On April 9, 2013, Professor Liu Baocheng was interviewed by Sin, Kei Yau, an environmental management graduate student at the University of Lund in Sweden, about the issues related to corporate social responsibility (CSR) in China. The context of the interview was roughly as follows:

 

When asked about the way in which many Chinese enterprises, under international pressure, have to meet basic CSR requirements, Professor Liu answered:

1.   Many Chinese enterprises, including state-owned enterprises, are required by SASAC to issue a CSR Report. Likewise, the Shenzhen Stock Exchange and the Shanghai Stock Exchange require the three types of companies (from the Governance Sector, overseas listed foreign shares of companies and financial companies), as well as newly listed companies, to disclose social responsibility. The enterprises, which must issue the CSR report, account for about 2/3 of all enterprises.

2.   The Blackwater incident in the United States (which resulted in the removal of more than a dozen Chinese companies listed on the NASDAQ due to fraud) affected companies that are seeking overseas listings.

3.   The labor issues of Foxconn and Suzhou CIL sparked public concern for CSR.

4.   The Environmental Protection Bureau was upgraded to the Ministry of Environmental Protection, which increased its authority to supervise and punish the violators of environmental regulations. It is also responsible for actively promoting corporate environmental officer training.

5.   The continued pressure of international buyers.

6.   Chinese enterprises involved in overseas investment have endured increasing criticism regarding their need for more CSR.

7.   The main reasons are consumer awareness, supervision of the media, and competition among brand names.

8.   The role of NGOs has become increasingly important.

 

Professor Liu pointed out that the biggest challenge for Chinese enterprises in the implementation of the ESG or CSR are:

1.   The definition of CSR is still ambiguous.

2.   Regarding the CSR report as part of public relations.

3.   The majority of CSR behavior are impulsive, or subject to major events (such as disaster relief), or the implementation of executive will, in short, they lack strategic planning.

4.   There are significant differences between the roles of CSR in different enterprises (state-owned enterprises, foreign invested enterprises, private enterprises, listed companies).

5.   CSR reports are written by self-proclaimed people of merit, not by unbiased third parties.

6.   Local protection. Local governments often try to cover up or conceal the bad behavior of business people in order to protect their sources of tax revenue.

7.   Red Cross "GuoMeimei” Scandal exposed the defects of charity institutes, and had a negative impact on the support charities receive from businesses.

 

When asked how Chinese enterprises understand international standards, including those stressed by international organizations such as the United Nations Global Compact committed to promoting the development of ESG or CSR, Prof. Liu said:

1.   Chinese enterprises lack extensive knowledge of these standards, especially on the executive level.

2.   Most of these standards require the development of programs to ensure their implementation, a job which most Chinese enterprises are incapable of doing.

3.   The role of the Chinese government is still a major factor, in that it still prevents corporations from voluntarily adopting CSR standards.

4.   Institutionalized discrimination, specifically in private enterprises and in household registration, allows for the neglect of corporate social responsibility.

Finally, in regard to foreign investors promoting the implementation of 'Responsible Investment' and the Chinese Listed Companies’ understanding of the concept of "responsible investment" or investors ESG, Professor Liu believes that the practice of socially responsible investment in China has just begun and is mainly concentrated in two areas: entrepreneurship and new energy.A small number of charity organizations refer to the International Responsible Investment Guide, but most still use the traditional investment audit trail, focusing on ROI (Return on Investment).Institutional investors’ "shareholder activism" is just emerging.