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"Corporate Social Responsibility" Reports in China: Progress or Greenwashing?

Over the past decade, an increasing number of Chinese companies have begun to produce corporate social responsibility (CSR) reports. Whether that’s led to more sustainable business practices is an open question.

In 2006, State Grid was the only company in China to file a CSR report. In 2012, 1,722 Chinese companies filed CSR reports, according to a study by Syntao, a sustainability consultant. Indeed, almost a quarter of large state-owned enterprises in China filed CSR reports last year.

In theory, the purpose of CSR reports is to share information about a business’s social and environmental impact with the public. Ideally, the publication of such china credit report leads to enhanced awareness, better monitoring practices, and action to curb detrimental occurrences.

Yet while some Chinese companies have received international recognition for enhanced CSR reporting, it’s not clear the trend has translated broadly into more socially and environmentally sound policies. As Chris Marquis, an associate professor at Harvard Business School, and Yang Chen, an associate professor at Shanghai Maritime University, wrote on Dec. 5 in the online magazine Chinadialogue, “some of the same companies that were lauded for their reporting work were not necessarily following through with more responsible actions in the rest of their enterprises.”

Marquis and Yang pointed to several examples, including Baogang Group, a steel company in Inner Mongolia. The company “claims to have invested tens of millions of dollars a year in environmental protection and waste processing, and has also been recognised for its CSR and sustainability activities,” the researchers write. However, earlier this year pollution from Baogang’s facilities near the village of Dalahai was linked to “unusually high rates of cancer, along with high rates of osteoporosis and skin and respiratory diseases, and the radiation levels are ten times higher than in the surrounding countryside.” Obviously, not a sign of its commitment to principle.

At the very least, some Chinese authorities appear to have embraced the concept of corporate responsibility. In November, the Chinese Academy of Social Sciences released a blue book, or official report, on the state of CSR in China, which recommended improved reporting guidelines. Currently, the Shenzhen Stock Exchange offers training on data collection and corporate reporting methods. That makes smart business sense, as unsustainable practices may prove a future liability to growth. Even smog-choked China is looking for ways to clean up.