to society is expectations from all kinds of corporations. Businesses should strive to make their own community not suffering from operational activities, the negative impact of products and services. Corporate should also accelerate the upgrading of industrial technology and industrial structure optimization, developing green technology, increasing its ability to absorb employment, environmental protection and social stability due diligence. Lastly, corporate is the responsible for social philanthropy. It is an important task for corporate to develop social service, education, health care, and social security that is directly related to the development of people's most immediate interests, thus achieving social stability and harmony. Capital corporate ought to maximize their advantages for the development of social undertakings in order to become a good corporate citizen. In addition, corporate should support community education, health, humanities, culture and art, the development of urban construction projects, helping communities to improve the public environment through voluntary community work.
On the other hand, a clear corporate social responsibility is to help protect resources and the environment and achieve sustainable development. As corporate citizen with great influence in social resource, it is an important corporate social responsibility to reduce all aspects of production activities may cause pollution to the environment through technical innovation and the reduction energy consumption and resources along with reduction of production costs and thus making products more prices competitive. Corporate should also build public good of environmental protection and community facilities to purify the environment, and protect the interests of the community and other citizens. This will help the city economic development and ease serious environmental pollution, particularly in industrial corporate concentrated area, and people living contradiction between environmental degradation. Corporate social responsibility in China also aims to help alleviate the gap and eliminate the hidden dangers of social instability. Corporate ought to focus on capital advantages, management strengths and human resources to the development of resources in poor areas via expansion of their operations access to new growth to make up for the lack of funding in poor areas and help local poverty. Such duty, in addition to sponsorship of cultural, educational, and other social welfare, also includes the responsibility of the community.
CSR in China (Thought from the Central Government)
Social Accountability 8000 (SA8000) is a set of voluntary labor standards initiated by the US-based Social Accountability International (SAI) in 1997, which ensures that retailers, brand companies, suppliers and other organizations maintain just and decent working conditions throughout the supply chain. As China joined the World Trade Organization, SA8000 led to many discussions regarding corporate social responsibility across the country. The Standing Committee of Chinese People's Political Consultative Conference and State Department counselor, Ren Yuling (任玉峪), mentioned in an interview that the European Union, the United States, and Japan have all developed their own social responsibility standards at an international level. While China focuses on economic development, social development and corporate social responsibility standards are also an area with great importance to develop in order to prevent falling behind and have foreign constraints over China’s own development. There are eight aspects of corporate social responsibility standards must be considered.
(1) Commitment and Integrity of the responsibility to ensure genuine products
In order to maintain market order and protect the interests of people, businesses must assume courtesy and honesty to ensure genuine social responsibility. Due to the lacking of integrity, the normal operation of socialist market economy is heavily damaged as corporations are not trustworthy, which resulted in counterfeit goods. Consumer welfare losses caused thereby reached 2500-2700 billion Yuen annually, which is 3-3.5% of GDP. Due to the interference of fraud and counterfeiting of goods, many corporate are at risk and became unsustainable.
(2) Commitment to scientific development and the responsibility to pay taxes
The objective of business is profitability. This includes an increase in revenue the mission of national development. Corporate must take responsibility for social development and improve economic condition. On top of that, corporate should take development as its objective and expand the scale of its operation, thus expanding share of taxes and make large amount of contribution to national development. Nonetheless, such development ought to be within scientific concept. Corporate must not only focus on short-term and domestic development, but have to have the vision for a sustainable and national development. Corporate ought to pay great attention to the guidance of scientific development concept in the “Five Co-ordination” (五个统筹), which was decided in the party's third plenum  proposed “urban and rural development, regional development, economic and social development, balancing development of human and nature, and domestic development and opening up internationally”.
(3) Commitment to sustainable development and conservation of resources
The development of corporate must be compatible with the conservation of resources. As entrepreneurs, it is essential to proceed from the overall position, adhere to sustainable development and resource conservation attention while enhancing economic growth and the development of circular economy by adjusting the industrial structure. In particular respond to the central government’s "going out" strategy, corporate ought to ensure the safe operation of the economy, and thus achieving sustained and the target of quadrupling.
(4) Commitment to protect environment and responsibility of maintaining natural harmony
As the global economic develops along with Chinese own development, environmental deterioration, especially in air, water and marine pollution is getting worse. Economic development resulted in over-exploitation of forests and minerals, causing great threat to the environment. Corporate must take the responsibility  to protect the environment to maintain the natural harmony for human survival and sustainable economic development.
(5) Take public responsibility for products and culture
Corporate is essential to effort to take on the development of medical health, educational and cultural construction. Health, public education and cultural development are extremely important to the development of a country. Removal of poverty towards prosperity is a significant role that cannot be underestimated. In contact, medical care does not only affect the health of the whole nation, but also affect the supply of social protection of labor resources. Moreover, culture education can be implicated through entertainment, cultivate people's character, and improving the quality of people. Due to the lack of development in these areas previously, the problem is more serious in the matter.
(6) Commitment to assist the poor and the responsibility for development of philanthropy
While Chinese economy has achieved great progress, the nation as a whole with a population of 1.3 billion still suffers from many difficulties especially in rural areas. Although government need to work hard in these responsibilities, corporate also need to share those concerns for the country, participate in those community to help the poor. It is for the good of the development of society, as well as the good for the own development, corporate ought to take responsibility to minimize poverty in the country.
(7) Protect the health of workers and the responsibility to ensure the well treatment of workers
Human resources are a valuable asset and valuable forces that support corporate development. Protecting the life, health and income of employees to ensure the well treatment of labor force do not only related to the sustained and healthy development of corporate, but also related to social development and stability. In order to cope with the international standards on corporate social responsibility and to the center on the concept of “People-Oriented (以人為本)” along with the implement of the objectives of building a harmonious society, corporate must take the responsibility of protecting workers’ benefits. In addition, corporate must respected business discipline to compliance with all law and regulation, improve labor protection, and continuously improve the level of wages and dispute on time. Corporate needs to communicate more with employees and be considerate of the needs for them.
(8) Commitment to the development of technology and innovation and the responsibility of independent intellectual property rights

Chinese economic efficiency of corporation is not as completive as Western or Japanese corporate and resources input and output rate is still very low. In order to solve the low efficiency problem, it is essential to attach importance to technological innovation. Through technological innovation, usage of coal, electricity, and oil can be reduced and improve efficiency. Since the economic reform period, China has been importing technology and neglected the importance of research and development (R&D) in order to take the shortcut to economic development. Such trend is still very popular nowadays, resulting in the phenomena of relenting on foreign technology and lack of R&D. Corporate ought to attach great importance to the absorption of imported technology and R&D, and increased funding and human resource to achieve innovative business-oriented.
Legal Obligations of Corporate in China
             In face of the problems arising from corporate production process, the four basic solutions are (1) increase social welfare through government taxes, (2) better development of a legal system and regulations to regulate business, (3) social welfare to improve the living standard of the less fortunate groups, and (4) development of the corporate sense of  taking social responsibility. At the present stage in China, various legal researches are being conducted to explore how taxation, business regulations, etc, to solve social problems and promote corporate social responsibility with Chinese characteristics. Compared to Western ideology of “corporate social responsibility”, corporate social responsibility with Chinese characteristics ought to reflect the sense responsibility (moral conduct) and philanthropy to be concept of corporate social responsibility. Western philanthropy began in the late 19th century, after nearly a century of development, the Western countries have formed a relatively complete charity civilization, in charity fund-raising, money to invest, charity audit, community supervision, and so has become a more mature institutional system. Beginning in the 1960s, the movement of corporate social responsibility movement became active in the Western society by adhering the basic concepts and different form of traditional charitable donations. Such movement of corporate social responsibility of emphasized on addressing social issues and the correlation between corporate production and its operation behavior. Corporate were to prevent social problems that may arise predictability rather than to solve the problems afterward. Nonetheless, the situation in China is different from Western countries. Philanthropy and corporate social responsibility are almost at the same stage as in the 1980s, and are currently on the way to get public awareness and recognition with systems to regulate the construction at this period to address social problems and the predictable conditions to strengthen corporate responsibility and self-discipline. These are the current stage of corporate responsibility and social expectations in China. Thus, although philanthropy charity and corporate social responsibility are incompatible, the basic starting point is to rely on moral self-discipline of enterprises and entrepreneurs to participate in social problems.
            Corporate social responsibility in China is the combination of corporate legal obligations and moral obligations, which include formal institutional arrangements and informal institutional arrangements of the entity. Moral obligation is not statutory, but voluntary compliance by the obligor other than coercion as the performance of its security obligations. In another word, the obligor is under what is known as “soft constraints”. The legal obligation is statutory and mandatory masterpiece for the performance of the state’s obligation to guarantee the reality and potential to the obligor, known as “hard constraint”, is to maintain basic social order and the minimum necessary for the moral law. Chinese current corporate law is accompanied by the deepening of economic reform gradually developed in 1978. Corporate law in China includes “State-owned Industrial Enterprises Law”, “Regulations of Urban Collective Enterprises”, “Township Enterprise Law”, “Provisional Regulations on Private Enterprises”, “Sino-Foreign Joint Venture Law”, “Sino-Foreign Joint Ventures”, “Foreign Corporate Law”, “Company Law”, “Partnership Enterprise Law”, and “Sole Proprietorship Law”.
    The Chinese Company Law (公司法) was adopted at the Fifth Session of the Standing Committee of the Eighth National Peoples Congress on December 29, 1993. It was revised three times with the latest one in 2005 at the 8th Session of the 10th National Peoples Congress. Similar to Japanese Companies Law Enforcement Ordinance, the Chinese Company Law only formulates the purposes of regulating the organization and operation of companies, protecting the legitimate rights and interests of companies, shareholders and creditors, maintaining the socialist economic order, and promoting the development of the socialist market economy. A small part of the Chinese Company Law does state that companies must engage in business activities abide by laws and administrative regulations, respect social ethics, business ethics, honesty and credit, and to accept the supervision of government and the public along with commitment to social responsibility. In order to strengthen the corporate specific systems of social responsibility, “Company Law” also regulate the employees and supervisor of the company that has made specific provisions for proportional representation, in which the proportion of representatives of the employees cannot be less than one-third, and requires two or more  state-owned enterprises and other state-owned investment entities set up by state-owned limited liability company and the company's board of directors representatives of the employees. It also allows other limited liability corporate and joint stock to set up employee representative director system. However, Chinese Company Law is just a matter of principle to declare the value orientation and behavior standards. The concept of corporate social responsibility, nature, content, and legal consequences when corporate not fulfilling their social responsibilities have no clear guideline. Specific institutional arrangements to strengthen the staff's position in the corporate authorities in order to protect the workers’ institutional foundation of interest, but the creditors, shareholders and other stakeholders are still not allowed to get involved in the internal governance structure of the corporate.
            Unlike Japan, there is not a “Charter of Corporate Behavior” in the Chinese legal system, although some corporate such as China Petroleum & Chemical Corporation Limited consist of some kind of “corporate behavior style”. Nonetheless, many elements of corporate social responsibility are scattered in different corporate laws in China mentioned above and beyond. These elements of corporate social responsibility are found mainly in “Patent Law”, “Accounting Law”, “Public Welfare & Donations Law”, “Trademark Law”, “Solid Waste Pollution Prevention Law”, “Air Pollution Control Act”, “Women’s Rights Protection Act”, “Safety Law
Protection of Minors Act”, “Soil and Water Conservation Act”, “Water Pollution Control Act
Water Law”, “Marine Environmental Protection Law”, “Environmental Regulations of Offshore Oil Exploration and Development”, “Consumer Protection Law”, “Cleaner Production Promotion Law”, “Environmental Protection Act”, “Environmental Noise Pollution Control Act”, “Environmental Impact Assessment Law”, “Vocational Education Act”, “Occupational Disease Prevention Law”, “Nature Reserve Regulations”, “Energy Conservation Law”, “Combating Coastal Pollution Damage to Marine Construction Project Environmental Regulations”, “Workers, Occupational Safety and Health Education Regulations”,  “Employees Incentive Regulations”, “Interim Measures for Workers Industrial Injury Insurance”, “Labor Market Regulations”, “Chemical Dangerous Goods Safety Management Regulations”, “National Nature Reserve”, “Female Labor Protection Provisions”, “Injury Insurance Regulations”, “Construction Project Environmental Protection Management Regulations”, “Completion &Acceptance of Construction Project Environmental Protection Facilities Regulations”, “Registration Pollutant Emissions Regulations”, “Pollution Monitoring & Management Measures”, “Interim Measures for Cleaner Production Audit”, “Environmental Standards Management Approach”, “Management of Environmental Protection of Electromagnetic Radiation”, Provisional Regulations on the Collection of Social Insurance”, “Resource Utilization Management Practices”, “Drinking Water Source Protection Area Pollution Control Regulations”, and so on. These laws and regulations consist of the guidelines for sustainable development economy and enhance the principle of a society that serve the people wholeheartedly and representatives of their fundamental interests, thus achieving the greater harmony. This includes the prohibition of using child labor and discrimination of any kind, the rights to construct negotiations with employers, and anticorruption. Corporate need to be responsible to all tax regulations. They are also regulated to disclose information in the areas on performance and social risk by establish reporting standards that includes recommendations on such preventive measures. In addition, these laws and regulations act in accordance with fair business practices, advertising and marketing deal with consumers when a corporate respects the privacy of consumers as all reasonable measures to ensure the safety and quality of goods and services. In terms of environmental issues, corporate are regulated to strengthen environmental protection and the impact of corporate health and safety. Many of these aspects are actually referable to the UN Global Compact and the OECD Guidelines. Nonetheless, these laws and regulations are more focused on domestic corporate activities in China instead of a multinational economy and do not have any guidelines on transnational corporate activities abroad, thus the supply chain principle is very week. Furthermore, it does not promote and disseminate the results of research and development activities in foreign countries that Chinese multinational corporate do business, and aims to contribute to the innovation capacity of the host countries. The Chinese laws and regulations also do not have a greater access by victims to effective remedy in case of violations. The OECD Guidelines state that corporate ought to carry out human rights due diligence as appropriate to their size, the nature and context of operations and the severity of the risks of adverse human rights impacts. The Guidelines note that this due diligence can be included within broader enterprise risk management systems provided that it goes beyond simply identifying and managing material risks to the enterprise itself to include the risks to rights-holders. Nonetheless, such due diligence element is not developed in the Chinese legal system.
  Furthermore, the content of regulation conduct outside the enterprise from the perspective of economic law and corporate social responsibility system is distributed among various laws and regulations, including product quality, consumer protection laws, unfair competition law, natural resources law, tax law and so on. These laws and regulations are in the provision of corporate social responsibility and are subject from different point of view. The lack of a system design specification necessary for the unity is the biggest issue of them. It is precisely because the existing legal norms of corporate social responsibility are difficult to establish an effective incentive binding mechanism. On top of that, law-abiding operators always seek personal gain while making the regulations and laws. The true mechanism of law is lacking social responsibility, and that many corporate harm the public interest for profit. Therefore, new element are added or modified the relevant provisions of the law from the perspective of a different scope and comprehensive promotion of corporate social responsibility construct the legal framework: including bankruptcy law, product quality, consumer protection laws, natural resources law, anti-unfair competition law, tax law, and so on. The legal system must be related to intrinsic value of social responsibility. Actions resulting in neglect of social responsibility and economic behavior must be punished, and thus corporate behavior would fall into the orbit of voluntary compliance.
Chinese social development had lagged behind its economic development since reformation. Because corporate did not think of social responsibility, a serial of scandals and phenomena awakened the Chinese government that not only scientific and economic developments were important, but also the building a harmonious society and elimination of these society discord. Thus, the voice of all corporations must fulfill their social responsibilities arise. In order to build a harmonious and orderly society, Chinese believes that it requires maximization of mobilizing all labor, knowledge, management, capital and technology, energy, and exploration the source of all social wealth. As a member nation of World Trade Organization, China has had many discussions regarding corporate social responsibility across the country. While China focuses on economic development, social development and corporate social responsibility standards are also an area with great importance to develop in order to prevent falling behind and have foreign constraints over China’s own development. Chinese current corporate law is just a matter of principle to declare the value orientation and behavior standards. The concept of corporate social responsibility, nature, content, and legal consequences when corporate not fulfilling their social responsibilities are unclear. Therefore, new elements are added or modified the relevant provisions of the law from the perspective of a different scope and comprehensive promotions of corporate social responsibility construct the legal framework.

李毅中:推进企业社会责任建设 促进工业经济发展,
论企业社会责任践行 法律保障机制的完善,

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