2020 CEIBSCORPORATE SOCIAL RESPONSIBILITY

WHITE PAPER

FOREWORDThe Covid-19 pandemic has brought mounting
uncertainties and complexities to the world economy. Our
globalized society faces the challenge of bringing thevirus under control while minimizing its impact on theeconomy. Economic difficulties substantially heighten theurgency for a more equitable and sustainable society.

Editorial Board
Guest Editors
Li Mingjun

President, Professor of Management, CEIBS

Ding Yuan

Vice President and Dean, Professor of Accounting,
Cathay Capital Chair in Accounting, CEIBS

Executive Editor
Chen Jieping

Professor Emeritus, CEIBSAt the same time, there is an ever-pressing need toenrich and expand the CSR framework in the context ofsocial and economic development. CEIBS has incorporated CSR programs into teaching, research, and student/
alumni activities since its inception. The international business school jointly founded by the Chinese government
and the European Union has accelerated knowledge
creation and dissemination during the pandemic to support economic stability and business development. The
institution has also served as a key communication channel between academia and industry by synthesizing andsharing innovative practices and experiences of alumni
enterprises. The timely release of the CEIBS Corporate
Social Responsibility White Paper provides a new, multidimensional and dynamic framework for enterprises tounderstand CSR and sustainable development in a complex and ever-changing business climate.
2020 marks the third year of the “Corporate Social
Responsibility Initiative,” a joint project between CEIBS
and the CEIBS Alumni Association. The white paper goesbeyond business operations to shed light on the latest
CSR trends and developments affecting China and theworld. The paper reflects the progress made in environmental protection, business-nature symbiosis, and social
development. These reflections are undoubtedly evenmore relevant in the face of the Covid-19 outbreak.
This year's white paper's successful launch is theresult of the collective efforts of CEIBS professors andresearch teams, as well as alumni associations and companies. The professors obtained the research presented
in the paper through the employment of detailed CSRparameters focused on business leaders, employee
behavior and their relationship to the external environment. This granular and nuanced form of research is a
powerful tool for guiding the healthy development of CSR.
The five CEIBS alumni companies featured in thewhite paper offer exceptional examples of aligning business practices with social needs. Their learning-based
future-proof business innovations are a powerful demonstration of how best to bring CSR to the forefront of business activities. These five firms all received the CSRAward in April 2019 at the second CEIBS Alumni Corporate Social Responsibility Award, organized by the CEIBS
Alumni Association. Some 53 alumni enterprises andorganizations competed for awards that covered innovation, philanthropy, and the environment. Eventually, 15
companies took home the prizes. Under the guidance ofProfessor Chen Jieping and in cooperation with the five
CSR Award winners, our research team put down in writing their innovative practices following investigations andinterviews.
While the world faces a common challenge of combating the Covid-19 pandemic as the second half of 2020
commences, it is the immediate action of every individualthat will make a real difference. As CEIBS European President Dr. Dipak Chand Jain famously said, “We live under
the same sky, but everyone sees a different landscape.”
The time to change the world and thrive against all theodds is now. By bringing students, faculty, and alumni
together, CEIB strives to create more connections, partnerships, and value in the post-pandemic era.

Editorial Board Members
Xu BinProfessor of Economics and Finance, Wu Jinglian Chairin Economics, Associate Dean (Research), CEIBS

Rui Meng

Professor of Finance and Accounting, Parkland Chair in
Finance, Director of Ph.D. Programme, Director of CEIBS
Centre for Wealth Management, Co-Director of CEIBS
Centre for Family Heritage, Programme Director of
Family Office Diploma Programme, CEIBSChen Shimin

Professor of Accounting, Zhu Xiaoming Chair in
Accounting, Director of Case Development Centre,
CEIBS

Lydia J. Price

Professor of Marketing, CEIBSChen Shaohui Professor of Management Practice, Programme Co-Director of Advanced Management Programme, CEIBS

Prof. Li Mingjun
CEIBS President

Prof. Ding Yuan
CEIBS Vice President and Dean

CONTENTSI

CSR Trends Globally> Bold and Practical Solutions for the EnvironmentⅡCSR Practices in ChinaⅢ

CSR Practices of CEIBS Alumni Companies> Concerted and Coherent Actions towards Sustainability> ZBJ: The Intrinsic Altruism of a Service Transaction Platform> Sinoeco: “Business + Technology” Dual Drivers for the Conservation of
Aquatic Life in China> Better Life Group: The Golden Touch Project for Targeted Poverty
Alleviation> Yili Group: Building a Green Future by Living CSR Values> Phoenix Contact China: A Force for Good Creating Mutually Beneficial
OutcomesⅣ

CEIBS CSR Research> The Adoption of Green Practices by Chinese Firms: Assessing theDeterminants and Effects of Top Management Championship> Effects of Proactive Environmental Strategy on Environmental Performance> Corporate Social Responsibility and Collective Organisational Citizenship
BehaviourⅤ

Research on CSR Reports of A-Share Listed
Companies

Ⅰ

CSR TRENDS
GLOBALLY“
CSR Trends Globally:
Bold and Practical
Solutions for theEnvironment
By Lydia J. Price, China Europe International Business School (CEIBS)
Laurie Underwood, Xi'an Jiaotong-Liverpool University

Society's calls for business responsibility tend to shift
from closing gaps in employment, equality and healthcare, to reversing environmental threats like pollution,
climate change and biodiversity loss. Technology is aconstant, either in the guise of monster-under-the-bed(think AI job displacement), or superhero (think meatalternatives). As we wrote our report early this year,
companies were raising commitments to nature in
response to new scientific reports about environmental
risks. Now, suddenly Covid-19 is shifting our perspective
back to the human and social challenges of preserving
jobs, health and safety. What this shows is that sustainablebusiness must necessarily be integrative and multi-faceted.
Each year our reports show companies widening theirscope of responsibility. It's a trend we applaud, and one
we'll continue to track.

”— Lydia J. Price
CEIBS Professor of Marketing

In many ways, 2019 was a pivotal year as global leaders began to recognize environmental challenges as moreworrying than economic downturns or social inequalities—topics that dominated headlines in recent years in response
to populist politics. Environmental risks dominated the World Economic Forum's (WEF) 2020 Global Risks Report,
released in January 2020, occupying the top five spots in terms of risk likelihood and claiming three of the top five spots
in terms of risk impact.1
1

Extreme Weather

Climate Action Failure2
Top 5 Global
Risks inTerms ofLikelihood

3

4

5

1

Natural Disasters

Weapons ofMass Destruction2
Top 5 Global
Risks inTerms of
ImpactBiodiversity Loss

3

Biodiversity Loss

Human Made
Environmental Disasters

Climate Action Failure

45Extreme Weather

Water Crises

The WEF identifies the risk perceptions of global decision-makers annually within five categories—economic, environmental, geopolitical, societal, and technological—and this year marked the first time that entries from a single category (environmental) dominated a top-5 list. That outcome no doubt was influenced by high profile, UN-backed reports
released in 2019 indicating that climate change and biodiversity loss are already at dangerously high levels, andfurthermore, that worrisome trends are mostly accelerating rather than declining despite commitments from world political leaders to take corrective action. Meanwhile, scientific reports offered new insight on the mounting dangers of
microplastic pollution.
To counter the bleak outlook presented by these independent, third-party reports, large MNCs began offering big,bold plans to achieve a net positive impact on the environment, meaning they will give back to nature more than theytake each year. Some are even contemplating the challenge of compensating for legacy harms to the environment
since the time of their company's founding. Multi-disciplinary collaborations—a theme we highlighted in last year's
report—are expanding in scope and ambition, recognizing that systems transformation is needed to solve our gravest
environmental difficulties. Meanwhile, companies and organizations increasingly reorient innovation efforts to leveragenatural systems, thus creating a growing class of efficient and effective “environmental technologies.”
In the chapter below, we first review the three highest priority environmental issues now facing the planet, according
to the world's most-respected global NGOs. Secondly, we discuss five promising advances in corporate and citizen practices in 2019, as stakeholders cooperate to counteract the most challenging megatrends of environmental degradation.

CEIBS Corporate Social Responsibility White Paper

CSR Trends Globally

Science Sounds the Alarm over Three Key Issues
Issue #1: Climate Change
The UN's Intergovernmental Panel on Climate
Change (IPCC), issued two rigorously researched
and widely respected reports in 2019— Climate
Change and Land (August, 2019) and Special
Report on the Ocean and Cryosphere in a Changing Climate (September, 2019).① In them, the UN
warns in stark terms that fast and aggressive
action is required right now to mitigate the worst
climate change risks. In 2018, the UN Environment
Programme (UNEP) reported that, to keep global
warming within 1.5℃, reductions in global greenhouse gas (GHG) emissions will have to reach 7.6
percent annually from 2020 to 2030. 2 But global
climate control talks in Madrid in 2019 (see Sidebar1) failed to set a unified path for government
action going forward, prompting a number of business leaders to accept the responsibility for driving change themselves. The challenge is daunting: reduce carbon emissions from the businesssector to zero (carbon neutrality) or, more ambitiously, remove more carbon from the atmospherethan businesses emit (carbon negativity; also
referred to as climate positivity).

[Sidebar1] Key Outcomes: Recent Conference of Parties (COP) on Climate Change
COP21 (December 2015 in Paris, France)· 195 nations jointly agreed to maintain temperature increases “well below” 2℃, with 1.5℃ recognized as a difficult but not impossible target toachieve.3· To do so, each country will develop “Nationally Determined Contributions” (NDCs) for carbon reductions.
· Forestry and land protection were prioritized.
COP23 (November 2017 in Bonn, Germany)· President Trump withdrew the US from the Paris Accord in June 2017. However, an alternative US delegation representing states, cities andcompanies established a pavilion under the banner “We Are Still In.”
· China was largely seen as stepping into the leadership void left by the US exit.
· Developing nations charged rich nations with failing to meet their commitments up to 2020.
COP25 (December 2019 in Madrid, Spain):Issue #2: Biodiversity Loss and Ecosystem Preservation
In May 2019, the Intergovernmental Science-Policy
Platform on Biodiversity and Ecosystem Services(IPBES) delivered a report on a three-year UN-backed
research project showing that biodiversity loss poses athreat as harmful to human wellbeing as climatechange, though the problem has been under-recognized until quite recently.5 The report argued that transformative change is needed on a massive scale to
avoid catastrophic losses in the essential ecosystemservices provided by natural systems—e.g., sequestering carbon, purifying and storing water, filtering pollutants, and providing wildlife habitat. The study revealed
that nearly 1 million species are currently threatenedwith extinction, and we are now losing species 1000
times faster than ever before—a scale and pace muchgreater than anticipated.
Governments, companies, and NGOs have alreadystepped up their responses. The UN identified 2020 asa critical year for nations to set an agenda of ‘make or
break' actions in the decade to come. 6 A number ofglobal meetings are scheduled, among which Chinaplans to host the UN Convention on Biodiversity COP15
in October 2020 in Kunming. The meeting is slated to
finalize overall biodiversity planning for the decade,along with decisions on capacity-building and resource
mobilization. China is already putting a number of related initiatives into practice. Most notably, a 10-year ban
was implemented on Yangtze River fishing in order toreplenish stocks that had dropped by more than 75 percent since the 1950s 7 . Meanwhile, companies aremaking their own big pledges. ‘Regeneration' of natural
systems and ‘net positive' initiatives are replacing ‘sustainability' in the CSR plans of many MNCs, and thesearch is now on for the means to achieve such lofty
goals. As with climate change, the challenge is monumental: to transform business into a force for preserving, and even generating, healthy natural ecosystems.

· Unlike previous COPs, there was no debate regarding the urgency or truthfulness of climate change impacts. 4 Nevertheless, the meeting waslargely deemed a disappointment for failing to set rules for international carbon markets.5 Participating nations delayed the creation of new
guidelines until COP26 in 2020.5· Another impasse: the meeting failed to establish compensation for nations already suffering from “loss and damage” caused by climatechange—damages which may reach US$150 billion a year by 2025.5· In a sign of growing public concern over climate change, the event attracted protesters seeking faster, more effective action.
· The EU, the UK and other governments decided to strengthen their own carbon reduction regulations independently.5①: The IPCC's Special Report on the Ocean and Cryosphere in a Changing Climate, created by more than 100 authors from 36 countries and referencing 7000 scientific papers,
compiles new scientific research on the effects of climate change on ocean and cryosphere. It was approved by all 195 IPCC member governments before publication. The
IPCC's Special Report on Land and Climate involved hundreds of experts from 52 nations worldwide over a two-year period.

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CSR Trends Globally

Companies and Citizens RespondDue to the gravity, scope and scale of these critical challenges to our environment, companies are rethinking andrecalibrating their approach to corporate responsibility, and citizens are increasing their engagement. Below, we list
what we consider to be the five most compelling advances of the year.

Issue #3: Plastic Waste
Worldwide production of plastics has reached 300 million tons yearly—equal
to the weight of the world's entire human population.8 Of particular concern is thehigh proportion (50%) of single-use plastics—including 5 trillion plastic bags
annually 9—and the fact that plastic use by volume increased faster in the 2000s
than during the previous four decades. UNEP reports that, of the 8.3 billion tonsof plastics created since the 1950s, roughly 79% has ended up in a landfill or thenatural environment, 12% has been incinerated, and only 9% has been recycled.
The bulk of disposed plastics—8 million tons annually—wind up in the world's
oceans. This places the world on a trajectory in which, if the rate of increase continues, the oceans will contain more plastics than fish by 2050.
Technological advances have greatly increased our access to high- quality
data on the scope and scale of microplastics entering the oceans and atmosphere. Those data show that microscopic plastics now exist virtually everywhere, including in the food we eat and the water we drink.9 On a more positivenote, however, investigations of single-use plastic have moved beyond defining
the problem and into finding solutions. More governments are limiting or banningtheir use (see sidebar2), and businesses are following suit. Among them, Sodexo,
American Airlines, Red Lobster, Dell, Disney, and Bon Appetit Management haveannounced plastics bans or reductions in the past two years. More than 250
others, including Pepsico, Unilever, Nestle, L'Oreal, Coca-Cola, and H&M havesigned onto the New Plastics Economy Global Commitment (organized by the
Ellen MacArthur Foundation in collaboration with the UN, WEF, WWF and 40 academic institutions). Co-signatories commit to three goals: recycling used products into new materials, discontinuing single-use plastics packaging, and using
only re-used, recycled or composted plastics packaging by 2025.10

Advance #1: Companies Commit to Net-Positivity
In the latest CEO Study on Sustainability② produced by the United Nations Global Compact and consulting firm
Accenture, UN Secretary General H.E. Antonio Guterres emphasized the need to “… mobilize the private sector” to fightclimate change, eradicate poverty and fulfill the overall Sustainable Development Goals (SDGs) by 2030. The title of thisyear's report, which summarizes interview and survey data from 1000 CEOs and 1500 senior business leaders globally,is The Decade to Deliver. Among the key findings: 75% of North American and Asian top executives see a need to “decouple economic growth from the use of natural resources and environmental degradation.” 15 To achieve that, companies are moving beyond their previous ambitions to be “less unsustainable” and are now moving strenuously to becomea net-positive force for good.
A number of large-scale, high-profile Western MNCs have pledged to replenish more natural resources than theyuse. Starbucks promised in January 2020 to become resource positive—storing more carbon and providing more cleanwater than they use, while entirely eliminating waste. Although no timetable was set for those achievements, the company has begun long-term research and innovation to completely transform its current practices, including the use of disposable cups. For now, their first-stage efforts are notable for working with NGO World Wildlife Fund (known outside
North America as World Wide Fund for Nature) and consultancy firm Quantis to carefully assess baseline carbon, water
and waste footprints across the entire value chain.16 This initiative will serve as the reference for other MNCs designinginterventions with big and bold positive impact.
[Sidebar2] Governments
Restrict Single-Use Plastics· EU passed regulations in March
2019 banning single-use plastics(utensils, straws, stirrers, andcotton buds) by 2021.11 The EU
also strengthened its polluter pay
regulations and will require
member states to collect 90% of
plastic bottles by 2029.
· Canada announced plans in June2019 to ban single-use plastics
by 2021.12· Peru has restricted visitors frombringing single-use plastics into
its protected areas since January
2019 and will phase out single-use
plastics entirely by 2022.13· China, France, UK 13, Chile, Kenya,
have all restricted or banned
single-use plastics bags. India isin the process of developing
similar legislation.14· Individual states and cities,
including California, Seattle,
Washington DC and San Diego,
have banned various types ofsingle-use plastics.13②: In September 2019 UN Global Compact and Accenture released their fifth triennial Strategy CEO Study, compiling insights from 1,000 CEOs in 21 industries and 99 countries,
gleaned from a poll of 1500 senior business leaders and interviews with 100 executives.

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CSR Trends Globally

Advance #2: Circular Economy Gets Practical
Microsoft is pledging to go beyond “net zero” on carbon
emissions; eventually removing all legacy carbon generated
either directly or by electrical consumption since the company founding in 1975. Specifically, in January 2020, company
executives committed to carbon negativity in current operations by 2030 (removing more carbon than is emitted eachyear), so that cumulative net carbon removals will compensate for all historical emissions by 2050. As Microsoft's corporate
blog states: “While the world will need to reach net zero, those of
us who can afford to move faster and go further should do so.” 17
Using a new US$1 billion “climate innovation fund,” the company will use its own technology to assist suppliers and customers worldwide to reduce their carbon emissions, and foster
the development of new methods of carbon capture, reduction and removal. From 2021, Microsoft also promises thatcarbon reduction will become “an explicit aspect of our procurement processes for our supply chain” .
These leading organizations are signaling that upstream
and downstream business partners will have to work together
in the search for net positive outcomes. Moreover, they recognize that success hinges on the support of government
policies to level the competitive playing field with traditional
companies that still adhere to the most harmful environmental
practices. A growing number of companies are engaged inpolicy conversations about the need to raise taxes and end
subsidies for carbon- and resource-intensive businesses.
They want to see more support and funding for green innovation and the transition to a clean and inclusive economy. In
May 2019, for example, US oil companies, automakers andconsumer products manufacturers launched the Americans
for Carbon Dividends, campaigning lawmakers to pass a carbon-tax-and-dividend plan—a move that will likely increaseprices for their products. 18 BP and Royal Dutch Shell each
donated US$1 million to the campaign. Meanwhile, Ford
Motor Co. became a founding member of the similarly
focused Climate Leadership Council. Finally, dozens of corporations from IT (IBM), healthcare (Kaiser Permante),
finance (Capital One Financial Corp.), chemicals (DSM) andconsumer products (Nature's Path) also campaigned congress for a tax on carbon emissions.19[Sidebar3] Impactful Initiatives: Climate and Biodiversity
Business For Nature—Formed during a July 2019 meeting of the WEF in Dalian China, and in conjunction with the Trondheim Biodiversity Con-In recent years, the Circular Economy (CE) concept has gained acceptance globally for its potential to simultaneously protect the environment andenhance resource efficiency by keeping goods and materials circulating in
the economy and out of landfills. PwC notes that CE “derives its inspirationfrom nature's biological cycle and creates closed loop material and energy
cycles where waste is a problem because it is seen as value leakage.” 23
Accenture consultants identify CE as a US$4.5 trillion opportunity over the
next decade, with industries including fast moving consumer goods and electricity generation able to capture US$110 billion and US$250 billion respectively by achieving CE transformations.24 Similarly, the Ellen MacArthur Foundation (EMF)—a world leading CE think tank—argues that CE can unlock
more than US$560 billion of value in the fashion industry through collaborations across the value chain, from production to marketing to after-sales care.
The CE concept works on three key principles: a) prioritize renewable
inputs, b) maximize product use (e.g., via sharing platforms, product as a service, and design for durability), and c) recover by-products and waste.
Though elegant in design, and promising in terms of recaptured economic
value from waste streams, the model has proven difficult to execute. Recently,
however, more effort has gone into making this conceptual model highly practical. EMF, for example, released a holistic metrics and measurement systemcalled Circulytics in January this year25 to allow companies of any size or complexity to assess their overall level of circularity. The tool will greatly boost
internal and external transparency, and EMF consultants will offer insight on
the most productive areas of improvement. After studying data inputs fromparticipants, Circulytics experts assign a comprehensive score and deliver
feedback about possible improvements to company strategy, innovation,internal skills, systems, processes and infrastructure, as well as external
engagements. 26 More than 30 member companies of the CE100 initiative
tested the tool in 2019 (see Sidebar4).
With the help of the Ellen MacArthur Foundation CE early movers arestarting to publicize the lessons of their practical experiences through a dedicated CE podcast called Explore the Circular Economy. Italian Bank Intessa
Sanpaolo, for example, has situated CE efforts within the bank's Innovation
Center. The Innovation Center now acts as a startup in launching a dedicatedCE platform supported by a €5 billion fund to help customers catalyze theirshift to a circular economy. 27 The center's work has included widespreadtraining of bank leaders and staff to understand the new opportunities presented by circular businesses, as well as the risks of continuing their financial
support for linear businesses (now at risk in a new age of climate regulationand growing natural disasters such as the massive November floods in
Venice). A dedicated CE lab works collaboratively with researchers, clientsand financial staff to identify and improve on circular solutions. Today, circular
design is gaining recognition as a promising area for the bank to add value to
Italy's many creative small businesses.

[Sidebar4] Impactful Initiatives:
Circular Economy
CE100—Widely respected as theworld's leading Circular Economy
network, this organization connects
companies, innovators, governments,
and academic institutions by offering
comprehensive information as well asworkshops, seminars, and learning
resources. Launched by Ellen MacArthur Foundation, CE100s new Circulytics tool has been tested by members
including BASF, DSM, IKEA, Novo
Nordisk, and Unilever.28
Factor 10—A Circular Economy project
launched in 2017 by WBCSD (World
Business Council for Sustainable Development), this coalition of more than 20companies provides detailed guidelines
and methodology for the transition
toward a CE business model. The
group seeks to eliminate waste by 2050
through improving resource efficiency
tenfold.29
The Global Commitment—Launched in2018, this coalition of 400+ organizations supports a vision of CE in whichplastics are kept “in the economy andout of the ocean” and “in which plastics
never become waste” 30 by promotinga system of “innovate, eliminate, circulate” . Members include 200 of theferences in Norway, this coalition of 360 companies worldwide urges governments to form wide-reaching international agreements as early as

world's largest producers and users of2020 to reverse nature loss. 19 They focus on five key goals: an emergency declaration for the planet, an ambitious post-2020 framework,

plastics packaging (responsible forrenewed environmental targets, increased ambition and Nature-Based Solutions, and governance of the High Seas Treaty.20

more than 1/5 of plastic packaging

Climate Action 100+—Within this coalition of 370 investors (representing US$35 trillion in assets), each has committed to net zero emissions. The

used worldwide), as well as 16 govern-group includes the largest GHG emitters on earth.21

ments, 26 financial institutions, 50

CDP—This not-for-profit charity provides a “global disclosure system” to help companies, investors, and local governments manage their environmental impact. Focused on sustainability within supply chains, CDP seeks to cut 1 billion metric tons of emissions by committing key suppli-

academic institutions, and leading
NGOs including WEF and WWF.31

ers to the world's largest corporations to increase their renewable energy usage by 20 percentage points.22

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Advance #3: More Solutions Grounded in Nature and Science
Nature-based solutions (NBS) tackle socio-environmental challenges by cultivating, restoring and or managing natural systems.32 The European Commission seeks NBS initiatives to “… bring more, and more diverse, nature and naturalfeatures and processes into cities, landscapes and seascapes, through locally adapted, resource-efficient and systemic interventions. ” 33 These solutions often prove to be lower in cost and more effective than technology-based,
human-developed solutions. For example, 2019 Ohio State University research into reducing air pollution found that, in
75 percent of the countries polled, plants reduced emissions more efficiently than did high tech systems such as
smokestack scrubbers.34
Tree planting is a popular NBS used by companies and countries globally to offset carbon emissions. The potential
is evident; given that one mature tree can, on average, absorb 40 pounds of CO2 yearly.35 But massive scale is needed
to make tree-planting programs effective. Last year, we saluted Ant Financial's innovative App Ant Forest, for planting
100 million trees in China's arid desert regions as a reward for “green” behavior by 500 million registered users.36 Innovators are now harnessing drone technology to speed things up even more. British start-up, Biocarbon Engineering,has developed drones that plant hundreds of trees within minutes by firing “seed missiles” across fields.37 In Yangon,
Myanmar, the drones accelerated the work of local citizens and non-profits seeking to reforest more than 350,000 acresof land with more than 1 billion trees. Villagers are trained as drone pilots to carry out the high speed planting, freeing
up the time of others to care for the new seedlings.
Tom Chi, founder of the educational program Prototype Thinking and co-founder of Google X, refers to tree-planting drones as “invention catalysts” that have transformative potential to spark a complete system reset. With one drone
operator able to plant 100,000 seedpods daily, he sees potential for the technology to eventually plant 20 billion trees
per year for only US$80 million in operating costs38, while generating many more local jobs for tree care. After 50 years,
that kind of productivity could remove as much carbon from the air as humans have produced since the beginning of
the industrial revolution.

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CSR Trends Globally

Science-based solutions (SBS), in contrast, are more narrowly aimed
at maintaining global warming below 2℃. Soil is one focus of science-based investigations. Researchers have recognized that soil stores
more carbon than is found in our atmosphere plus all living plants andanimals.39 Modern agriculture and grazing practices release much of thatcarbon into the atmosphere, accelerating climate change. Investigations
are underway to determine the potentially beneficial impacts of changing
farming practices so as to reduce tillage, rotate crops and rotate animalgrazing zones.
Rethinking meat is another integrative initiative that is gaining traction. Given that beef and dairy producers are the biggest contributors of
GHGs in the agricultural sector, a number of SBS initiatives seek toreform beef or entirely eliminate it from our diets. The “Beef Up Sustainability” initiative launched in July 2019 by global food producer and distributor Cargill aims to reduce beef-related GHG emissions across thecompany's North American supply chain by 30 percent by 2030—anamount equivalent to removing 2 million cars from US highways per
year.40 Cargill's investments into science-based innovations cover the fullproduct-use cycle, from improving cattle feed and optimizing fertilizers,
to improving grazing management with ranchers, upgrading packaging,
and reducing post-consumer food waste of beef.
An entirely different approach is presented by
Impossible Foods, a company committed to “eliminating the need to make food from animals.” The
US-based company debuted its first laboratory-created, fully plant-based meat substitute—the Impossible™ Burger—in
2016, 41 claiming that: “It's delicious,
nutritious, and made using but asmall fraction of the land, water andenergy required to make meat froma cow.” In 2019, the company
began offering the Impossible
Whopper, now available at 7,800
locations of Burger King, as wellas launching “Impossible Pork”
and working to develop othermeat-, fish- and dairy-alternatives made from plants. The
company, which sells productsin Singapore, Hong Kong and
Macau, is now targeting China asa promising potential market, after
giving out 50,000 free samples atthe 2019 China International Import
Exposition.42011

CEIBS Corporate Social Responsibility White Paper

Advance #4:
Finance Deepens the Conversation on Climate Risk and Opportunity
As we mentioned last year, global financial institutions are moving quickly to address the growing risks and opportunities of climate change and other forms of environmental degradation. 2019 saw a notable increase in the number
and variety of financial companies attending “greenfin” meetings and conferences, and a palpable sharpening of theensuing conversations.
Risk analytics company Trucost (part of S&P Global) ramped up calls for companies to report on both physical andtransitional risks to their businesses. Currently, financial reports tend to underestimate climate risks due to a disproportionate focus on manageable transition costs including government taxes and penalties, changes in technology, andloss of reputation. Going forward, they must recognize the estimated chronic and acute risks of physical changes in theenvironment that might manifest under different climate scenarios (e.g., temperature rises of 1.5℃ to 4℃)43. Data from a
Trucost survey of the 500 largest publicly listed, US-based companies and the 1,200 largest global companies showsthat business leaders identify the greatest causes of ‘physical risk' as: “water stress, heat waves and wildfires linked toincreasing global average temperatures … if fossil fuels continue to dominate and carbon emissions continue to rise.” 44
The report continued: “60% of major US companies and 40% of major global companies have at least one asset at highrisk from these physical climate risks.” 45 The well-respected Taskforce on Climate-Related Financial Risks (TCFD),
which we profiled in last year's report, has issued guidelines for conducting scenario analysis to assess various types ofclimate risk.46
Peter Bakker, President of the World Business Council for Sustainable Development (WBCSD), sees the recentchanges in financial reporting as critical for the ongoing viability of the capitalist system. He advocates a triangularsolution for capitalism: 1) every company must set science-based targets for climate and biodiversity (i.e., net-zerocarbon and net-zero nature loss), 2) companies must follow TCFD guidelines to integrate climate risk in governance,
management and disclosure, and 3) the financial system must develop standardized ESG indicators that are comparable across companies and industries.47 With these changes, he argues, investors will redirect capital to support themarket transformations so necessary for planetary wellbeing.

CSR Trends Globally

Advance #5: Millennials Engage
Another trend that strongly solidified in 2019 was the rising visibility
and increased activity of the world's youth. Motivated by the growing
reports of a radically transformed future world, today's GenY and GenZ
are voicing their concerns and making their choices about jobs and purchases in ways that clearly distinguish them from elder generations. As
the WEF states in a recent website post: “Today, youth-led collective
action is proving decisive in combating global challenges.” The article
praises millennials for their active and positive support for environmental
protection as well as social causes including protections for women andgirls, stating: “young people are at the forefront of change.54
One dramatic sign of the power of today's youth: teenaged Greta
Thunberg's appearance during the February 2020 Academy Awards toannounce her new TV series on BBC. The series will “follow Greta's international crusade, which takes her to the front line of climate change insome of the most extraordinary places on earth, as she explores what
actions could be taken to limit climate change and the damage it causes.” 55 The high profile announcement follows Time magazine naming Ms.
Thunberg as Person of the Year (in December 2019) in recognition of her
impact on both youth and world leaders to start acting on climate change
and stop merely talking about it. Governments are showing signs thatyouth voices matter. Progressive and inclusive US cities (Houston, Grand
Rapids, Omaha, Philadelphia) are establishing special boards and commissions representing youth, thus expanding the definition of diversity toinclude age and perspective alongside race, gender, and religion.

Investors are speaking up in support. BlackRock Chairman and CEO Larry Fink, for example, once again raised aclarion call (in his most recent annual CEO Letter) for thefinance industry and the users of financial services to recognize that: “Climate change has become a defining factor incompanies' long-term prospects,” 48 adding his belief that
“we are on the edge of a fundamental reshaping offinance” , with improved financial reports playing a key role.
In a move that will surely catalyze industry change, Fink has
asked all BlackRock investee companies to issue both a
TCFD-based report on climate change risks and an
SASB-based industry report on sustainability (see Sidebar5).
[Sidebar5] Impactful Initiatives: Financial Reporting
Science Based Targets—So far, 750+ of the world's largest companies have joined this initiative to set carbon reduction targets in line with theParis Agreement to maintain global warming within 2℃. As these companies enact their plans, pressure to cut emissions will cascade down
through their supply chains and value chains. Carbon Intelligence is one organization offering guidelines for participating companies.49
TCFD—The Task Force on Climate-Related Financial Disclosure was founded in 2015 by the United Nations' FSB (Financial Stability Board) as away to produce “productive, coherent principles and guide-lines for companies to accurately disclose their climate-related risks” 50 Since TCFD
released its first recommendations in 2017, membership has grown to 930 organizations by December 2019 (representing US$11 million inmarket capitalization).51
SASB—Since 2011, the Sustainability Accounting Standards Board has operated as a nonprofit organization focused on setting and disseminating financial reporting standards which businesses worldwide use to “identify, manage and report on the sustainability topics that matter.” 52 To
date, 330,000 standards have been downloaded by companies across 200 nations.
Global Investor Statement to Governments on Climate Change—In December 2019, a coalition of 631 institutional investors (together managing
assets worth US$37 trillion) issued the statement during COP25 to demand that world governmental leaders proactively and effectively address
climate change. Specifically, government leaders were pressed to “phase out thermal coal power, put a meaningful price on carbon pollution,end subsidies for fossil fuels, and update and strengthen nationally determined contributions to meet the goals of the Paris Agreement.” 53

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In addition, products and services designed by and for today's responsibility-minded youth are flourishing in themarketplace. Sharing economy “unicorns” from the transportation and hospitality industries are now joined by fashionindustry newcomers such as The RealReal, which (after a successful IPO in June 2019) has a market capitalization of
US$2.39 billion.56 The success of this second-hand fashion retailer testifies to the popularity of a business model allowing youth to frequently change wardrobes at a reasonable price while also overcoming the waste-generating problemsof fast fashion (an industry charged with triggering a 40% drop in the lifespan of clothing in recent years). 57 From 2016
to 2018, the US second-hand apparel market grew 21 times faster than retail clothing overall; looking ahead, nationwide
revenues from US “resale” clothing are expected to grow from US$24 billion to US$51 billion by 2023.58 The resalemodel is now being replicated in China, where newcomer Y:closet offers luxury clothes and accessories on a sharing
platform popular with online shoppers. That platform now has 15 million registered users, and analysts expect luxury
fashion sharing to eventually bloom among Chinese youth who want to update their wardrobes frequently, but either
can't afford luxury prices or simply view second-hand purchases as part of a youthful and green lifestyle.59
Business schools and universities are also witnessing growing demand for courses and extra-curricular activities
focused on social impact and sustainable management. Impact investing is now popular with MBA students worldwide,and b-school competitions increasingly feature a sustainability or social impact dimension. The challenges are difficult
to solve, giving students an opportunity to stretch their problem-solving abilities to the limit—but they also offer rays ofhope that business will seriously begin transforming our economies for the better. The current cohort of CEIBS MBA students shares this global enthusiasm for change; The Social Impact and Responsibility Club has a record number ofparticipants this year, and the club's activities, often organized in cooperation with other functional business clubs,
have led to recognition and awards. In addition to raising their understanding and awareness of our planet's mostpressing environmental and social problems at present, the students are hopeful that these activities can open pathways to impactful lives and careers. If your company has need of a business-sustainability professional, or a generalmanager seeking a purposeful career, be sure to reach out to us for connections. And keep sharing your responsible
business practices and experiences. Together, we can have impact.

CSR Trends Globally

References
1 World Economic Forum, http://www3.weforum.org/docs/WEF_Global_Risk_Report_2020.pdf
2 IPCC, Global Warming of 1.5℃
3 World Bank. Retrieved from https://www.worldbank.org/en/news/feature/2015/12/18/outcomes-from-cop21-forests-as-a-key-climate- and-development-solution
4 KPMG https://home.kpmg/xx/en/home/insights/2019/12/key-outcomes-of-cop
25.html
5 Chatham House. Retrieved from https://www.chathamhouse.org/expert/comment/biodiversity-loss-big-crisis-climate-change#
6 https://www.unenvironment.org/news-and-stories/story/2020-crunch-year- biodiversity-and-climate-emergencies
7 http://www.china.org.cn/china/2020-01/02/content_75570033.htm
8 UNEP https://www.unenvironment.org/interactive/beat-plastic-pollution/
9 Wired. https://www.wired.com/story/the-year-humanity-declared-war-on-microplastics/
10 Visit https://www.newplasticseconomy.org/projects/global-commitment
11 European Union. https://www.europarl.europa.eu/news/en/press-room/2019
0321IPR32111/parliament-seals-ban-on-throwaway-plastics-by-2021
12 National Geographic. https://www.nationalgeographic.com/environment/2018/07/ocean-plastic-pollution-solutions/
13 Financial Times. https://www.ft.com/content/f00869c2-7bdd-11e9-81d2- f785092ab560
14 India Times. https://economictimes.indiatimes.com/news/politics-and-nation/
government-may-list-8-single-use-plastic-items/articleshow/72324377.cms
15 UN Global Compact & Accenture. Retrieved from https://www.accenture.com/_acnmedia/pdf-109/accenture-ungc-ceo-study.pdf
16 Greenbiz. Retrieved from https://www.greenbiz.com/article/starbucks-commits-give-more-it-takes-planet-and-ditch-disposable-cups
17 Microsoft. Retrieved from https://blogs.microsoft.com/blog/2020/01/16/microsoft-will-be-carbon-negative-by-2030/
18 Bloomberg. Retrieved from https://www.bloomberg.com/news/articles/2019-0520/oil-companies-join-corporate-lobbying-push-for-u-s-carbon-tax
19 WBCSD. Retrieved from https://www.wbcsd.org/Overview/News-Insights/General/News/Leading-global-organizations-join-forces-to-elevate-the-businesscall-to-protect-and-restore-nature
20 Business for Nature. Retrieved from https://www.businessfornature.org/
21 Visit www.climateaction100.org
22 CDP. Retrieved from https://www.cdp.net/en
23 PwC. pwc-circular-economy-study-2019 2.pdf
24 Accenture. https://www.weforum.org/agenda/2020/01/how-can-we-accelerate-the-transition-to-a-circular-economy/
25 Ellen Macarthur Foundation, https://www.ellenmacarthurfoundation.org/resources/apply/circulytics-measuring-circularity
26 Greenbiz. https://www.greenbiz.com/article/new-tool-ellen-macarthur-foundationaims-help-companies-measure-circularity
27 Ellen MacArthur Foundation Podcast, “Explore the Circular Economy” , Episode25, December 20, 2019.
28 Visit www.ellenmacarthurfoundation.org/our-work/activities/ce100
29 Visit www.wbcsd.org/Programs/Circular-Economy/Factor-10
30 Global Commitment. GC-report-June-pdf
31 Visit https://www.newplasticseconomy.org/projects/global-commitment

32 Wikipedia. Retrieved from https://en.wikipedia.org/wiki/Nature-based_solutions
33 European Commission. Retrieved from https://ec.europa.eu/research/environment/index.cfm?pg=nbs
34 Ohio State University. Retrieved from https://pubs.acs.org/doi/abs/10.1021/
acs.est.9b01445
35 Flash Forest. Retrieved from https://flashforest.ca/
36 Alizila. Retrieved from https://www.alizila.com/how-alipay-users-planted-100m-trees-in-china/
37 Standard. Retrieved from https://www.standard.co.uk/news/world/treeplantingdrones-could-help-restore-world-s-forests-a4116376.html
38 Greenbiz. https://www.greenbiz.com/video/tom-chi-making-ecological-regeneration-imperative-tech
39 Renee Cho, “Can soil help combat climate change?” in State of the Planet,
Columbia University Earth Institute blog, February 21, 2018.
40 Cargill. Retrieved from https://www.cargill.com/story/cargill-aims-to-beefup-sustainability
41 Impossible Foods. Retrieved from https://impossiblefoods.com/locations/
42 CNBC. Retrieved from https://www.cnbc.com/2019/11/06/impossible-foods-seeshuge-opportunity-in-meat-loving-china.html
43 Greenbiz. The State of Green Business 2020, Chapter 26
44 2020 State of Green Business Report, p6
45 2020 SOGB Report, p6
46 TCFD. https://www.fsb-tcfd.org/publications/
47 WBCSD. https://www.wbcsd.org/Overview/News-Insights/Insights-from-the-President/The-triangle-that-will-fix-capitalism
48 BlackRock. Retrieved from https://www.blackrock.com/corporate/investor-relations/larry-fink-ceo-letter
49 Visit https://carbon.ci
50 TCFD Retrieved from https://www.fsb-tcfd.org/about/#
51 TCFD. Retrieved from https://www.fsb-tcfd.org/tcfd-supporters/
52 SASB. Retrieved from https://www.sasb.org/
53 The Investor Agenda. Retrieved from http://theinvestoragenda.org/wp-content/uploads/2019/12/December-9-2019_-PressRelease_Global-Investor-Statement-to-Governments-on-Climate-Change.pdf
54 WEF. Retrieved from https://www.weforum.org/agenda/2019/08/the-youth-revolution-is-more-powerful-than-ever/
55 Vanity Fair. Retrieved from https://www.vanityfair.com/hollywood/2020/02/greta-thunberg-bbc-television-show
56 F o r b e s . R e t r i e v e d f r o m h t t p s : / / w w w. f o r b e s . c o m / s i t e s / g l e n d a t o ma/2019/06/28/the-realreal-ipo-luxury-reseller-latest-retailer-to-go-public/#59fb00e46289
57 Ellen MacArthur Foundation. https://www.ellenmacarthurfoundation.org/explore/fashion-and-the-circular-economy
58 GlobalData. Retrieved from https://www.ft.com/content/a7e5d5f8-7c91-11e98b5c-33d0560f039c
59 Jing Daily. Retrieved from https://jingdaily.com/4-reasons-why-luxury-rentals-could-be-a-hit-with-chinese-millennials/
60 WEF. Retrieved from https://www.weforum.org/agenda/2019/08/the-youth-revolution-is-more-powerful-than-ever/
61 Visit https://www.weforum.org/events/global-shapers-annual-summit[Sidebar6] Impactful Initiatives: Youth Shaping the World
Global Shapers Community-This network of 8000 thought-leaders in 165 countries—each under the age of 30—was founded by WEF in 2019 togather “inspiring innovators, activists and entrepreneurs … who play a central role in creating lasting change in their communities and theworld.” 60 Members focus on three principle goals: standing up for equity and inclusion, protecting the planet and nature, shaping the future of
education and employment. WEF holds a Global Shapers Summit annually.61

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CSR PRACTICESIN CHINA

“
CSR Practices in China:
Concerted and Coherent Actions
towards Sustainability

There is a fast growing consensus among Chinese
enterprises about the need to implement social responsibility practices. In addition to making traditional donations, more and more companies are pursuing innovativemodels and integrating social responsibilities into corporate strategies, creating core values while also turning acommercial profit.

”

Looking towards the future, companies will facerising challenges such as climate change, damage toecosystems and the growing gap between the rich andthe poor. Chinese firms will only prosper from a new waveof economic opportunities and weather all storms if theyremain committed to living in harmony with nature andnurturing a reciprocal relationship with society.
This white paper represents only the tip of theiceberg when examining the diverse range of practices
and solutions undertaken in China. This document aims
to inspire more companies to adopt such strategies,
thereby making significant contributions to social wellbeing and development.
— Chen Jieping, CEIBS Professor Emeritus

By Chen Jieping, CEIBS Professor Emeritus
Huang Xiayan, CEIBS Case Center

conomic prosperity has historically failed to provide sufficient solace for the maladies that it also
brings. Crises such as climate change, ecological destruction and a widening wealth gap haveintensified, impeding national development around the world. Providing solutions to such global
issues and building a community capable of providing a shared future for humankind has become
one of the most significant challenges of our times. Chinese companies continue to explore proactive
approaches to social responsibilities to counter such dilemmas and contribute solutions and wisdom.
Last year's white paper summarized and categorized CSR practices in the country according to
responsibilities in promoting economic development and legal compliance. Other categories included constructing responsible and reliable supply chains, strengthening the responsibility of internet
platforms and promoting green finance. These offer useful examples and reference points for both
CEIBS alumni and the general public.

E

Based on these practices, this white paper will look back on Chinese companies' progress interms of CSR practices from last year and illustrate their ideas and actions from the perspectives of1) their coexistence with the natural environment; 2) the unification of business goals with social wellbeing; and 3) the realization of sustainable development. The first part of the paper will review how
firms have cultivated a symbiotic relationship with nature by adopting low-carbon production, protecting biodiversity and relieving pressure on the environment. The second part will examine how they
contribute to poverty relief and rural development, create equal job opportunities and grow more
inclusive of underrepresented groups such as women, the physically challenged and younger generations. The third part will discuss how firms balance economic gains with social responsibilities, integrate commercial aims with public welfare and how social responsibility investments can guide sustainable business development.

CEIBS Corporate Social Responsibility White Paper

CSR Practices in China

In Harmony with Nature
The Global Footprint Network (GFN) estimated that the world had already consumed its annual “quota” ofglobal natural resources for 2019 on July 29th last year and marked the day as Earth Overshoot Day. The international environmental protection organization issued a report to mark the event. The document warned thathumanity continues to “overdraw” on resources for the rest of year.1 The GFN pointed out that humankind's
average speed of natural resource consumption is 1.75 times that of normal self-replenishment on Earth andthe rate is 2.2 times higher in China.
Carbon dioxide accumulation in the atmosphere has led to an ecological “overdraft” on Earth's systems,with effects such as deforestation, soil erosion, falling freshwater reserves, loss of biodiversity and climatechange. Natural disasters such as typhoons, wildfires, drought and flooding consequently occur. This scenario calls for caution. Chinese companies are making practical changes to reduce the burden. These changes
include adopting low-carbon production processes, protecting biodiversity and reducing waste plastic.

Actions towards Low-Carbon Production
In April 2019, the China Meteorological Administration's Climate Change Center published the latest monitoringdata on climate change nationally and globally. Data in the Blue Paper of Climate Change in China (2019) shows thattemperatures are still increasing, while extreme climatic and meteorological events in China are intensifying, cryosphere
deterioration is accelerating and climate-related risks are rising.2 The impact on humankind, animals and plants and theglobal ecosystem is universal and may even be irreversible. Collins Dictionary named climate strike① the New Word of
the Year in 2019, as the public put pressure on authorities and enterprises to take action.
The Chinese government attaches great importance to climate change issues. President Xi Jinping called for proactive national strategies to counter the issue at the 2018 National Conference on Environmental Protection. He also
provided more impetus and guidance for the establishment of a fair and just global climate governance system basedon mutually beneficial cooperation. President Xi expressed hope that China would become an important player, contributor and leader in promoting ecological progress worldwide.3 Since 2018, the government has initiated a series of measures to alleviate climate change effects, including industrial restructuring, energy structure optimization, emission controls, carbon sink expansion and atmospheric pollution prevention. Energy consumed per ¥10,000 of GDP decreased
2.6% annually in 2019 and CO2 emissions per ¥10,000 of GDP decreased 4.1%. 4
In response to this governmental initiative, industrial associations and social organizations have formulated agreements and proposals as guidelines for low-carbon transformation across the industrial chain and at enterprise level. For
example, the Real Estate Industry Green Supply Chain Initiative (Green Chain Initiative) advocated the adoption of environment-friendly supply chains across the whole industry, while calling for adherence to the principle of non-purchasingof non-green products and establishing a white list for environmentally compliant suppliers to reduce carbon emissions
and pollutant discharge across the value chain. In 2019, the Green Chain Initiative called for reduced carbon emissions
and energy efficiency based on environmental compliance. It added a green list to the white list to prioritize enterprisesthat qualify for environmental certification and perform well in energy conservation and emissions reduction.5

Protecting Biodiversity
From global warming to Amazon forest fires, Australian bush fires, Covid-19 and locust plagues in Asia and Africa,
the catastrophic consequences of humankind's traumatic relationship with nature is evident. Enterprises and society
must work to avert the potentially dire effects of ecosystem deterioration, species extinction and biodiversity loss. Compared with climate change that has an immediate impact on everyday life, biodiversity has a more remote effect as
humans rarely interact with wild animals and plants on a day-to-day basis. Therefore, this aspect receives comparatively less attention, as evidenced by its relative insignificance in CSR disclosure compared with other issues.
Since the Covid-19 outbreak, the public has again turned their attention to wildlife. Eating wild animals or encroaching on their natural habitat raises the chances of virus exposure and transmission. As part of efforts to protect wild animals and plants, Alibaba has partnered Tencent and other companies to launch an IT business alliance to crack down
on illegal trading online and other crimes involving wildlife. These firms use IT technologies to screen relevant information and forestall transactions. They also use their own platforms to raise public awareness of the importance of protecting wildlife and refraining from consumption and related transactions.9
The Framework of Global Biodiversity After 2020 draft proposal sets out ways to reverse biodiversity loss and retrogression by 2030 to restore balance by the middle of the century to promote a symbiotic relationship between humanity
and nature.10 Chinese enterprises widely explore biodiversity protection and have formed both “nature-based” and “human-oriented” solutions. For example, Yili Group, the dairy product giant led by 2002 CEIBS EMBA alumnus Pan Gang,
has operated a sustainable corn farming and wetland protection project in Songnen Plateau in Heilongjiang province
since 2016. The corn comes from a 1,000-mu (670 square-meter) sustainable pilot farm. The water saved could protect
54,000 mu (36 square-kilometers) of wetland. The Inner Mongolia-based company also launched the “One Pack of Milkfor 4.6 square-meters of Wetland” project, through which it donates a proportion of revenue from sales of Satine-branded organic milk. The donation is equivalent to the cost of protecting 4.6 square-meters of northeastern China wetland
for one year.
Many firms now incorporate biodiversity into their daily management and taken measures to reduce the adverse
effects of their business activities on biodiversity. For example, limestone extraction for cement factories typicallycauses significant topographical changes and damages wildlife habitats. Consequently, Huaxin Cement conducted an
ecology and biodiversity impact assessment during the initial feasibility stage of its Meizishan mine project to ensure
environmental damage remained within a reasonable range. When determining a mining plan, the Hubei-based firm
also designed an environmental restoration plan to ensure the sustained availability of mines and protect biodiversity.11
Other enterprises have leveraged their technical strengths in innovative ways to promote biodiversity protection
and achieve mutually beneficial results. Mobile entertainment firm 37Games developed China's first animal protection
title — “Saving Wildlife” combines technical advantages and wildlife protection social responsibilities into a “game plus
public welfare” model. Players score points by avoiding obstacles and saving animals. This title raises gamers' awareness of wildlife protection by encouraging them to participate in virtual missions. In the game, the developer createdchallenging obstacles and also provides tips to protect wildlife in real life.12

Enterprises have been earnestly living up to the call for low-carbon development. For example, factories belonging
to Beautycos International, part of L'Oréal Paris, use solar, wind and biomass energy for power and heating and officially hit zero carbon-emissions in June last year.6 Thermal plants, which generate most of China's power, face great difficulties in cutting CO2 emissions. To help solve this problem, JD Digits, the e-commerce giant's fintech arm, applied AI
deep learning to improve boiler efficiency. The move reduced power generator set energy consumption by 0.5%. Estimates suggest the technology could cut annual coal consumption of a 600-megawatt medium-sized generator set by
3,600 tons and annual CO2 emissions by nearly 9,000 tons.7 Regional grid operators are also pursuing “environmentally-friendly electricity” transformation. The State Grid Company in Huzhou produces and delivers power in an energy-saving, efficient and low-carbon manner while fostering a way of producing, living and consuming based on such
ecological electricity.8①: Climate strike is a form of protest where students and workers go on strike to demand that governments take action to curb climate change.

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CSR Practices in China

Unifying Business Goals with Social Wellbeing
Relieving Pressure on the Environment
Plastic waste and micro-plastics havedevastating effects on groundwater, soil,
oceans and maritime organisms. The
United Nations Environment Program
points out that the wide use of these materials has had an increasingly severe
impact on the global environment. Estimates suggest that some 8 million metrictons of plastics are dumped into theocean annually, equivalent to five grocerybags per every foot of coastline aroundthe globe. Plastics account for between
60% and 90% of waste that gathers oncoastlines, ocean surfaces and the seabed.13 This marine pollution threatens the
lives of at least 800 maritime species andenters the food chain, ultimately ending
up on household dining tables. Microplastic concentration in the downstream
Yangtze River has reached 500 thousand
particles per square-kilometer and they
have been detected in bodies of water infaraway regions like Tibet autonomous
region and Qinghai province.14 Japanese
researchers even detected waste micro
plastics in the air last November.
Dealing with marine waste plastics and micro-plastics was high on the agenda at the G20 Summit in June last year.
All parties agreed on the Osaka Blue Ocean Vision to end plastic leakage into the ocean by 2050 15. As a major plastic
producer, China is also reexamining the use and disposal of plastics to fundamentally curb plastic pollutants. The StateCouncil rolled trial plans in 2019 to develop “waste-free cities” while the Hainan provincial government issued a complete ban on the production, sales and use of non-biodegradable plastic products. Shanghai has issued strict guidelines on household waste classification while property developer Vanke has initiated a zero-trash office work plan.
As plastics and waste emerge as a key issue, the necessity for drawing up recycling plans has become a common
goal among local authorities, enterprises and the general public. The primary problem in plastics recycling is theretrieval of used products and packaging from consumers. This aspect is also key to building a closed-loop recycling
economy. Signify (previously Philips Lighting) has adopted an innovative business model to solve the problem. Insteadof selling lights directly, the Dutch electronics firm leases lighting to customers while still retaining ownership rights. By
doing this, the company remains responsible for light replacements and recycling thereafter. The move has helped totransform the company from traditional “one-time selling” to recycling-oriented “lighting services provision.” Thus it hasestablished a mutually beneficial relationship with its customers and boosted the recycling economy's development.16
Other enterprises have pursued recycling and trash-into-treasure programs to provide sustainable solutions. Domestic company Reclothing Bank, for example, is dedicated to upcycling thrown-away clothing into fashion pieces
trend from patched-up clothing to regenerated materials and then to synthesizing environment-friendly ones. The
Shanghai-based firm made a breakthrough last year with the creation of an RPET (recycled polyethylene terephthalate)environment-friendly material by extracting fiber from recycled plastic bottles, greatly reducing garbage landfill andconsumption of non-renewable resources. Its environment-friendly production could save 42% of energy, 45% of green
gas and about 94% of the water used in traditional technologies, helping the high-polluting textile industry to go
green.17

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The 2018 Nobel Prize for Economics focused on “technological innovation, climate change and economic
growth” research, while the 2019 award centered on “experimental practices in alleviating global poverty.”
Poverty reduction is the United Nations' primary sustainable development goal and the core element of sustainable development philosophy in China. Since the reform and opening up, the population living in absolute
poverty in Chinese rural areas has fallen from 770 million to 5.5 million last year, while the poverty incidence
rate has dropped to 0.6%.4 The UN Secretary-General António Guterres has spoken highly of efforts to alleviate poverty in China, commenting that “China is the country that has made the most contribution to global poverty relief.” 18 Chinese enterprises, a leading force in reducing poverty in the country, have contributed many
innovative practices and solutions to the cause.
Companies don't focus on narrowing the wealth gap alone; they are increasingly paying attention to social
injustice from a broader perspective. The International Labor Organization indicated last July that countries
are slowly moving towards reducing informal employment. Some 61% of workers around the world still engage
in informal employment and women, younger generations and the physically challenged still face grave challenges in gaining equal access to decent jobs.19 Business models and technological innovations are revolutionizing the way people work and live. In the context of huge advances in technology, promoting inclusiveness and reducing social inequality have become critical issues.

Poverty Alleviation and Rural Reconstruction
Enterprise-level targeted poverty alleviation programs in China not only address poverty issues at a basic level but
also create a means for the underprivileged to generate wealth themselves. If the Nobel Prize in Economics represents
a theoretical contribution to global poverty reduction factors, then the experience of more than 700 million Chinese
people provides first-hand accounts of how to alleviate poverty on a global level potentially.
China's poverty-stricken areas are mostly found in remote and isolated regions, typically featuring a hostile naturalenvironment and a weak industrial foundation. Even if gifted particular resources, it remains difficult for these communities
to turn them into stable revenue channels due to various constraints. Some companies have industrialized local resources
to create endogenous growth and help surrounding areas pull themselves out of poverty. For example, in central Gansu
province lies the Linxia Dongxiang Hui ethnicity autonomous prefecture, where little industry had previously existed andresidents had struggled to make ends meet. Major property developer Country Garden entered into one-to-one assistancepartnerships with local villagers and sent dedicated poverty relief officials to commercialize local resources such as goatssince 2018. The Foshan-based realtor also introduced grants, technical training and cooperative breeding to help local
industries become more self-subsistent with better quality products on a larger scale. The area has now cultivated a pillar
industry based on the “three treasures of Dongxiang,” namely, goats, potatoes and embroidery.20
Through poverty reduction efforts, enterprises have helped to shape and foster special local industries. However,they have also applied e-commerce and big-data to empower poverty-stricken areas to jump onboard the internet anddigital economy. For example, Alibaba has formed a direct supply network using its online marketplace Taobao andmobile payments service Alipay through what it calls the “one county, one merchandise” model. The Hangzhou-basedtech giant has also looked to selling via live-streaming to promote the sale of quality goods sourced from impoverishedareas. Alibaba also employs big-data analysis to guide agricultural production and help these areas discover, cultivateand develop local specialty products to blaze a trail in e-commerce during poverty relief efforts.
Poverty alleviation fights against absolute poverty, while rural reconstruction generally struggles against relative
poverty by instilling a pleasant rural landscape, creating wealth for farmers and cultivating strong agriculture. Rural
finance has always been a weak link in the traditional financial system.21 JD Digits has developed a data-driven digitalfinance system, especially for the rural market. The system expedites a process of metamorphosis agriculture while
also boosting rural finance's overall development. The system allocates credit lines to farmers based on quantitativemodels and each farmer's historical production data, free of any mortgages or collateral. During production, it allocatesfixed funding amounts at fixed times to the industrial chain based on such models to precisely control the liquidity.
Interest is calculated phase by phase to maximize the efficiency of fund utilization. It also helps farmer households
manage risks and realize the informatization and automation of agricultural production management to enable “foolproof” agriculture.
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CEIBS Corporate Social Responsibility White Paper

Equal Job Opportunities
The World Economic Forum's Global Gender Gap Report 2020 states that at least 257 years is needed to eradicate
the global gender-based economic inequality gap. This projection is 55 years more than in the 2018 estimate. The gap
mainly exhibits itself in the lower proportion of women in managerial positions, the low level of labor participation andlower levels of income. The reasons behind this include relatively higher proportions of women in positions vulnerable toautomation, a lower proportion of women in high-income technical roles and career path limitations for women due tofamilial responsibilities.22
Job-related gender discrepancies have garnered much attention from companies. Some have carried out women's
leadership projects, provided support for family-bound female employees and disclosed gender equality data in CSR
reports to promote equal rights.23 The Bloomberg Gender-Equality Index is the only database in its field with broad
investment implications. The New York media firm launched the tracker to reward and accredit those companies dedicated to improving gender equality transparency. New energy vehicle manufacturer BYD, computer giant Lenovo andcatering group Yum China were the first Chinese entrants on the index in 2019 due to their excellent performance increating an equal and inclusive working environment for employees. Yum China, which runs KFC and Pizza Hut in the
country, was one of two catering enterprises in the index's global category due to efforts to eliminate gender differences by raising female representation in the boardroom and at senior management level.24
Technical advances such as AI and cloud computing have brought significant benefits to society, while at thesame time provoking concerns about employment. Some tech firms have demonstrated that such breakthroughs cancreate large amounts of new jobs while replacing certain existing ones. JD Digits' services for individuals and SMEs
provides a good example. While the company has achieved zero human interference through Big Data and AI, it hascreated more than 3,000 positions in data processing, technological R&D and risk control.25 At Alibaba, the tech ecosystem has given rise to new positions such as AR-based cosmetic makeup simulation engineers, holographic image
constructors and AI dialect speech trainers. In addition to creating new roles, Alibaba also provides training and certifications to skill-up existing personnel. For example, the company's Lark-like workspace management app Ding Talkrolled out external training and certification for “digital managers” in December 2018. As of this May, the company had
trained and certified more than two million digital managers. 26

CSR Practices in China

Inclusive and Pluralistic Society
Firms pay more and more attention to social inclusiveness and regard
pluralism and inclusiveness as top priorities in terms of their social responsibilities. Some focus on improving social roles and the status ofstay-at-home rural women by bolstering their job competitiveness andentrepreneurial skills to unleash them a major driving force of social development. For example, Mary Kay's China subsidiary launched a Sustainable
Development Goals② model village project in Chuxiong city in southwestern
Yunnan province based on the multi-level marketing firm's experience incareer training and development for women. The project aims to empower
local women to find jobs and forge out new sources of income. Mary Kay
joined hands with six UN agencies in September 2019 to launch a global“entrepreneurship accelerator for women,” combining online courses withoffline practical training to enable higher levels of participation insocial-economic development.27
People with physical and sensory disabilities often struggle to navigate
society. Due to the efforts of IT companies such as Alibaba and JD.COM toconnect more resources to their internet platforms, the physically challenged can overcome their physical inhibitors and gain equal access to job
opportunities or even start up their own business. Search giant Baidu
launched the “AI-Assisting Eyesight” initiative in May 2019 to help massage
therapists, a popular profession among China's blind community. Baidu's
smart speaker system allows them to voice-activate air conditioning, lights
and televisions and therefore work more conveniently and effectively.28 On
October's “White Cane Safety Day,” local services O2O platform Meituan
introduced a voice-activated online takeout app for the visually impaired,allowing them to choose an eatery, order dishes, pay and even ask for arefund, completely unaided. This also marked the first lifestyle service app
tailor-made for the visually impaired.29
Health issues in impoverished areas have also raised widespread concerns. Companies' efforts have not only helped less well-off adolescents
become healthier, but they have also had a positive effect on their education. For example, Mengniu Dairy has donated milk to schools in countryside areas since 2002 through the Inner Mongolia-based company's“School Milk Program.” 30 Another dairy producer Yili Group promotes
equal access to education while providing nutrition and health services tochildren from poor backgrounds. The “Yili Future Park” is a non-profit project that provides diversified science education for children. The projectcomprises an online platform for children of urban and rural-based children
alike to share science-related stories and enjoy the discipline together.31
With an internet penetration rate of more than 90%, adolescents are
the most active user group in China's cyberspace. As a melting pot ofideas and thoughts, the internet is home to both positive and negative content. Adolescents who are still in the developmental stage are among themost susceptible to these ideas. While the internet can bring much joy,users are also vulnerable to potential risks that could harm them, such as
cyber-attacks, malicious software, privacy leaks and addiction. 32 In July
2019, Xinhua News Agency rolled out the search app “Huayang Searching,” China's first such software that screens content that could be malicious for teenagers.33②: The Sustainable Development Goals (SDGs), also known as the Global Goals, were adopted by all United Nations Member States in 2015 as a universal call to action to end
poverty, protect the planet and ensure that all people enjoy peace and prosperity by 2030.

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Sustainably Upward
The success of an enterprise has never depended on revenue increases alone. Instead, success is a combination of factors including employee growth, consumer recognition, business goodwill and contributions to society. Only through promoting the growth of employees, clients, investors, society and all other stakeholders, can acompany develop sustainably.
Chinese companies outnumbered American counterparts on the Fortune 500 list for the first time last year,with 129 entries compared with 121 from the US.34 However, a Chinese enterprise is yet to enter the Global 100
most sustainable corporations from Canadian financial outlet Corporate Knights. This indicates that while many
Chinese businesses have achieved significant growth in terms of strength and scale, they still hold relatively little
influence in sustainable development. The reason may stem from an undue emphasis that companies place on
economic goals while ignoring their social and environmental responsibilities. It may also be the case that companies are unaware of how to create social value while at the same time remaining in operation and maintaining
competitiveness.35

Balancing Interests and Responsibilities
A chemical plant in Xiangshui county industrial park, Jiangsu province, suffered a serious explosion in March 2019,causing at least 78 deaths and more than 600 injuries. The direct economic loss was ¥1.97 billion (US$282 million③).
After the accident, the media revealed that the local government had set very low standards for environmental protection.36 This means that local authorities and firms may have put profits before the social good. Some enterprises arebent on short-term economic growth while ignoring their responsibilities to employees, clients and consumers. Someeven seek out economic growth at a high cost to the environment. These harm society and nature while also impeding
the long-term growth of enterprises themselves. Firms need to identify business opportunities based on economic,
social and environmental red lines, and incorporate social and economic values into their growth targets to achievesustainable development.
As technologies like Big Data and AI grow at astonishing rates, their applications in commercial, living and workplace scenarios have helped tremendously to save labor costs. For example, with the onset of Covid-19, Alibaba's
DAMO Academy R&D initiative has launched an intelligent epidemic robot. It uses knowledge packs from public healthinstitutions supported by machine learning algorithms to answer most general inquiries, significantly reducing pressure
on human services. Nevertheless, some enterprises abuse advanced technologies to the detriment of consumers. For
example, 315 Gala, a popular evening show on state broadcaster CCTV, ran an expose on a tech firm in 2019 that used
AI to make unwanted robocalls. This not only goes against morality but also constitutes a form of deceit and criminal
activity. Therefore, companies should remain prudent at all times
on their responsible use of technology.

Commerce and Public Welfare
In November 2019, media reports suggested that staff at Shuidi, a Chinese mutual insurance startup that
crowd-funds donations for patients with serious illnesses, was encouraging patients to exaggerate their conditions tosecure more donations. The platform would then take a slice of the funds as a commission and even provide fixed templates to describe sicknesses in a way to garner more sympathy. The expose led to great outcry and aroused debate38
mainly regarding the fine line between commerce and public welfare. This platform pursued a business model combining crowd-funded public welfare with insurance sales. The parent company uses the platform to attract web traffic andgenerate revenue by selling insurance. Commercial profits contribute to support public welfare operations to realize
sustainable growth. While the model itself is innovative, the firm tarnished its initial mission when carrying out its operations.39 This case demonstrates the grave challenges faced during the integration of commerce and public welfare.
Companies that realize public welfare through their business model are known as social enterprises. If firms, inturn, aim to pursue economic benefits through related publicity, it is considered to be public welfare marketing or evenspeculative behavior. Hongmao Pharmaceutical drew public outcry last December after its inclusion on the China Association of Traditional Chinese Medicine's 2018 CSR star company list. While the company had broken the law over
2,500 times and received more than 10 market bans over 10 years, it also participated in a multitude of targeted poverty reduction initiatives and public welfare programs. Such dichotomized behavior triggered much public debate overwhether its participation in CSR initiatives had been well-intentioned.40 Research shows that enterprises carrying out
outward CSR projects more readily receive the public's praise and goodwill. However, they should remember that suchactivities' goal is not to gain laurels but to nurture sustainable development. To this end, enterprises must bring benefits
to employees, clients and a broader range of stakeholders.
How can commerce and public welfare become better integrated? Peter F. Drucker, the founding father of modern
management studies, noted that the essence of companies is to solve social problems and each social problem represents an opportunity. Some far-sighted enterprises engaged in social and environmental issues have innovatively
brought social, environmental and commercial goals under the same umbrella, turning problems into opportunities.
Alipay's Ant Forest is one such initiative to realize a mutually beneficial integration. The Alipay app feature encourages
low-carbon activities such as using public transportation, buying tickets online and paying their utility fees online toaccumulate “green energy” on their accounts. When users accumulate a certain amount of energy, they can cash it into commission the planting of a real tree in areas affected by desertification. This innovative model has awakened the
public to environmental protection and promoted a low-carbon lifestyle. It has also helped Alipay gain user traffic andusage time, as well as expand social interactions and application scenarios. By doing so, Ant Forest has significantly
expanded and enhanced Alipay's payment and social functions.

Data security risks have become increasingly evident withthe expanded use of new technologies. Some platforms collectuser information without consent or the appropriate agreements,
or lack proper measures for user information protection. Suchdata safety and privacy protection issues are now top of theagendas of related enterprises. Some have voluntarily undertaken
obligations to protect user information and put forward effective
measures and solutions. During the 2019 “Double Eleven” online
shopping festival, prominent Chinese courier SF Express rolled
out a feature to hide user phone numbers from delivery staff toprotect their data better and boost safety.37 Takeout delivery services such as Meituan and Alibaba's Ele.me quickly followed suitalong with house rental platforms like Zuke.com with functions toprevent user harassment from advertisers and agents.
③: ¥ = CNY = Chinese yuan renminbi; ¥1 = approximately US$0.14 on December 31, 2019.

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SRI as a Sustainability Driver
Socially responsible investment (SRI), also known as green or sustainable investment, is a strategy in which a company considers the social impacts of its investments simultaneously with financial gains to realize sustainable profit distribution. When choosing target firms, it evaluates environmental, social and governance (ESG) factors as well as financial forecasts to ensure that the enterprise will yield positive and quantifiable social and environmental effects while alsoachieving financial targets.
SRI in China mainly took the form of bank lending activities in the early days. The Central Government, along with
the State Council, proposed the concept of “building a green financial system” with the 2015 Integrated Reform Plan for
Promoting Ecological Progress. The 13th Five-Year Plan, issued the same year, elevated green finance to a national
strategic level. The Industrial and Commercial Bank of China, the Industrial Bank and Huaxia Bank became the firstbatch of the country's commercial lenders to become signatories of the UN Principles for Responsible Banking in September 2019④.41 Under the guidance and promotion of supervisory departments, China's banks have sought out new
green financing practices. For example, the Industrial Bank launched the Investment in Green Innovation project in
September 2019 to support low-carbon, energy-saving initiatives. They can contribute to the curtailment of climatechange and establish an innovative financing model for environment-friendly development practices.42 As of the end oflast year, the total outstanding credit balance for green financing among the 21 major banks in the country exceeded¥1 trillion.43
Recently, as socially responsible investments spread to securities, equity investment and industrial funding practices, responsibility-based products such as the ESG stock indices, green bonds and green funds continuously thrive. For
example, the ESG responsibility investment fund under asset manager E Fund, evaluates companies' performancethrough negative screening and its evaluation system. First, it weeds out stocks with negative ESG records, such as highpollution, high energy consumption and poor environmental governance before scoring publicly listed companies andgroups the top 80% into a stock pool for selection. Finally, it inspects the environmental effects, social responsibility performance and governance levels of the companies based on public disclosures and investigations and integrates these
indicators into a final score.44 As of the end of last year, 11 public funds employ ESG evaluation with a total scale is ¥15.3
billion, according to Wind data. Of these, four were established last year, with a combined scale of nearly ¥5.2 billion.
Boosted by the philosophy of “doing business for the general good” and “public welfare-based market operations,”
SRI is gaining even more momentum. Social responsibility investors target poverty reduction, elderly care, environmental protection and other issues at present through the public welfare system, business models and financial means. 45
For example, Ehong Capital, an investment firm, has financed Lvkang Medical Care, a platform dedicated to providing
quality life for the elderly. This project set a precedent for using influence-backed investment to solve social sorepoints.46 Another successful example is CFPA Microfinance, which aims to provide resources to middle and low-income
groups in rural areas. It has now become the most widely used platform for rural micro-financing and has generated
tremendous social value.47

As the public grows increasingly aware of climate change, environmental damage, wealth disparity and social injustice, companies face a trio of key issues: how to operate in harmony with nature, how to balance corporate goals withpublic welfare needs and how to profitably realize sustainable development. More and more firms understand the significance of CSR for jointly promoting economic development and a healthy society. Moreover, companies are starting tomove beyond philanthropy to integrate CSR practices with business decisions and operational strategies.
Chinese companies paid more attention to environmental protection over the past year, reducing greenhouse gas
emissions and developing the recycling economy through innovations in technology and business models. They also
focused on social equality and justice, offing targeted poverty alleviation programs and equal job opportunities. Morefirms looked to address social issues while realizing commercial goals and embarked on explorations in this regard.
Social responsibility investment also channeled capital into the promotion of sustainable development.
Looking forward, Chinese companies still face considerable challenges. These include maintaining sustainable
development while expanding on existing capacity and scale, and balancing commercial goals with social values. This
white paper sheds light on the challenges, and seeks to inspire enterprises to approach sustainable development from a
broader perspective, incorporating nature and society into development goals. Chinese enterprises can bring throughmore vivid examples of social responsibility practices.

CSR Practices in China

References
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2 National Climate Center. Formal Release of Climate Change Blue Book 2019: Climate Warming Continues. 2019-04-02. https://mp.weixin.qq.com/s/rgeTpcafwVdn8gckJJi_gQ
3 Chinese Ministry of Ecology and Environment. 2019 Annual Report of Chinese Policy in Response to Climate Change. 2019.11
4 National Statistics Bureau. Statistical Communiqué of the People's Republic of China on the 2019 Social and Economic Development. 2020-02-08. http://www.stats.gov.cn/tjsj/zxfb/202002/t20200228_1728913.html
5 China Setting the Standard and Promoting Cooperation: A Green Supply Chain Initiative Co-sponsored by Green Chain Campaign with China Urban Realty Association. CE.CN,
2019-03-08. http://tech.ce.cn/news/201903/08/t20190308_31643164.shtml
6 Chen Yi, L'Oréal Officially Declares Beautycos International “Zero-Carbon”. Economic Daily, 2019-06-25. https://baijiahao.baidu.com/s?id=1637279463048886347
7 2019 Case Book of Business Climate Actions: Contribution by Chinese Businesses to Climate Governance Experiences. China Economic Herald, 2019-12-26. http://www.ceh.com.cn/shpd/2019/12/1204262.shtml
8 Zhao Ran, Huzhou: Green Power, Greener Nature. China Power News Network. 2018-04-20. http://www.cpnn.com.cn/zdzgtt/201804/t20180420_1066075.html
9 IT Business Alliance Established in Beijing on Cracking Down Cyber-Based Trade of Wildlife. Xinhua.net. 2017-11-23. http://www.xinhuanet.com/gongyi/2017-11/23/c_129747799.htm
10 Lim Ming. Covid-19 May Affect Global Climate and Biodiversity Actions. World Forestry Reports. 2020-03-27. http://www.tanpaifang.com/tanguwen/2020/0327/69480.html
11 Huaxin Cement Creates Green Mining Ecology Protection System. Ccement.com. 2020-05-24. https://m.ccement.com/news/content/902811397227845001.html
12 37Games Launches the First-Ever “Saving Wildlife” H5 Game. China.com.cn. 2020-05-20. http://finance.china.com.cn/qy/whzl/20200520/5277743.shtml
13 UN Environment Agency: Plastics Particles, Plastics Granules and Throw-Away Plastics Damage Marine Organisms and Human Health.Sohu.com. 2019-12-31. https://www.sohu.com/a/363823007_389140
14 Micro-plastics: An Invisible Pollution. China Science Daily. 2019-04-25. http://news.sciencenet.cn/htmlnews/2019/4/425648.shtm
15 Blue Ocean Vision Realized at G20 and Maritime Plastic Garbage Will Be Zero by 2050. China News. 2019-06-29. https://www.chinanews.com/gj/2019/06-29/8878508.shtml
16 Airport Schipol Is Renting Its Lighting—A New Business Model of The Recycling Economy. China Sustainability Tribune. 2019 (11):41-43.
17 “Re Being Plus”: Reclothing Bank x FAKE NATOO 2019 Automn and Winter Series. EF.360.2019-03-18. http://news.ef360.com/Articles/2019-3-28/379809.html
18 Editorial: China Makes Biggest Contribution to Global Poverty Alleviation. 21st Century Business Herald. 2019-10-16. http://www.21jingji.com/2019/10-16/wMMDEzNzlfMTUxMjQwMA.html
19 International Labor Organization. Towards a better future for women and work: Voices of women and men. ILO.org. 2019-07-19. https://www.ilo.org/moscow/information-resources/publications/WCMS_713438/lang--en/index.htm
20 Chinese Enterprises Help Boosting Endogenous Drive to Get Rid of Poverty. Chinanews.com. 2020-05-07. https://www.sohu.com/a/397487075_123753
21 JD Digital Agricultural Finance: “Foolproof” Agriculture Helping Farmers to Get Rid of Poverty. JRJ.com. 2018-01-10. http://finance.jrj.com.cn/2018/01/10161023925299.shtml
22 Gender Gap Broadening: Female Jobs Are More Vulnerable to Automation. Tencent.com.2019-12-17. https://new.qq.com/omn/20191217/20191217A0FJ2400.html
23 Chinese Ranking Continuing to Slide on 2018 Global Gender Gap Report. 2018-12-19. https://mp.weixin.qq.com/s/9uLDtmheqDOTwG1ElaRbEA
24 Yum China Ranks among the First Batch of Chinese Enterprises to Be Incorporated Into the 2019 Gender Equality Index. American Press. 2019-01-17. https://www.prnasia.com/story/235256-1.shtml
25 World Bank: 2019 World Development Report. 2018-06-09. http://www.199it.com/archives/734508.html
26 New Technologies Bring Up Fantasy Jobs: 2.5 Million New Jobs Created at Alibaba. People's Net. 2020-05-11. http://scitech.people.com.cn/n1/2020/0511/c1007-31704755.html
27 Mary Key Helping Females To Participate in Economic Development And Get Rid of Poverty. BJNews.com. 2019-11-05. http://www.bjnews.com.cn/feature/2019/11/05/645796.html
28 AI: A Good Helping Hand to the Visually Impaired. 2019-12-12. https://www.sohu.com/a/360046876_389570
29 Meituan Launches Voice-Based Takeaway Ordering System for the Visually Impaired. Geek Park. 2019-10-21. http://www.geekpark.net/news/249090
30 Mengniu Accredited With “2019 Asia Corporate Social Responsibilities-Social Welfare Facilitator Prize”, Adding to Its CSR Momentum. Caijing.com.cn. 2019-05-27.
https://finance.sina.com.cn/roll/2019-05-27/doc-ihvhiqay1804229.shtml
31 Yili: Safeguarding Health and Safety of Poor-Area Children through Targeted Nutrition Aids. China Business Network. 2018-12-19. https://www.yicai.com/news/100083333.html
32 Blue Book on Adolescents: Annual Report On The Internet Use Of Chinese Minors (2019) Suggests IT Enterprises Should Take More Social Responsibilities. China Philanthropy
Times. 2019-06-01. http://www.gongyishibao.com/html/yaowen/16716.html
33 “Huayang Searching”, The First Chinese Search App Designed For Adolescents, Has Been Released. Xinhuanet. 2019-07-11. http://www.xinhuanet.com/2019-07/11/c_1124739834.htm.
34 2019 Fortune 500 List. FORTUNEChina. 2019-07-22. http://www.fortunechina.com/fortune500/c/2019-07/22/content_339535.htm
35 How Does The Sustainability Orientation of Entrepreneurs Influence The Future. China Sustainability Tribune, 2019 (08): 5-26.
36 Investigation Report of the “3.21” Extremely Significant Explosion Accident of Tianjiayi Chemicals Co.Ltd., Jiangsu, Tianshui. CCTV News, 2019-11-15.
http://m.news.cctv.com/2019/11/15/ARTIDxWJl3X95uxK22IrlmMF191115.shtml
37 SF For Safeguarding Privacy Safety in Chinese Express Package Delivery. 2019-11-14. https://www.freebuf.com/fevents/220128.html
38 How to Regulate Internet Crowd Funding Platforms? Xinhua News Agency. http://www.xinhuanet.com/politics/2019-12/11/c_1125336153.htm
39 “Water Drops” Revelation: Crowd Funding—Welfare or Commerce? The Economic Observer. 2019-12-22. https://tech.sina.com.cn/i/2019-12-22/doc-iihnzahi9139791.shtml
40 Hongmao Pharmaceuticals: A Corporate Social Responsibility Star—or another Way Round? The Beijing News. 2019-12-24. http://www.bjnews.com.cn/opinion/2019/12/24/665673.html
41 Introduction of New Requirements on Bank Information Disclosure Stipulated in UN Responsible Banking Principles. Syn Tao Green Finance. 2019-11-05. http://www.syntaogf.com/Menu_Page_CN.asp?ID=21&Page_ID=320
42 Industrial Bank Launches Green Investment Initiative for a Greener Fujian. Investor China.2019-09-18. http://www.investorchina.cn/article/47798
43 What Is Responsible Banking: Caixin.com. 2019-09-24. http://opinion.caixin.com/2019-09-24/101465513.html.
44 China Social Investment Report: China Social Investment Forum, Dec.2019.http://syntaogf.com/Uploads/files/%E4%B8%AD%E5%9B%BD%E8%B4%A3%E4%BB%BB%E6%8A%95%E8%B5%84%E5%B9%B4%E5%BA%A6%E6%8A%A5%E5%91%8A2019.pdf
45 A Discourse with Ma Weihua: Seizing Historical Opportunities and Boosting Sustainable Development Finance. China Sustainability Tribune. 2019 (12) : 13-16.
46 Practice of Ehong Capital in Influence-Oriented Investment. 21st Century News. 2018-07-11. http://www.21jingji.com/2018/7-11/1NMDEzODFfMTQzOTI1Nw.html
47 CFPA Micro Finance. https://www.cdfinance.com.cn/detail/4511.html④: The UN Principles of Responsible Banking framework is enacted by the financial initiative organization under the UN Environment Programme, among others, to help banks
maintain their social goals in accordance with UN Sustainable Development Group and Paris Agreement on Climate Change. It helps banks to play a key role as financial
intermediaries and boost climate change action and sustainable development.

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CSR PRACTICES OF
CEIBS ALUMNICOMPANIESZBJ: The Intrinsic
Altruism of a Service
Transaction Platform“

There is a widely held belief that it's the job ofbusinesses to generate economic value, while it's the
responsibility of the government to create social benefits
in order to serve its people. We at ZBJ believe that ourcompany should create social value along with economic
value — the unity of making profits and generating social
benefits is worth us fighting for.1”— Zhu Mingyue
Founder and CEO of ZBJ, CEIBS EMBA2013 Alumnus

hu Mingyue loves to share this story about his debate with a prominent designer at a cafe in Beijing in 2013. The
designer blamed him and his zbj.com (ZBJ) for undervaluing designers and disrupting the designing industry. Zhu
rebutted by asking two questions: “How many customers have you served, as the largest design company in China?” ,and “How many designers have you hired?” The designer answered with pride, saying they served 100 customers per
year and hired 700 designers, which was already a remarkable achievement in this industry. Zhu then said, in a calm
tone, “There are 89 million business entities in China, and the number is still increasing by 50,000 every day. You can
only serve 100 customers per year, so how about the other 80 million companies? Who can they turn to for professional
brand marketing services or transformation? What about the millions of professional or non-professional designers in
China, who may not be your employees, but still want to find a design job, build their own design business, or make adifference in the world and achieve their ambitions with their designing skills? What ZBJ wants to do is provide solutions
to these people's pain points.” After hearing his words, the designer softened his attitude. 2 “ZBJ is here to support
small and medium-sized enterprises (SMEs),” Zhu said.

Z

By Zhang Chi, CEIBS Case Center

Zhu Mingyue founded ZBJ in 2006 in Chongqing. The company has launched several “transformation campaigns”① under his leadership, and grown into a unicorn in service crowdsourcing, which was once considered one of
the “least promising” , “slowest-growing” business fields. ZBJ has now evolved into a service market based on talentsharing, with 22 million registered users (as of December 2019). The professionals and agencies on ZBJ can provide
more than 1,000 types of services covering the entire business life cycle for companies. ZBJ provides special benefits
and training programs, including its offline workspace sharing service Zwork②, for businesses operating on this platform, helping more than 14 million professionals to adapt to the internet age and serve clients all over the world. With
the help of ZBJ, a successful incubator, 100,000 professionals have established their own companies. Combining the
SaaS ecommerce platform with offline incubators, ZBJ is able to pool together third-party resources to provide “Internet
Plus” solutions and all-around services for micro, small and medium-sized enterprises (MSMEs) in all industries, helping
businesses to upgrade their brand, technologies and business models and eventually driving regional industrial transformation.3①: “Transformation campaigns” were reforms carried out by ZBJ to change its products and business models. Every transformation campaign pushed the development of thecompany. In December 2018, ZBJ launched the latest transformation campaign “Campaign 10” , which focuses on serving buyers and aims to improve the closing rate and to
upgrade the company's operation mode. The main goal of this campaign is to improve the closing rate to no less than 80%, while establishing a system connecting the entire
company's information flow, capital flow and user data. It also aims to generate ¥10 billion (¥ = CNY = Chinese yuan renminbi; ¥1 = approximately US$0.14 on December 31,
2019.) in revenue and build a platform ecosystem that benefits buyers, service providers and the platform itself.

Photo courtesy of ZBJ.COM②: “Zwork” is a business community built for knowledge workers around the world. Well-connected to the talent-sharing platform ZBJ, Zwork offers entrepreneurs flexible working
space in several Chinese cities, as well as all-around, one-stop corporate and consultation services provided by professional teams in customer communication and entrepreneurship training.

CEIBS Corporate Social Responsibility White Paper

Starting Up:
to Address the Pain Points in Service Transactions

CSR Practices of CEIBS Alumni Companies

Looking forService Providers

In the early 2000s, Zhu Mingyue, always curious about new things, was fascinated by online shopping, a new business model at the time. He noticed a specific need to be satisfied. “There were so many talented people, who wereexcellent writers, designers, or planners, but they couldn't find the opportunities to use their skills.” Zhu said, “Meanwhile, there was another group of people, who just started their companies, most of which were small or micro-enterprises. They couldn't afford a professional creative design company.” He saw an entrepreneurial opportunity in this.
“We believed we could establish a platform to connect these two group of people,” he said.4
Zhou Yong, Vice President of ZBJ and President of ZBJ's Bajie Institute of Digital Economy, considers ZBJ as aservice marketplace for companies. The core of service delivery, he believes, is an intrinsic altruism that prioritizes customer experience and value. “When we match people's demands and skills to make a deal, we have to think from theperspective of customers. We need to take into consideration the interests of customers and the public, and even tradeor social benefits. That is the essence of our business,” he said.

Monetizing
SkillsThe philosophy of “altruism” pushes ZBJ to upgrade their business model, fix their flaws and solve the pain points
in service transactions.

The Witkey Model③
ZBJ used a reward system in the beginning. In this system, buyers of creative services would post their demands
and rewards on the platform, and service providers would submit their works to bid for the reward. The customer would
select the most satisfactory work and pay them the reward. Zhu soon noticed this system was only suitable forshort-term small tasks, and the providers’ works could fall victim to IP thefts. Therefore, ZBJ launched a new bidding
system. In this system, customers would post their demands first, and then choose among the service providers who
showed interest. The chosen provider would provide services for the client.5 Meanwhile the previous reward systemremained available for buyers searching for low-cost services. ZBJ also launched a warrant service for customers,
guaranteeing that there is no plagiarism or cheating in the final works and that service providers will pay the customer
twice the price as compensation for flawed works. In 2011, ZBJ changed its bidding system focusing on customers, toa hiring system focusing on providers. This new system targets the mainstream demands of intermediate customers,
which account for 60 percent of all customers on the platform.5 Providers would set up online shopfronts on ZBJ to promote their business, while customers would choose the service they need and make payments directly.
While other “Witkey” websites advertised themselves as “the most professional” or “having the largest number oftasks and bidders” , ZBJ was the first to claim itself as “the Witkey website with the highest business integrity” 6. Zhu
believes integrity and safety are the most essential values of a service business. Ding Ran, head of service provider management, explained, “Most Witkey websites do not offer refunds, while for all customers on ZBJ, we promise a full refund if
no one bids for their task.” 5 ZBJ has established an evaluation system that ranks service providers based on their transaction records and customers’ reviews.7 Higher-rated providers will have lower commission rates. ZBJ also has a non-negotiable rule that all ZBJ employees are strictly prohibited from taking orders on the website, or they will be fired.

Eliminating Commissions and Providing Extended Services
In June 2015, after weighing the pros and cons, ZBJ announced they would eliminate all commissions except
those on speculative works and piecework. Guo Jun, former head of marketing at ZBJ, said that ZBJ kept charging
20% commissions for speculative works and piecework only to prevent fraud or plagiarism and to protect service providers. For the providers, no commission is undoubtedly good news, meaning they no longer have to pay extra fees
when monetizing their skills.
Without the commissions-its only source of income, ZBJ launched a new business model, which Zhu described as“building ‘rigs’ on ‘the ocean of data’”. ZBJ has since gathered plenty of users, service providers and original works.
These resources are the ocean of data, where the platform and customers could extract value as rigs.8 ZBJ now offers
additional services, especially in intellectual properties, finance, taxation, technology services, and service standardization. These additional services are now its major sources of revenue.

③: The term “Witkey” is a combination of the words “wit” and “key” , which stand for the key of wisdom. Originating in China, this term refers to people who make a profit on theinternet with their wisdom, knowledge, skills or experiences. They monetize their wisdom, knowledge, skills or experiences by solving, through the internet, other people's scientific or technological challenges, or problems in work, life or study.

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CEIBS Corporate Social Responsibility White Paper

CSR Practices of CEIBS Alumni Companies

Building a Platform
In 2014, ZBJ decided to position itself as a platform business and it has been gradually moving its self-owned
operations onto the platform ever since. A platform company has to develop a new business model that doesn't rely oncommissions. “Building an internet platform is not the same as growing a simple service company. A service company
just needs to serve clients, but an internet platform has to think from the perspective of the entire society, the industry
and the public. Otherwise, we could not create a cross-side network effect, because users come and go,” said Zhou
Yong. Therefore, ZBJ has been promoting a corporate culture that emphasizes creating social value along with economic value.
Ding Ran's words in an interview revealed ZBJ's commitment to its positioning in the market, “When we talk about
the value of our platform internally, we always say that we are not just a profitable business, but also one with social
responsibilities. When people joined us, they did not come just for money or for surviving; they also changed the way
they worked. Some even quitted a more stable job to achieve their dreams of entrepreneurship and help us to develop
this platform. When we attract more people like them, we will feel a stronger sense of responsibility.” 9

Supporting Government Efforts to“Delegate Administrative Power, Improve Regulation and Upgrade Services”④In the past, China's economic development relied more on medium- and large-sized enterprises, which the government managed through administrative means. Now, SMEs have become a major driving force behind the country's economic growth. To facilitate their growth, market forces have to play a decisive role in the allocation of resources. Since
the 18th CPC National Congress, the central government has been pushing forward the “Decentralization-Control-Service” reform as an important tool for transforming government functions and improving administrative efficiency. Specifically, the reform involves streamlining administration and delegating power, improving regulation, and optimizing service. 10 The goals include: reducing enterprise costs; increasing the attractiveness and competitiveness of the real
economy; optimizing the business environment; promoting profound changes in government functions and creating afair living environment for the people. 11 However, due to a lack of direct communication channels, it used to be difficult
to foster mutual understanding and trust between the government and SMEs. ZBJ's platform, by using big data, wasable to step in to plug the hole. Its online bookkeeping function has been welcomed by many local market regulators.
“This is because we are able to support the government efforts to implement the ‘Decentralization-Control-Service’reform,” Zhou Yong said.
Delegating Regulatory Power

Improving Regulation

Upgrading Services

ZBJ keeps records oftransactions of tens of millionsof SMEs on its platform, nomatter where they are domiciled, thus guaranteeing theauthenticity of these records.
This allows the platform tolearn about individual companies and the industries they
are in. Besides, ZBJ is astrong advocate for industry
self-regulation and the government can trust the website
with part of its regulatory
power and give business entities more freedom.

ZBJ, working with the National Bureau of Statistics of China,
has developed an index based on the big data collected by theplatform to measure the level of activeness of MSMEs in theservice sector. Based on transaction volumes and revenues ofcompanies on the platform and other data, the index can beused to gauge economic prosperity. At the macro level, theindex helps local governments understand economic development and identify problems impeding growth, such as an underdeveloped modern service sector or failure to make full use of
the internet on the part of local businesses. At the micro level,
the index allows ZBJ to have detailed information about individual SMEs, enabling it to give local regulators warnings of potential
violation of regulations by a certain company, in which case, theregulators can notify the company of the consequences or help
the company to build the capabilities it lacks, instead of using it
for law enforcement purposes.

ZBJ is assisting
businesses in obtaining precisely the government services theyneed, such as subsidies for entrepreneurship, without going
through unnecessary
bureaucracy, thus
preventing rent seeking and increasing thetransparency in the
distribution of government resources.

④: The strategy is aimed at streamlining regulation to lower barriers to entry, improving regulation to promote fair competition in the market, and enhancing public service efficiency
to create a business-friendly environment.

036

Facilitating the Development of Remote,
Isolated Areas
In his report to the 19th CPC National Congress held in 2017, President Xi
Jinping announced a rural vitalization strategy. “Issues relating to agriculture,rural areas, and rural people are fundamental to China as they directly concern our country's stability and our people's wellbeing. Addressing theseissues should have a central place on the work agenda of the Party, and wemust prioritize the development of agriculture and rural areas,” he said.12 In
2020, the central government pointed out in No. 1 Central Document that“efforts need to be made to win the battle against poverty as the country
strives to complete the building of a moderately prosperous society in all
respects this year.” The document contains a number of priority areas ofwork, including vigorously developing e-commerce in rural areas; strengthening the construction of cold-chain transport and supply chains to make up
for discrepancies in infrastructure with urban areas; and building big data
centers for agriculture and rural areas, and carrying out pilot digitalization
projects in villages based on existing resources.
“ZBJ is a necessity for clients in remote, isolated areas,” Zhou Yongsaid. “They are underserved locally and lack access to quality industry
resources, like logo design, marketing, business planning, and fundraising
report compiling. On our platform, however, they can get quality professional
services with a little money.” Zhou's idea resonated with Zhu Mingyue. “Companies in remote places like Xinjiang and Inner Mongolia need the internet
more, compared to peers in more developed areas. To find services likebrand building, bookkeeping, tax filing and marketing, they depend on ZBJ
more than companies in tier-one cities such as Beijing, Shanghai andGuangzhou,” Zhu said. Back in 2015, ZBJ started building sales teams
nationwide.
In 2018, ZBJ and the Guizhou provincial government signed a strategiccooperation framework agreement to advance poverty alleviation, develop a
big data industry and improve environmental health in the province. Under
this agreement, ZBJ pledged to help incubate 1,500 startups in the modern
service and big data industries, which will create, directly or indirectly, nearly
100,000 jobs.13 “The business model of ZBJ is the solution to the lack of service resources in Guizhou. With this platform, the Guizhou government isable to attract resources outside the province to fulfill local demands and to
attract investment as well,” Zhou Yong said. Under the agreement, ZBJ willoffer at least three services to Guizhou: a) developing a special regional platform to consolidate the cultural, tourism and recreational resources in theprovince; b) helping formulate corporate and industrial standards in supportof the growth of individual businesses to build up their capacity of offering
stable services; and c) attracting business resources like capital into theprovince to enhance local service providers’ capability to remain in business.

Photo courtesy of ZBJ.COM

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CEIBS Corporate Social Responsibility White Paper

CSR Practices of CEIBS Alumni Companies

Empowering SMEs

Providing Jobs for the Disadvantaged

In its 13th Five-Year Plan, the Chinese government pledges to develop a modern Internet-based industrial systemby implementing the “Internet Plus” Action Plan. Specifically, it involves promoting the extensive use of the Internet to
revolutionize the modes and organization of production, i.e., making industries more networked, intelligent, service-oriented and synergized. Under the plan, large Internet companies are encouraged to open up their innovation resources
to micro- and small-sized enterprises and start-ups, and establish open-ended Internet-based innovation alliances.14
ZBJ has brought together 13 million professionals and organizations on its platform, and made 1 billion matches forusers totaling more than 20 million transactions. Relying on massive amounts of data and strong mining capabilities,
ZBJ has established a big data-based platform providing “Internet + big data” service for entrepreneurs, employers,
traditional industries and regional governments. In this way, ZBJ has helped unlock value of big data, drive the digitaltransformation and upgrading of traditional industries, and promote the deep integration of the digital economy and thereal economy. 15

As early as September 2014, Premier Li Keqiang incorporated “mass entrepreneurship and innovation” in a newnational strategy, setting off a wave of entrepreneurship and innovation across the country. In 2016, on a tour to the
Ministry of Human Resources and Social Security, he urged the ministry to increase the service industry's ability toabsorb more migrant workers, and create more entrepreneurial or employment opportunities in their local areas.

ZBJ has been building SMEs capacity in a number of ways.
Transforming traditional companies. Traditional SMEs in relatively developed areas are facing huge challenges,
too. “Many business owners in these areas were born in the 1950s and 1960s and are in traditional industries. Theirchildren are not willing to give up white-collar jobs in big cities and take over the family business. These owners themselves may not care much about the future of their companies, but local governments do. They hope our platform canhelp these firms transform by adopting internet, digital and cloud computing technologies,” Zhou said. Through big
data-based smart analytics tools, ZBJ allows its users to identify their needs and service providers on the platform to
identify their deficiencies. ZBJ developed eight capability dimensions based on the big data of users’ needs. The platform or its users can assess service providers’ capabilities through these dimensions to find their shortcomings, allowing the platform to offer tailored empowerment measures to each company.
Sharing resources for research and development (R&D) and innovation. In December 2017, ZBJ and the Scienceand Technology Department of Yunnan Province entered into a strategic cooperation agreement to build the “Internet
Plus” Technological Innovation Cloud Platform for Yunnan. The platform will help address the weakness of SMEs in R&D
and product design, and blaze a trail for joint R&D and innovation on the internet. Generally, SMEs are unable to recruitor afford well-educated R&D professionals and thus have difficulties in building their own R&D capacities. The best way
to solve this problem is to spare them the trouble of designing. Meanwhile, SMEs’ biggest advantage is their quick
response to market demands, putting them in the best position to offer customized and targeted services. Given the
weakness and strength of SMEs, ZBJ decided to serve as their “back office” on the platform, taking over all the designand development activities, so that the SEMs could focus their resources on taking orders, selling products and delivering services. “We have developed a platform for joint R&D and innovation with the Department of Industry and Information Technology of Yunnan Province,” Zhou said. “The platform functions as a shared manufacturing center for all the
SMEs on the platform and also offers supply chain services. SMEs used to incur high procurement expenses and sufferfrom unstable supplies because of their weak bargaining power. Our platform has changed the whole game by pooling
together the demands of about 10,000 companies. Besides, it has the support of the local government, so we can help
SMEs get cheap and steady supplies. In doing these things, we can really address their weaknesses.”

The flexible employment offered by ZBJ is a quick fix to unemployment among disadvantaged groups, adding momentum to the implementation of China's targeted measures in poverty alleviation and the national strategy of mass
entrepreneurship and innovation.
ZBJ, together with the China Disabled Persons’ Federation and the Chongqing Disabled Persons’ Federation,
launched a program called the “Sunshine Plan” aimed at helping disabled entrepreneurs through training in starting abusiness, boosting online exposure, and promotional support, making it easier and more convenient for them to start
their own business. The Plan enables disabled people to access a broader market and to innovate in a larger range offields, allowing them to focus more on their profession and business operation. By September 2017, the plan had benefitted a number of businesses, including Chuangwai Visual, Aijing Interaction and Chuge Design, three startups with amonthly revenue of over ¥10,000 respectively.17
As for undergraduates planning to start their own business, ZBJ launched a program called the “Sky Eagle Plan” ,offering them support in company registration, tax filing, trademark and copyright registration, and patent application.
The plan's goals are to attract over 50,000 participants nationwide, help more than 3,000 university students to launch
their companies on ZBJ, and support them in generating ¥100 million worth of orders annually, by the end of 2021.18
ZBJ has launched several service platforms over the years aimed at offering vocational training and employment
services to veterans, supporting China's national policies of prioritizing veteran employment. In the future, ZBJ willdevelop more service platforms targeting specific demographic groups. “We are thinking of doing something for
women, especial well-educated full-time housewives. They may have trouble adapting to the corporate world by thetime their kid attends school. We can offer them job opportunities to help them realize their own value,” Zhou said.

Changing the ways to obtain new customers. In the past year, Bama, a county in Guangxi Province, has launcheda series of Bama-branded products, like pork, tea seed oil, and hemp, and played a leading role in establishing an
investment company along with eight neighboring counties to develop the tourism industry in the entire area. Behindthe huge transformation of Bama is a Chongqing-based company called Boguan Dazhi. A few years ago, the company
almost went out of business. “As a design company, our job is to provide design services for customers. But in reality,
we spent all day entertaining our customers at the dinner table. The industry was weak and fragmented and thus lacking bargaining power, so we could only get new orders by pleasing customers,” the founder of the company said.
Through ZBJ, entrepreneurs and customers can get to know each other and go on to strike a deal in a shorter period oftime.16
Expanding business reach. Before doing business on ZBJ, Yichen, a company based in Guangdong Province,
served customers within the province only. After opening an online store on the website, the company started to receive
orders from across the country. Moreover, it had the opportunity to participate in a project that had the support of theCanadian Prime Minister and offered great services to the well-known Canadian brand Umbra. 11038

Photo courtesy of ZBJ.COM

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CEIBS Corporate Social Responsibility White Paper

Thriving by Benefiting Other Businesses:
Serving as Infrastructure of the Digital Economy“There is no doubt that the biggest social responsibility of a company is to run a successful business,” Zhou said.
The launch of ipr.zbj.com in 2014 represented ZBJ's first attempt to extend its service line, which generated a revenueof ¥9.4 million by the end of the year. The figure exceeded ¥100 million in 2015, and nearly quadrupled in 2016. In May
2017, cs.zbj.com, another service extension, earned a monthly revenue of ¥10 million to achieve a break-even. ZBJ
Financial's revenue also exceeded ¥100 million.19 In July 2019, ZBJ filed with the China Securities Regulatory Commission Chongqing Branch to prepare for an IPO on the SSE STAR Market. 20

CSR Practices of CEIBS Alumni Companies

References
1 NetEase News. “Liangjiang New Area developing with ZBJ intellectual property services.” Last modified February 29, 2016. http://news.163.com/16/0229/12/BH09Q3A900014A
EE.html. (accessed September 9, 2018)
2 Sohu Technology. “Zhu Mingyue's thoughts on creating a platform company”. Last modified June 13, 2017. http://www.sohu.com/a/148469167_440492. (accessed September
10, 2018)
3 ZBJ Official Website. Company profile. https://www.ZBJ.com/about/index. (accessed December 4, 2019)
4 Wu Hanjun. “ZBJ: starting a company is a Journey to the West”. Zaobao. Reprinted on the website of Chongqing Linagjiang New Area. Last modified February 8, 2015.
http://www.liangjiang.gov.cn/Content/2015-02/08/content_13707.htm (accessed August 21, 2018)
5 Shi Yajuan. “ZBJ: honesty is the key to Witkey”. Innovation Time, 2012 (4): 56-59.
6 Zhang Qiao. “ZBJ: selling services online”. China Information World. Reprinted on Sohu. Last modified September 17, 2012. http://it.sohu.com/20120917/n353369958.shtml.
(accessed December 17, 2019)
7 Wang Yingchun, Qin Hao. “Zhu Mingyue: ZBJ will go public on Nasdaq in 3 years”. China Securities Journal. Last modified October 21, 2014. http://www.cs.com.cn/ssgs/gsxw/201410/t20141021_4540379.html. (accessed August 29, 2018)
8 Chen Weiru, Xu Leiping. “ZBJ: the journey of a service transaction platform”. The Global Platform of China Cases. 2015.
9 ZBJ Official Website. “ZBJ Vice President Ding Ran: how we managed to succeed”. Last modified February 19, 2016. http://news.ZBJ.com/article-id-11087.html. (accessed“But at ZBJ, we think we need to do more, because we, as a platform company, are responsible for the well-beingof many other people, not just our own employees,” Zhou said. A new work philosophy and lifestyles have been gaining
momentum. Many young graduates refuse to work for an organization in the traditional way. Instead, they choose tostart their own business and work as a partner or to become a freelancer working on an online platform, using their professional skills while enjoying the freedom to work anywhere. In this new era, ZBJ is moving towards becoming infrastructure of the digital economy. “This is the most important reason why the platform can't fail,” Zhou Yong said.

August 20, 2018)10 people.cn, “Build a modern governance system through further ‘Delegation-Control-Service’ reforms”, 2019-12-23[2020-03-30], https://baijiahao.baidu.com/s?id=1653669176“When designing our platform, we think about the needs of the country, industries and individual companies,” Zhou
Yong said. “Future businesses are going to operate on an online platform. Many secondary functions of firms will be
fulfilled by the platforms. This is not a future that ZBJ is trying to create, but a certainty that our company must preparefor. Ultimately, platform companies exist by pooling together social resources, instead of sharing their own resources,
so platform companies in the Internet era must take on more social responsibilities.”

http://www.cac.gov.cn/2016-03/18/c_1118372649.htm
15 Bonboru, “ZBJ achieves initial success in building big data platform by tapping into the value of data”, 2018-02-02[2020-03-30], https://zx.ipr.zbj.com/qyzx/wzdt/3780.html
16 ZBJ Official Website. “ZBJ CEO Zhu Mingyue: helping entrepreneurs to be held in high esteem”. Last modified January 11, 2018. https://www.ZBJ.com/about/media-detail-tzbj-“The most important social responsibility of a platform company and the most valuable contribution it can make tosociety is to enable more people and companies to do business and prosper on it,” Zhou Yong said. ZBJ has been andwill be following the principle of “thriving by benefiting other businesses” and the business philosophy of “creatingsocial value along with economic value” .

(accessed December 4, 2019)19 CEIBS, exclusive report, “How ZBJ manages to go from losses to a break-even and further to exponential growth in net profits?”, 2017-12-13[2020-03-30], https://www.sohu-

249382030&wfr=spider&for=pc
11 Zhao Haiyan, “Transform government functions through further ‘Delegation-Control-Service’ reforms”, 2018-08-28[2020-03-30], http://epaper.hljnews.cn/hljrb/20180828/37665
6.html
12 “Implement the rural vitalization strategy”, 2018-08-23[2020-03-30], http://theory.people.com.cn/n1/2018/0823/c413700-30246228.html
13 Sohu. “ZBJ signs a strategic agreement with the Guizhou provincial government, pledging to create 100,000 jobs in 5 years”. Last modified May 28, 2018. http://www.sohu.com/a/233123052_485782. (accessed December 5, 2019)14 “‘13th Five-Year Plan’ outline: implementing a strategy for building an Internet powerhouse and accelerating the construction of a digital China”, 2016-03-18[2020-03-30],

sayy2018p1i2. (accessed December 4, 2019)17 China Industrial Design Association. “ZBJ praised for its contribution to the implementation of the national strategy on the first day of the National Mass Entrepreneurship andInnovation Week 2017”. Last modified September 15, 2017. http://www.chinadesign.cn/hydtai/743.jhtml. (accessed December 17, 2019)18 Chongqing Municipal Federation of Trade Unions. “Chongqing ZBJ Network, Co., Ltd.” Last modified April 27, 2018. http://www.cqgh.org/html/51alljz/20180427/102476.html.

.com/a/210190736_177801
20 jrj.com, “ZBJ takes pre-listing tutoring: the transformation of a struggling business into a unicorn in Sichuan”, 2019-07-23[2020-03-30], http://finance.sina.com.cn/stock/relnews/cn/2019-07-23/doc-ihytcerm5653254.shtml

Photo courtesy of ZBJ.COM

040

041

Sinoeco: “Business +Technology” Dual Drivers
for the Conservation of
Aquatic Life in China
By Huang Xiayan, CEIBS Case Center“

Being able to contribute to slowing down the extinction of species is my biggest pride.
— Ye Ming
Chairman of Sinoeco, CEIBS EMBA2016 Alumnus”T

he beauty of Nature lies in the diversity of its flora and fauna. Wuhan
Sino-SCI Ruihua Eco Tech Co., Ltd., or ‘Sinoeco’, is a private company
located in Wuhan, and is home to the world's leading research facility foraquatic ecology. By harnessing both the power of business and technology,
Sinoeco is a Chinese company that also clearly demonstrates its social responsibility through its cutting-edge work in aquatic ecological conservation andrestoration.
Since its establishment in 2010, Sinoeco's mission has been to “use science and technology to preserve ecology”. In 2013, it experimented with a new
business model geared to allow the company to fulfil both its social and business goals. Then, in 2019, Sinoeco entered the fixed pre-listing period under
the guidance of a compliance advisor required to prepare its listing on themain board. In just a few years, Sinoeco not only matured into an industry
leader it also became China's only technological service provider covering theentire industrial chain in aquatic ecological conservation and restoration.1 Since
its inception, it has deepened its expertise in this specialist field and established a market network that penetrates China's seven major river basins andcovers more than 20 provinces, provincial-level cities and autonomous regions.
Throughout this process, Sinoeco has championed corporate social responsibility, employed technology that ensures the harmonious coexistence ofhumans and nature, and has demonstrated how corporate business and social
values can thrive side by side.

Photo courtesy of Sinoeco

CEIBS Corporate Social Responsibility White Paper

CSR Practices of CEIBS Alumni Companies

A Business Model Designed to Defend Aquatic Biodiversity

Endangered Species: the Ecological Crisis of the Yangtze RiverA One-Stop-Shop Technology Service Provider Bringing Benefit to All

Wuhan is a beautiful river town located at the confluence of the Yangtze and Han rivers. It is also the city where Ye
Ming, chairman of Sinoeco was born and raised. Ye Ming grew up playing on the banks of the Yangtze and considers
that the river runs in his blood. As a youth, spending time along the water's edge, Ye Ming was often able to sight riverdolphins racing and diving in and out of the water: ships straining against the currents, river dolphins chasing after thewaves in pairs or in threes, occasionally showing bulbous heads and black sides above the water as they plunged andsliced through the surface of the water…

Aquatic conservation programs usually comprise a series of components such as
the building and operation of fish restocking facilities, fish passage design and implementation, and habitat restoration. In this type of comprehensive system, each organization, such as research institutes, survey and design institutes as well as fishing companies will have different strengths. An aquatic ecological compensation programusually needs to integrate multiple resources. Consequently, communication between
so many players is expensive and progress is slow. When Ye Ming joined Sinoeco in2013, he immediately grasped this nettle and pioneered a new model that would offer
a range of services that covered the whole industrial chain.

These scenes now only exist in Ye's memory. Human activity such as damming, pollution, overfishing, channelling,
shoreline hardening, mining and quarrying2 has severely depleted biodiversity in the Yangtze River basin. According tohistorical statistics, there were more than 4,300 aquatic species in the Yangtze River Basin, including over 400 fish species. Eleven of them, such as the Chinese sturgeon, Yangtze sturgeon and Yangtze finless porpoise, are subject tonational level priority protection orders. There are over 170 fish native to the Yangtze River. Currently, in the Yangtze
River Basin, 92 endangered fish species are listed in China Red Data Book of Endangered Animals, and close to 300
species are listed in the appendices of CITES (the Convention on International Trade in Endangered Species of Wild
Fauna and Flora).3
As of 2000, there has been no record of natural breeding of the Yangtze sturgeon, and its wild population has been
almost completely wiped out. In 2007, the Baiji Dolphin, also known as Goddess of the Yangtze River, a Grade-I wild
animal subject to state-level priority protection, was declared to be functionally extinct. Since 2013, there has been nosighting of the white sturgeon known as the king of freshwater fish. In 2018, the population of Yangtze dolphins only
amounted to half the number of giant pandas3. In 2019, the four biggest domestic fish (black carp, grass carp, silver
carp and bighead carp) were down by over 90% compared with the 1950s in terms of frequency of occurrence of fishstocks.4

Two Major Social Responsibilities Shouldered by One Business Model

Species are endangered and face extinction along the Yangtze River, leading to the degradation and collapse of
the Yangtze ecosystem. It is worrying to realise that although it is known that the ten-thousand-li long river is sick, technology, research, and knowhow to protect it, are lacking. Although there are “hard restrictions” imposed by relevant
policies, a question remains: what can be done by the private sector to safeguard this ‘Mother River’ ? This is the issue
that haunts Ye Ming. “The protection of species is critical” is a phrase he repeats constantly: and he is ready to makeprotecting aquatic life his calling, and believes that “protecting aquatic life is good, and it should be possible to protect
biodiversity if we have the right business model” .
Adopting the right business model to preserve aquatic life can raise public awareness about the problem, rally
public support behind the cause, and ensure greater recognition is given to the value it has for society. At the sametime, it can be profitable. Ye believes that the primary purpose of a business is to be profitable, while good governance is a fundamental part of being socially responsible.
He adds that “there are three types of effort: the kind that isrewarding but tedious, the kind that is fun but not rewarding, and the kind that is both fun and rewarding.” Conservation of aquatic life is good for the country, the people andfuture generations. It is therefore rewarding, and it is also
definitely fun for Ye: the company makes a profit whilst honouring its commitment to society and to the environment,
and so succeeds in merging economic interest with social
values.

044

Sinoeco is the only company in the aquatic ecological conservation businesscapable of offering a comprehensive service: it is a one-stop biotechnological shop for
its clients. It could be compared to a hospital that offers not just clinical services, butalso a pharmacy and surgery. Sinoeco can provide aquatic ecological inspections,program design and implementation, as well as quantitative assessment of separate
links along the whole sector value chain. It has established a technological system foraquatic ecology that includes diagnosis and appraisal, technological service, as well
as operations and management support that provide a comprehensive package capable of providing solutions to all problems related to aquatic ecological conservation
and restoration. “Our aim is to be the Union Hospital of aquatic ecology,” Ye says.
Sinoeco's whole industrial chain business model has been a recipe for success.
In just six years, it has become China's biggest tech provider for fish restocking facilities and the biggest fish passage and monitoring provider. As of March 2020, its operations covered more than 20 provinces, municipalities and autonomous regions in
China, with 40 restocking facilities serving over 40 clients—the largest client base in
China. It had close to 20 fish passage demonstration projects, dwarfing any competitor in China. Its scorecard also includes China's first fish collection and transportation
system demonstration project as well as more than 180 ecological monitoring andassessment projects, making it the clear leader in this sector in China. According to
Hu Baolin, former Deputy Director of the State Council Three Gorges Project Office, in
the absence of large-scale systematic and comprehensive conservation of the Yangtze River, Sinoeco's experience with its whole industrial chain business model must betransposed so that aquatic ecological restoration can be transformed from a single-point service to a comprehensive service. 5
Sinoeco's whole industrial chain business model has assured its rapid ascent in
the industry and guarantee its viability and competitive edge. Its economic interestsand contribution to society through aquatic life conservation, are mutually reinforcing.
In figures, Sinoeco has maintained an impressive 30% or so increase in its annual revenues over the last few years. Every year, Sinoeco releases more than 10 million rare
fingerlings of 72 species. It has also launched habitat restoration projects and tackled
the root of fish survival problem.
At the same time, Sinoeco's whole industrial chain business model has delivered
tremendous value to its customers. Ye explains: “our clients, who have seen theirper-unit investment go down, see the benefit of our model.” Sinoeco's synergistic solution has reduced client reinvestment. Sinoeco brings value to its clients and builds
trust with them through cooperation. With the average contract lasting 5 years, Sinoeco is acclaimed in customer loyalty. Some customers have maintained contracts withthe company for 20 years. This underpins Sinoeco's stable development.

045

CEIBS Corporate Social Responsibility White Paper

Boosting Technological Strength, Conserving Ecology with Technology

From Teamwork to Platform:
Striving for Technological Breakthroughs and Innovation
Aquatic ecological technologies are regional. Given the huge variety of natural conditions in the bodies of water in
China, ecological restoration must target problems considering local circumstances and there is no turn-key solution.
Ye Ming explains with an analogy: “we cannot treat fish of the Yangtze River with methods designed for American
salmon.” Consequently, the technological threshold for aquatic ecological conservation is quite elevated.
“Strictly speaking, we are not an environmental protection company. We are more of a biotech company.” Ye emphasizes further that biotechnology lies at the heart of Sinoeco and the services it provides to its clients consist mainlyof aquatic biological restoration and the building of the aquatic ecosystems. At its launch in 2010, Sinoeco made “using
technology to conserve ecology” its mission, and since then has consistently given technological innovation centre
stage.
Sinoeco first set up a tripartite structure for its technological development: a technology committee composed of
authoritative aquatic biologists; an expert committee comprising up to 35 contracted experts from over 20 first-classinstitutes and universities; and a 200-strong professional specialist technology team in which a third of its members
hold advanced degrees or senior specialist positions. In addition, Sinoeco has 5 specialized innovation teams covering
the conservation of aquatic resources, ecological monitoring and assessment, fish passage facilities, water circulationequipment, and ecological restoration. All of these teams provide ongoing technological support for the company's
development.
In parallel, Sinoeco established a three-tiered independent innovative research and development system comprising a Research Institute of Aquatic Ecological Conservation of the Yangtze River, a Provincial Engineering and Technology Centre for the Conservation and Restoration of Aquatic Species, and a CMA-accredited assessment laboratory foraquatic biodiversity. For the first component, in 2017, Sinoeco began forging ties with numerous aquatic ecology
experts with a view to populating a Research Institute of Aquatic Ecological Conservation of the Yangtze River, which
would become China's first think tank dedicated to the protection of aquatic ecology in the Yangtze. Then, Sinoeco built
the Hubei Engineering and Technology Centre for the Conservation and Restoration of Aquatic Species as a hub for
dispatching and managing the company's technologies. Finally, in February 2019, a subsidiary company of Sinoeco
was certified by the national CMA and became the first CMA-accredited third-party platform, among private-sector
applicants, qualified to carry out aquatic biological monitoring and assessment.
Sinoeco's unwavering ambition to be innovative and original has been the source of its numerous technologicalachievements. As of March 2020, Sinoeco boasted reproductive techniques for 78 aquatic species, the largest number
in China by a private company, including core technologies such as artificial breeding and rearing techniques for rare
aquatic species: all-parameter-controlled RAS technology, restoration technologies for passage of migratory aquatic
species, re-naturalization of rivers, lakes and habitats, and techniques to evaluate the process of aquatic ecologicalrestoration. Sinoeco's independently developed RAS equipment now commands a market share of 80%. The company
also houses 47 national patents, has had over 40 scientific papers published, and has a Certified Intellectual Property
Management System.

CSR Practices of CEIBS Alumni Companies

From Incentivising to Caring:
Building a Culture of Sustained Technological Innovation
Ye Ming believes that creating value for society is just one side of the coin for a company: the other side is its commitment to the staff who are the architects of this social value. As the field evolves, new ecological technologies
emerge. To broaden the horizons of its workers and enhance their professional and innovative ability, Sinoeco has regularly held the ‘Sinoeco Forum’ , where experts of the field gather to share best practices and frontier knowledge, in a
stimulating environment for employees to learn and exchange.
Lectures given by external experts aside, Sinoeco has a series of internal technological exchange and incentive
schemes. At its annual convention held at the beginning of 2019, for instance, some employees were recognized as“Sinoeco TechStars” for their contributions to scientific and technological innovation. Sinoeco also announced a Reward
Schemes in Technological Achievements and Innovation to provide different financial and non-financial incentives to
employees based on different types of achievement, thus giving impetus to their enthusiastic and proactive engagement in technological innovation.6
Giving recognition and supporting employees enables an organization to fulfil its duty to them as people. “Recognizing the value of our employees is essential, by supporting their career progression, income, dignity and self-esteem.”Ye says, “My principle is to pay them 10% more than our competitors.” Providing room and board to non-local staff isalso among the measures implemented by the company as a way of looking after its workers.

From Inside the Industry to the General Public:
Raising Scientific and Ecological AwarenessAs a pioneer in the field, Sinoeco's scientific research is fairly comprehensive, and has led to numerous breakthroughs in the field of aquatic biotechnology. Mindful of its social responsibilities however, Sinoeco sees its role
extending well beyond the company itself.
A standardized industry order can facilitate the rapid and healthy development of the field. Sinoeco has actively
participated in the drafting of rules such as the China National Energy Administration's Technical Protocols for Operation and Management of Fish Restocking Stations around Hydropower Projects and Technical Protocols for Outcome
Assessment of Fish Restocking Stations around Hydropower Project. In addition, based on its own experiences andpractices, Sinoeco has voluntarily put together Sinoeco's Protocols for Operation Management of Fish Restocking Station, which is now openly available after have been reviewed and passed by the China Renewable Energy Engineering
Institute.
Beyond this, Sinoeco has actively promoted the application of scientific approaches to aquatic ecological conservation to other fields. For example, releasing or setting fish free, is very popular. Many people do not know, however,that the unguided release of fish can hamper natural growth and propagation of other species in certain areas and evendevastate local species. Good intentions may therefore be counterproductive for the natural environment and upset theecological balance. Ye is emphatic in saying that the release of fish is a highly scientific activity that needs to be carefully controlled and supervised.
To get more people to understand the rationale of releasing and scientifically protect aquatic life, Sinoeco has invited students, parents, and the general public to visit fish restocking stations to participate in stocking and releasing
activities, and organised information sessions and demonstrations on scientific releasing. Notably, as of December
2019, Sinoeco's stocking stations had received more than 3,000 visitors from both inside and outside the industry andmore than 30,000 people had participated in its outreach and educational events on stocking and releasing.
Sinoeco has also responded positively to government's call for better Yangtze River governance. Its involvement inpublic-interest advocacy and promotional events is such that as of December 2019, it had printed 20,000 brochures
and held more than 40 seminars on the subject. Notably, in November 2019, the Social and Legal Section of the ChinaMedia Group organized the production of a documentary entitled “Life of the Yangtze” aimed at raising awarenessabout good Yangtze river governance and spreading conservation success stories. Sinoeco spared no effort to support
the film crew when they made the trip to a Sinoeco restocking station to film an example of how fish should be releasedin the public interest.

Photo courtesy of Sinoeco

046

047

CEIBS Corporate Social Responsibility White Paper

Synergize Public Interest Groups to Upgrade Ecological Conservation

CSR Practices of CEIBS Alumni Companies

Sinoeco's Business System
Microorganisms

Sinoeco's efforts to protect aquatic life extend far beyond the above-mentioned operations.
A tech company specializing in aquatic conservation, Sinoeco has not only been devoted to protecting biodiversity
but also actively engaged in charity and environmental protection projects as part of its social responsibility efforts.
Under Ye Ming's leadership, Sinoeco has become a role model in this regard, as evidenced by its vigorous involvementin multiple initiatives such as establishing the environment industry alliance, saving the Yangtze finless porpoise,launching popular science campaigns for aquatic conservation, and spreading the value of ecological and environmental protection.

Synthetic
biofilm

As a case in point, Sinoeco joined the Yangtze River Dolphin Protection Campaign in October 2016. This campaign
brought together government, universities and research institutes, businesses, NGOs, and the public to save the Yangtze dolphin from extinction, restore its population, and keep the Yangtze ecosystem stable. For example, the “Assisted
Patrolling” project was launched, which involved training 1,000 fishermen to become dolphin caretakers. As of the endof 2018, a total of 15 demonstration stations had been established for river dolphin patrols, with 106 participating patrollers scanning 348,474.9 kilometres annually on their rounds, and carrying out 668 anti-poaching trips.

Building
communities
of submergedplantsBuilding
communities
of emergent
plantsAt the behest of Ye Ming, Sinoeco has been supporting the Yangtze River Dolphin Protection Campaign for four
consecutive years, raising funds on September 9th Charity Day, and mobilizing resources to save Yangtze dolphins.
Sinoeco has been focusing on protecting aquatic life and restoring natural habitats as it grows, in fulfilment of
its CSR obligations. According to Ye, the biggest challenge lying ahead will be how to conduct charity work using
a business approach, and he is currently exploring solutions. For Ye, charity projects and business models are
not mutually exclusive: assuming a social responsibility is not a trivial matter and can only be achieved throughthe sustainable development of business. Protecting China's aquatic ecosystems is a mammoth task ahead, andSinoeco is committed to making unremitting efforts to contribute to the cause through the use of tech solutions.
On November 14, 2019, the results for the 10th All China Environment Prize, the highest form of recognition forwork in the field of ecological and environmental protection, were announced. Sinoeco was the only private company to have obtained honourable mention in ecological conservation. This not only acknowledges Sinoeco's
achievements of the last nine years, but also charts its path for the future. In the past, Sinoeco was driven by dual
drivers of business and technology, and saw itself as part of the social environment thereby actively assuming its
social responsibility. In future, Sinoeco will continue to work for the public interest, and pursue its journey on thesometimes twisting road of ecological conservation to play its part in making China an ecologically minded civilization.

Microbial
agentsAquatic
plantsBuilding
communitiesof floating-leaf
plantsBuilding
communities
of benthic
organisms

Biologicalconservation

Ecologicalequipment

Fishpassagefacilities

Aquatic
animals

EcologicalmonitoringRare
speciesbank

Habitatrestoration

Soil

Water

Aquatic life

Aquatic eco-system
References
1 Sinoeco: Using Technology and Craftsmanship to Guard our Ecological House. China Business Times, 2019-12-08[2019-12-10]. http://www.sinoeco.net/cont/308.html.
2 The Opinions of the General Office of the State Council on Stepping up the Conservation of the Aquatic Life of The Yangtze. The official website for the State Council of China,
2018-10-15[2019-12-08]. http://www.gov.cn/zhengce/content/2018-10/15/content_5330882.htm.
3 Zhao Zhengnan. Biodiversity of Aquatic Life along the Yangtze Is Being Threatened. China Fishery News, 2019-02-18[2019-12-05]. https://mp.weixin.qq.com/s/CmU9v4NAV83yCJ6lmMNnbA.
4 Zhou Mengshuang. The Rating of “No More Fish to Fish” and the Yangtze River on the Verge of a Comprehensive Fishing Ban. Guangming Daily, 2019-10-15[2019-12-01].
https://news.sina.com.cn/c/2019-10-15/doc-iicezuev2231866.shtml.
5 Hu Baolin, Former Deputy Director of State Council Three Gorges Project Office, Visits Sinoeco with his Team. Official website of Sinoeco. 2019-06-14[2019-12-18].

th

Ye Ming attended the 10 China Environment Awards Ceremony/Photos courtesy of Sinoeco048

http://www.sinoeco.net/cont/284.html.
6 Sinoeco Has Been Granted Multiple Patents, Signaling its Remarkable Achievements in Technological Innovation. Official website of Sinoeco. 2019-09-03[2019-12-06].
http://www.sinoeco.net/cont/294.html.

049

Better Life Group:
The Golden Touch Project
for Targeted Poverty
Alleviation“

Enterprises playing a major role in development-oriented poverty reduction programs should capitalize on market
trends and opportunities to achieve “targeted” alleviation.
They need to focus specifically on two aspects: one is tomake the best use of every resource they have and allocate
them to where they are most needed, and the other is to put
in place long-term effective measures and help develop
industries according to local conditions. The latter is
expected to provide poor households with a sustainablesource of income and prevent them from falling back intopoverty.

”— Wang Tian
Chairman of Better Life Group, CEIBS CEO2007 alumnus

By Ruan Liyang, CEIBS Case Center
ounded in March 1995, Better Life Group today ranks among China's top 500 enterprises and top 100 private service companies,
with more than 700 physical stores across Hunan, Jiangxi, Sichuan,
Chongqing, Guangxi, and other provinces. A leading player in China's
retail industry, Better Life Group has in recent years consolidated its
strengths, while embracing new technologies and a changing market
environment. The company's multifold digital transformation and globalization strategies have helped transform it into a data-driven smart retailbusiness that integrates online and offline channels. It has also developed a comprehensive supply chain underpinned by a global distribution, warehousing, and distribution network.

F

Better Life Group attaches great importance to corporate social
responsibility and has contributed to a number of worthy causes,
including poverty alleviation, disaster relief, supporting vulnerable
groups, and boosting employment. In particular, it has made over ¥150
million① in charitable donations, established the Fuguang Charitable
Foundation for vulnerable groups, and created over 70,000 jobs. In
March 2016, Better Life Group launched the ‘Golden Touch Project,’which provides poverty alleviation by harnessing the company's
strengths in distribution and logistics to develop local industries. The
Group has explored sustainable models for reducing poverty throughindustry, including buying agricultural products from farmers, creatingjobs for farmers, offering vocational training, and investing in poverty-alleviation industries.

①: ¥ = CNY = Chinese yuan renminbi; ¥1 = approximately US$0.14 on December 31, 2019.

CEIBS Corporate Social Responsibility White Paper

CSR Practices of CEIBS Alumni Companies

Harnessing Industry to Alleviate Poverty
Industry-led poverty alleviation involves using a fine-tuned approach to develop agriculture, tourism, and improve
infrastructure in poverty-stricken areas. This in turn boosts economic growth, employment, and local incomes. In recent
years, the Chinese government has formulated a series of industry-led poverty alleviation policies, including the ‘Decision of the CPC Central Committee and the State Council on Winning the Fight against Poverty’ issued by the StateCouncil in 2015, and the ‘Poverty Alleviation Plan for the Thirteenth Five-Year Plan Period.’ These have stimulated growing interest in poverty alleviation from the private sector and bolstered partnerships between the government andnon-government entities.
As one of China's top 500 companies and a leader in retail, Better Life Group has taken an active role in industry-led poverty alleviation. As the Group sees it, there are currently many hurdles to achieving poverty alleviation in
China, including rural hollowing caused by labor migration, and resource wastage caused by bad practices and supply-demand imbalances. The solutions include seeking industry-led regional development; promoting the differentiation, upgrading, and growth of regional industries; creating unique flagship industries; involving private capital in industry-led poverty alleviation; and taking advantage of distribution channels that are at the disposal of the government andmajor businesses.

The Golden Touch Project: Long-term Mechanisms for Poverty Alleviation
During China's annual parliamentary session in March 2016, NPC deputy Wang Tian, who is also the chairman ofBetter Life Group, put forward a proposal with the title, ‘Introducing market-oriented operations and using industry todrive targeted poverty alleviation.’ Wang also unveiled the Golden Touch Project, which aims to harness the Group's
hundreds of stores, e-commerce platforms, and extensive logistics networks across China to better utilize low value-added agricultural products and other resources, helping to clear a path for industrial development in poverty-stricken villages. As Wang puts it, “This isn't just a passing fad. We want to use our unique resource base to target and support poverty-stricken villages through market mechanisms, with the goal of achieving sustainable development.”
In April 2016, Better Life Group established a poverty alleviation management department. While only small, thedepartment was able to mobilize resources from the Group's procurement, brand, and finance departments to ensure
the smooth implementation of poverty alleviation work.
Corporate social responsibility should be a long-term commitment. Aiming for quick, easy fixes is disadvantageous
for both the companies and communities involved, and poverty alleviation programs should seek to be self-sustaining.
With this in mind, when creating the Golden Touch Project, Better Life Group set out a three-step plan: in the first year, it
would provide charitable assistance to encourage impoverished households to set up businesses; in the second year, it
would help them to master business skills; and in the third year, it would help them to achieve profitability, thereby
establishing a long-term mechanism for targeted poverty alleviation.

A Charitable Vision

In the first year of the Golden Touch Project, Better Life Group set up
poverty alleviation bases in more than 20 villages in Hunan Province, where
its headquarters are located. The bases undertook to buy all products produced by farmers under an exclusive sales agreement. The first bases
were located in areas that were a provincial priority for poverty alleviation.
With the support of the provincial government's poverty alleviation team,the Group reached out to poverty-stricken villages that could find no market
for their agricultural products. It bought local products at a premium andsold them on through its own supermarkets. For example, Better Life Group
sold mooli (a type of radish) for up to ¥1.6 per kilo in its stores, but paid
farmers ¥1.4 per kilo. After factoring in freight and other costs, it only justbroke even. As Wang Tian puts it, “Ours is a charitable program, not abusiness. We don't try to make money from poverty alleviation.”

Better Life Group stores sold produce frompoverty-stricken counties/
In the year that the Golden Touch Project was launched, a growing
Photo courtesy of Better Life Group
number of agricultural products from impoverished villages appeared in
Better Life Group's supermarkets and online stores, including mooli from
Chaliu village in Suining County, radishes from Huanglishan village in Xintian County, ginger from Quanxi village in Guidong County, maize from Guantuan village in Tongdao Dong Autonomous County, and asparagus lettuce from Chahua
village in Xiangtan County. The Group encouraged consumers to take part in ‘buying is donating’ events, which not only
gave villages an outlet for their produce, but also delivered varied produce to consumers.

Helping Farmers to Stand on Their Own Feet

Following some initial success, Better Life Group began to look for other villages that it could support through thisapproach. In order to improve efficiency and processes, the Group concluded purchase agreements with agricultural
cooperatives that had extensive operating experience in this field. The cooperatives provided agricultural technology
and management services for poor households and performed standardized pre-processing and packaging. The
Group then purchased the finished products to sell in its own supermarkets.
Unlike at the outset, when Better Life Group simply organized charity events, as the Golden Touch Project gained
traction, the Group began to work towards a loftier goal—to raise the aspirations of the poor. To do so, the Group's
supermarkets began refusing unsatisfactory vegetables from the cooperatives, which encouraged producers to focus
on quality. At the same time, poor households realized that if they wanted to
be profitable, they would have to produce high-quality agricultural products,
instead of relying solely on goodwill.
Chen Zhiqiang, party secretary and CEO of Better Life Group, believes
that successful poverty alleviation isn't about offering a ‘blood transfusion,’ butrather showing people how to ‘make their own blood,’ to use a metaphor. As
he describes, “We can't just sell products for farmers. We need to improve theviability of their businesses, so that in the future, they can find their own markets without the support of poverty alleviation teams and Better Life Group.”

Better Life Group base for targetedpoverty alleviation/
Photo courtesy of Better Life Group052

By applying this model, Better Life Group has further expanded its poverty alleviation project to include partnerships with a vegetable cooperative in
Sangzhi County, a waxberry cooperative in Xinhua County, a goat cooperativein the town of Chunkou in Liuyang city, a vegetable cooperative in the town of
Jinjing in Changsha County, and a ginger cooperative in Guidong County.

053

CEIBS Corporate Social Responsibility White Paper

CSR Practices of CEIBS Alumni Companies

Creating a Benchmark: Shibadong's Bottled Spring Water
Shibadong is a Miao ethnic village located in
Huayuan County in Xiangxi Tujia and Miao Autonomous
Prefecture. The village gets its name, which means‘eighteen caves’ from a network of karst caves in thearea. In 2013, the village's per capita net income was¥1,668 or just 18.75% of the national average for farmers. The village had 225 households with 939 members
in total, of which 136 households (542 people) wereclassed as poverty-stricken. In November 2013, President Xi Jinping came to inspect the village. He proposed a set of guidelines which advocated seeking truth
from facts, adapting to local conditions, and implementing targeted guidance and poverty alleviation.’ This
marked the beginning of China's targeted poverty alleviation efforts. Subsequently, ten targeted poverty alleviation projects were launched in the area, with a focus on
boosting production, promoting rural tourism, reallocating labor, and providing medical assistance and environmental compensation. This put the spotlight on poverty alleviation efforts in Shibadong village.

‘Industrializing’ Poverty Alleviation Efforts

Through the Golden Touch Project, Better Life Group found better ways to match consumer needs with agricultural
production, helping to deliver deeper, more targeted industry-led poverty alleviation. The Group helped impoverishedcommunities to build their own production bases, including for raising free-range hens and cultivating mushrooms. In
this way, it was no longer just unleashing the potential of existing production facilities, but also adding new capacity. In
effect, the Group had found a way to ‘industrialize’ the poverty alleviation process.
Firstly, for industry-led poverty alleviation to work, it was necessary to identify suitable projects that were adapted
to local conditions. That means taking stock of available natural resources, planting habits, and the local labor force.
Better Life Group considered the above factors and recommended a number of suitable agricultural products to target
villages, such as sweet corn in Chunfeng village in Guidong County and free-range hens in Chaoshuipu village, XintianCounty. The Group promised to buy all of the under an exclusive agreement, which incentivized farmers to produce more.
Secondly, it was necessary to process agricultural products further to create added value, reduce risks and wastage, and create new outlets for hard-to-sell products. For example, research carried out by the Group showed that themountainous village of Tangdai in Shaoyang County had severe land and water shortages and a dearth of young laborers; this meant that they could only plant simple crops such as sweet potatoes, which would need further processing to
generate a decent income. Based on this research, the Group invested ¥3 million in a processing factory that produced
sweet potato vermicelli to help villagers escape poverty.

Towards the end of April 2017, Wang Tian made afield trip to Shibadong village to explore the local ecology. He found that the village was mountainous, with little
arable land and steep roads, making it unsuitable forgrowing crops or raising livestock. However, after
making some inquiries, he learned that there was amountain spring in the village whose water potentially
had commercial value. He visited the spring together
with village officials and took a sample of the water for
testing. The results showed that the water had many
desirable properties. Wang entered into discussions
with stakeholders about the best targeted poverty alleviation strategy for building a bottling plant in the area.

Thirdly, it was necessary to pool resources and replace traditional, low-intensity production in rural areas withlarge-scale mechanized production. Better Life Group crunched some numbers and discovered that the Group'sannual sales of agricultural products exceeded ¥10 billion, but their sales in Hunan Province accounted for less than
10% of the total. While this indicated considerable scope for more industry-led poverty alleviation in the province, it also
exposed a problem: Hunan suffered from a shortage of large-scale, standardized agricultural production. Indeed, farming in the area was done on such a small scale that villages couldn't even fill a truck with their produce—harvests often
amounted to no more than 500 to 1,000 kilograms. Such unintensive production wouldn't be enough to lift farmers out ofpoverty. Therefore, in partnership with local governments, the Group encouraged villages to specialize more: often
entire villages, towns, and sometimes even counties would collectively produce a specific product. At the same time,
the Group sought out forward-thinking, well-resourced individuals who had a firm grasp of agricultural technology tohelp oversee and scale up poverty alleviation projects.
Finally, it was important to find viable markets. Many farmers gave little thought to marketing before planting crops,
resulting in large harvests for which there were no buyers. “Industry-led poverty alleviation requires marketing channels,
and our Group offers an ideal sales platform,” says Wang Tian. In addition to its own stores, Better Life Group was able
to provide information about other domestic markets and e-commerce channels. At the same time, the Group performed big data analysis on sales data to identify which agricultural products were in short supply, and encouraged
farmers to adjust their crop choice accordingly.
Based on this experience, the Group was able to boost the scope and precision of its industry-led poverty alleviation program. By focusing on consumer demands, the Group built bridges between markets, and farmers in impoverished regions. Wang Tian argues that, “If poverty alleviation is to be sustainable, then consumption must be used todrive industrial development in poor areas and eliminate poverty. Many impoverished areas are endowed with a richnatural bounty. Trustworthy sales channels afford an opportunity for farmers to sell more products, and for consumers
to access these products.”

Identifying
suitable projects
that were adapted
to localconditions

054

Processing
agricultural
products further
to create
added value

Resources
integration andlarge-scale
production

Wang Tian tested the spring water in Shibadong village/
Photo courtesy of Better Life Group

Finding
viable markets

In June 2017, Better Life Group established aspring water bottling plant in Shibadong village after
making an investment of ¥30 million. The plant, called
Hunan Shibadong Mountain Spring Water Co., Ltd., had
an initial production capacity of ¥100 million per year.
The Group saw the project as a key driver for thevillage's collective economy and a means to achieve
poverty alleviation. After the plant came online, 15% of
all earnings went to the village collective. Moreover, withthe exception of a few technicians, the plant exclusively
employed local people, including those from poor
households. The factory formally began production on
October 8, 2017, and on March 22, 2018, after 11months of hard work, the bottling plant was finally listedon the stock market.

055

CEIBS Corporate Social Responsibility White Paper

CSR Practices of CEIBS Alumni Companies

The Shibadong village spring water bottling plant was an improvement on Better Life Group's original industry-led
poverty alleviation plan, and its mission was expanded to include the goals of ‘ensuring sustainable poverty alleviationand preventing villagers from falling back into poverty.’ The plant created 30 jobs for villagers. Whereas in the past,
many villagers had to travel to find work elsewhere, the construction of the bottling plant meant that many could now
stay in their hometown. The bottling plant assisted with poverty alleviation in a number of ways. Firstly, 15% of theplant's profits were paid to the village collective, with a minimum annual dividend of ¥500,000. In addition, for every
bottle of water produced, 1 cent was paid into the village's poverty alleviation fund for further development that would
benefit everyone. During peak times, the water factory could employ up to 130 local workers. Between 2017 and 2018,the village collective earned dividends of over ¥1.2 million from the plant, which has turned villagers into employees,
and farmers into shareholders.
In addition to marketing Shibadong's spring water through its own retail channels, Better Life Group also recruited
distributors and sales agents for the bottled water from across Hunan Province in a bid to scale up operations. Such
was its success that the Shibadong project became a benchmark for industry-led poverty alleviation. This prompted
other poverty-stricken areas to approach the Group, including the counties of Mayang, Anhua, and Pingjiang in Hunan
province, as well as villages in Chongqing and Guizhou Province. Wang Tian hopes that more villages with access toclean water can benefit from poverty alleviation. In the future, he even plans to establish a Shibadong poverty alleviation
fund that would build Shibadong into a poverty alleviation brand and provide support for other impoverished villages.
After the Shibadong project, Better Life Group continued to explore other new approaches for industry-led poverty
alleviation. One example was in the town of Jiwei in Huayuan county, which is known as western Hunan's granary
thanks to its abundant and fertile arable land. There, in a village called Yanluo, Better Life Group invested ¥20 million ina rice factory (Hunan Rice Agriculture Co., Ltd.), which entered into operation on September 28, 2019. This was theGroup's second project in the county to harness modern industry as a means of driving targeted poverty alleviation.
The rice factory is located in a three-sided courtyard with a total floor area of 1,300 square meters. The site contains a processing factory, agricultural exhibition hall, and office area. The factory, which has a daily capacity of 40
tons, created 42 jobs, for 12 of which locals were given preference. The Yanluo village collective was granted 15% of
the factory's earnings, and the village built up its economy around the rice milling industry. The rice factory directly purchased and processed high-quality rice from Jiwei town and launched a series of products, including ‘Chongshan Tribute Rice’ and ‘Zila Tribute Rice.’ In addition, the factory planted carefully selected seeds from these two ‘tribute’ varieties to create its own ‘Tribute Rice’ range. Through product standardization and branding, the factory was able to generate sustainable revenue growth.

Shibadong spring water/Photo courtesy of Better Life Group

Targeted Poverty Alleviation: the ‘Twinning’ Model
Building on the success of the Golden Touch Project, Better Life Group launched another program that used a‘twinning’ model to allow Group employees to directly engage with impoverished households.
On January 9, 2018, at Better Life Group's annual management meeting, Wang Tian called on more than 1,000
senior and middle managers to pair themselves with impoverished households in their locality. This targeted poverty
alleviation program, which was known as the ‘Thousand Households Project,’ aimed to take up the mantle of the Golden
Touch Project.
The twinning arrangement worked in three ways. Firstly, each senior manager at Better Life Group was paired with
an impoverished household. Secondly, donations made to impoverished households by the Group's middle and senior
managers were matched by the Fuguang Charitable Foundation. For example, if a manager donated ¥1,500 to ahousehold each year, and an additional ¥1,000 for their children's education, the Foundation would also donate ¥2,500
to the household. Thirdly, managers were required to visit their twinned family and invite the latter back to their own
homes at least once a year. This twinning arrangement was designed to help impoverished households build up asense of confidence and pride, while helping to reduce poverty, raise aspirations, impart knowledge and skills, provide
financial assistance, and support industry.
The Thousand Households Project was warmly welcomed by managers at Better Life Group, who signed a written
pledge to participate in the program. On February 6, 2018, Chen Zhiqiang led a team of managers to Jingzhi village inLonghui County, where they offered condolence payments, bursaries, rice, and cooking oil to impoverished families
during Spring Festival. This initiative was then enthusiastically adopted by managers at all of the Group's business divisions (including regions).
By the end of 2018, a total of 874 senior managers at Better Life Group had participated in the Thousand Households Project, providing support to 3,558 villagers from 874 twinned households in impoverished parts of Hunan, Xinjiang, Jiangxi, Guangxi, and other provinces. In 2019, managers commenced a second round of visits to their ‘adopted’families. After their initial pairing in 2018, the focus for 2019 shifted to offering guidance and support to help lift villagers
out of poverty. In August 2019, a subsidiary of Better Life Group, Better Life Real Estate, helped the village of Shixi in
Yuanling County by agreeing to buy 500 kilograms of peaches grown by local farmers who couldn't find a buyer. Meanwhile, the Group's poverty alleviation management department promoted a ‘buying is donating’ campaign to otherdepartments and bought over 1,000 kilograms of yellow peaches from Shixi, bolstering villagers’ confidence that they
could escape poverty by developing industry. Over time, the Thousand Households Project helped the Group's managers to establish close relationships with countless impoverished households while raising ¥2 million in donations overjust two years. The material and moral support extended by managers bolstered villagers’ determination to shake off
the shackles of poverty and achieve moderate prosperity.
Backed by its own sales channels, supply chain, and other market resources, Better Life Group has helped to build
partnerships between the government and private sector that ensure that industry-led poverty alleviation can be sustainable. Between 2016 and 2019, the Group assisted 75 poverty-stricken villages, established 58 procurement bases,
and signed strategic poverty alleviation agreements with 18 poverty-stricken counties, including the counties of Chengbu, Suining, Yongshun, and Xinhua in Hunan Province, as well as Luopu County in Xinjiang. The Group provided direct
and indirect assistance to some 12,000 poverty-stricken households, helping to boost their annual incomes by over
¥3,500 on average, and spending a total of ¥750 million on agricultural product purchase agreements with poor counties and villages. The Group's successful industry-led poverty alleviation model, which draws on its own businessstrengths, provides a point of reference for other businesses and organizations that want to contribute to China's poverty alleviation effort.

The ‘Tribute Rice’ range/Photo courtesy of Better Life Group

056

057

Yili Group: Building a Green
Future by Living CSR Values“

With foresight, we can shape the future; with cooperation, we can create synergy; and with mutual benefits,
we can find a win-win solution.

”— Pan Gang
Chairman and President of Yili Group,
CEIBS EMBA2002 Alumnus

By Zhu Qiong, CEIBS Case Center
ili Industrial Group Co., Ltd. is the first A-share listed company inChina's dairy industry, and the largest dairy company providing thelargest selection of product offerings. Thanks to its premium products,
leading comprehensive services and sustainable development capabilities, Yili has been a trusted sponsor of the world's top events and competitions, and a highly recognized brand among all levels of government and the community. It was the only officially designated dairy
product supplier for the 2008 Beijing Olympic Games, the World Expo
2010 in Shanghai, the 2016 G20 Hangzhou summit, the 2019 CISM Military World Games in Wuhan, and will continue to be the sole supplierfor the 2022 Beijing Winter Olympics. Yili is also a partner of the World
Economic Forum, Bo'ao Forum for Asia, World Internet Conference andother top summits. In 2019, Yili reported a total revenue of ¥90.223
billion①, up 13.41% YoY, and a net profit of ¥7 billion, up 7.73% YoY,
ranking first for the sixth year in a row in Asia's dairy industry. With adominant scale and strong sustainability, as evidenced by its annual
revenue growth as high as ¥10 billion for several consecutive years, Yili
continued to lead the pack in Asia in terms of market share and penetration, and return on net assets.

Y

As a leading, out-performing company in the dairy industry, Yili has
been fully committed to its CSRs. Yili's vision was to become one of theworld's most trusted health food providers. In order to achieve this goal,
Yili took the lead in incorporating CSR performance in its strategicplans, and took it upon itself to build a green, sustainable dairy industrial chain. In this process, it has become the cornerstone of China's drive
toward sustainable development.

Photo: Yili Group①: ¥ = CNY = Chinese yuan renminbi; ¥1 = approximately US$0.14 on December 31, 2019.

CEIBS Corporate Social Responsibility White Paper

Three Stages of CSR Performance at Yili

In 2019, Yili issued its annual CSR Report, recording great progress in the performance of CSRs since 2007.

Inception
The seeds of Yili's strategic CSRs were planted by its Chairman and President Pan Gang. As early as 2007, twoyears after he became Chairman of Yili, Pan put forward the vision of “green leadership” , i.e., to become a leader in“green production, consumption, and development” , as part of its green, sustainable development strategy. That year,
Yili released its first ever CSR report, and began to implement its unique “Healthy China Social Responsibility System”
which includes Yili's support for youth, the environment, and the communities in which it operates. It also introduced thefirst social responsibility emergency plan in China.
In 2009, Pan Gang upgraded its vision from “green leadership” to “co-building a green value chain” , calling on
the whole industry to forge a consensus on green, environment-friendly and sustainable development, in order toachieve healthy interactions between industry, nature and communities. In 2010, Yili became the first company in thedairy industry to complete a thorough assessment of its carbon footprint.

Improvement
In 2011, Yili started to implement its strategy of “co-building a green value chain” . This strategy includes environmental protection and mutually beneficial cooperation with stakeholders. On the environmental front, to ensure every
link of its supply chain was green, Yili carried out a thorough assessment of the carbon footprint of its operations - fromthe selection and conservation of milk sources, to the use of biodegradable packaging materials, through to the match
between logistics links and the production line, and to energy conservation and emission reduction.

CSR Practices of CEIBS Alumni Companies

Four Key Areas of Action

Building a Win-win Value Chain

Yili incorporated the interests of all stakeholders in the industrial chain—agro-pastoralists, suppliers, distributors,
consumers and employees—into its profit model, and designed a win-win mechanism for all. To make the mechanism
work, Yili needed to fulfill two major commitments: “decent work and economic growth” and “partnerships for the goals” .

Agropastoralists

Distributors
Suppliers

UpgradingIn 2017, Yili upgraded its CSR performance system from the “Healthy China Social Responsibility System” established in 2007 to one known as “World Integrally Sharing Health” (WISH). Under the new system, Yili worked to implement the nine SDGs in the four key areas of action: a win-win value chain, quality and innovation, public good, andnutrition and health.
In order to implement WISH, Yili set up a “1234” management system. The “1” stands for a steering committee, i.e.,
the Sustainable Development Committee, chaired by Pan Gang. The head of the Department of Enterprise Affairs
served as its secretary-general. The committee manages four working groups responsible for coordinating efforts
geared towards sustainable development by various departments. The “2” refers to two specialized work areas: i) special management of the group's public good projects, and risks related to sustainable development of overseas investment projects; and ii) special research into the Sustainability Report and sustainable development of the dairy industry.
The “3” refers to three levels of responsibilities for implementing the group's sustainable development strategy, namely,
the Group, business units, functional departments and branches, while “4” stands for four key areas of action.

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Consumers

Agro-pastoralists
The upstream part of Yili's value chain consists of millions of agro-pastoralists. After the Sanlu Scandal (Tainted-Baby-Milk Scandal) in 2008, Yili was acutely aware of the need to empower agro-pastoralists to improve their animal husbandry capacity and product quality. Yili identified four major challenges faced by them—inadequate technology, a lackof access to finance, high risks, and slower-than-expected transformation, and decided to support them on these fronts.
In 2018, Yili invested ¥3.588 billion in agro-pastoralists.

To ensure synergistic growth, Yili built a benefit-sharing business model for dairy farmers, partners and employees,
which encourages active collaboration for a shared green business ecosystem. (See “Win-win value chain” below)
In 2015, the United Nations adopted the historic new agenda, entitled “Transforming Our World: The 2030 Agenda
for Sustainable Development,” which was agreed upon by the 193 Member States of the United Nations, and includes
17 Sustainable Development Goals (SDGs). After studying the 17 SDGs and taking into consideration its own strategy,
Yili identified 9 goals to pursue: no poverty, zero hunger, good health and well-being, quality education, decent workand economic growth, responsible consumption and production, climate action, life on land, and partnerships for thegoals. In December 2016, Yili became a signatory to the “Business and Biodiversity Pledge,” a voluntary commitment to
the objectives of the UN Convention on Biological Diversity, in which it made nine pledges, demonstrating the strengths
and commitment to SDGs of a Chinese company.

Employees

Technology: To help agro-pastoralists build husbandry capacity, Yili
provided field guidance and set up a
“Cow School” , a training camp forsecond-generation cow farmers andan “Elite Stock Breeding Workshop”
to provide training in production procedures, operation management,
and financial management.

Industry: To help agro-pastoralists reform their “small, scattered andfinancially weak” operations, Yili introduced
an integrated husbandry model to encourage cultivation of high-quality forage. In 2017, under thismodel, silage growers signed contracts with dairy
farmers, driving the cultivation and sales of morethan 416,000 acres of high-quality silage corneach year. Agro-pastoralists obtained fresh silage
feed from reliable sources, while farmers on average made a profit of more than ¥3,600 per acrefrom high-quality silage, generating an annual
income of ¥1.6 billion.

Finance: Without any collateral to back a loan,
agro-pastoralists were unable to purchase silage, scale
up production, and improve facilities and equipment. In
order to help them gain access to finance, Yili took it
upon itself to assume material risks for their bank loans.
After assessing their operations and funding needs, Yili
provided them with joint liability guarantee. On top of
that, it teamed up with banks and other financial institutions to launch 13 financial products tailored specifically to their needs, such as “Silage Protection” and “Pasture Protection” . These products enjoyed great popularity among the agro-pastoralists. As of 2019, Yili hadprovided financial support to more than 5,000
partners along the value chain, totaling¥35.9 billion.

Risk mitigation: The risk ofanimal husbandry comes not only fromthe production cycle, but also from changes
in regional and international markets—characterized by bouts of imbalances between supply
and demand of raw milk. In order to share therisks of agro-pastoralists and promote the balanced development of the supply chain, Yili
signed price protection contracts with them.
Even if market prices fall, Yili will still buy raw
milk at the contract price, thus preventing themfrom losses. Similarly, if there is a surplus of raw
milk, Yili will buy out at the contract price.

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CEIBS Corporate Social Responsibility White Paper

CSR Practices of CEIBS Alumni Companies

Suppliers

Consumers

For suppliers, Yili has established a “Full Life
Cycle Supplier Management System” . Thissystem includes management standards for suppliers in all aspects of cooperation, ranging fromproduct development participation, classification,
performance management, to risk control, relationship maintenance, capacity building, and throughto exit. In particular, by requiring suppliers to sign
the Sunshine Action Commitment Letter, Yili holds
them equally responsible for environmental protection and green development, such as using
green, environmentally friendly, biodegradable,
low-weight, high-strength materials.

In addition to efforts of providing
consumers with quality health products,
Yili has created offline and online “transparent factories” and a Future Milk Platform as a direct link to consumers.

In addition, Yili worked to promote the sustainable development of suppliers through theestablishment of a Supplier Development Instituteand the creation of a joint quality engineer training
and certification system. By the end of 2018,
95.6% of Yili's suppliers had obtained quality
management certification (210 in the field of environmental management, and 82 in the joint quality
engineer certification).
In April 2019, at the Yili Group Supplier Conference, Yili led the establishment of the industry's
first global network of sustainable supply chain(known as the “WISH Network” ). The network
requires that both suppliers and vendors performtheir social responsibilities in the procurement
process, by integrating sustainable development
and implementing Article 10 of the Yili Programmeof Action for Sustainable Development. This helps
contribute to the achievement of SDG 17: “Partnership for sustainable development” .

Distributors

Yili has opened 36 brick-and-mortar“transparent factories” across the country
for consumers to visit. Its online “transparent factories” are open 24/7. In 2018,
the company attracted 13.55 million visitors to its physical factories, and 157.45
million to its online factories.
Its Future Milk Platform, an inclusive
platform dedicated to promoting innovative development and upgrading of thedairy and health food industries, allow
consumers and innovators to co-createand share benefits. The platform brings
together innovative third-party technology
platforms, institutions and creative teams
to collect, organize and evaluate creative
concepts and ideas, and converts creative and inspiring concepts into marketable products. In 2018, 67 creative products were developed on this platform.

An online “transparent factory” /Photo courtesy of Yili Group

Employees
Employees are seen as an essential asset for achieving the corporate
goal of building a win-win industrial chain. Yili provides employees withmore than 40 items of benefits, 85% of which are non-statutory.

“Green Travel, Fun Cycling” biking event/
Photo courtesy of Yili Group

Yili has always pursued win-win
cooperation with distributors—even protecting their interests at its own cost indifficult times.

Yili places employee health and safety at the heart of its operations. It
has put in place effective measures to mitigate occupational hazards andensure employee safety in the workplace, such as noise reduction, temperature regulation, and improved ergonomics. In addition, it regularly
monitors occupational and environmental conditions, conducts occupational health check-ups, and provides employees with personal protective
equipment and ongoing safety training in identifying, controlling and eliminating potential risks.
Yili also introduced the “Happy E Station” information platform, inviting
professional psychological counseling institutions to provide employeeswith training and counseling in career orientation, family management,
marriage, child birth and education, among other things. It also opened a
24-hour service hotline to enhance employees’ psychological resilience. In
addition, Yili organized a variety of fun sports events and games and care
activities to maximize the wellbeing of employees.

In order to help build distributor
capacity, Yili established the Distributor
Development Institute in 2016 to provide
multi-party training in business operations,team management, new retail, market
operations and product promotion. In
2018, Yili benefitted 39,653 people
through distributor training activities.
Yili's top-performing distributors attended an executive education workshop at Renmin
University of China/Photo courtesy of Yili Group062

An online “transparent factory” /Photo courtesy of Yili GroupPan Gang attended the 2019 onboarding
ceremony/Photo courtesy of Yili GroupIn addition to creating an equal, diverse and gender-equitable workplace, Yili also offers a range of capacity-building and training programmes. Statistics as of the end of 2018 show that its 56,079 employees
attended 12 training sessions per person that year. Yili was the first in thedairy industry to introduce Six Sigma to improve technical training. In 2018,
among the employees trained, 67 received the Six Sigma Green Belt Certification, 17 became Black Belts, and 2 became Master Black Belts.

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CEIBS Corporate Social Responsibility White Paper

CSR Practices of CEIBS Alumni Companies

Quality and Innovation

Philanthropy

This action was aimed at the goals of “responsible consumption and production” and “climate action” .

This action was geared toward three SDG commitments: “quality education” , “life on land” and “no poverty” .

Responsible Consumption
and Production

Caring for Youth
Conservation of Biodiversity

Climate Action

Responsible Consumption and Production
As a leader in the dairy industry, Yili officially launched the “Quality Leadership Strategy” in 2014, extending foodsafety efforts to all partners in the value chain and building a global quality management system.
In 2015, Yili replaced it with the “Quality Leadership 3210 Strategy” . The “3” stands for three goals: to build aworld-class quality assurance team, establish stringent standards in the industry, and offer top quality products. The “2”stands for two systems: a world-leading quality management system, and an independent whole-chain quality management system. The “1” refers to a one-off rejection of processes and results that do not meet food safety and productquality requirements throughout the value chain, while the “0” means zero food safety incidents.
In 2017, Yili started to build a “Whole Industry Chain Quality Management Ecosystem” and coordinated quality control of the whole value chain through benefit-sharing mechanisms. Yili managed to get players in the upstream of thevalue chain to adopt standardized, intensive pasture farming and management practices. As a mid-stream player itself,
Yili developed the most stringent quality standards in the industry, which are 50% higher than the national ones. Additionally, Yili further raised the bar 20% higher on some of its key products. In the downstream of the value chain, Yili
established a big data-based electronic product traceability programme covering the entire value chain. Comprisingthe “Product-specific Traceability Code System” and the “Food quality and Safety Traceability System Platform” , theprogramme ensures full traceability of product information.
On the supply side, all of Yili's suppliers achieved standardized production and scale of economy. Yili conducts
remote real-time monitoring of milk production, storage and transportation processes, ensuring intelligent control of raw
milk quality.
Yili set up a quality monitoring and control system at group, business unit and factory levels, involving more than 80
units along the value chain in the inspection of up to 1,000 items.
From 2015 to 2018, Yili recorded zero food safety incidents in the implementation of its quality leadership strategy.
In order to contribute to responsible production and consumption, Yili invested ¥460 million in R&D and ¥319 million in
testing in 2018. In the same year, it earned 182 patents. Meanwhile, Yili participated in the formulation of 64 national,
industry and local standards.

Climate Action
In order to achieve green and sustainable development, Yili has constructed an environmental sustainability model with three objectives: i) bringing greenhouse gas emissions down to below 1.87 million tons
by 2020; ii) cutting the overall energy consumption perunit of product and improving the greening of the manufacturing process; and iii) meeting pollutant emission
standards and reducing water and power consumption
per unit of product. To this end, Yili invested ¥286 million in environmental protection in 2018. As a result, it
managed to cut energy consumption by 16,000 metrictons of standard coal equivalent, save 790,000 tons ofwater, and turn five factories into green facilities ofnational standards.
064

Caring for YouthYili has launched two dedicated programs for youth—“Yili Nutrition 2020” and “Yili Ark” .
“Yili Nutrition 2020” was launched in 2017 to provide
students in poor mountainous areas with milk. In 2019, a
new component—screening for congenital heart disease—
was added. In 2018 alone, Yili invested a total of ¥52 million in products and nutritional support, benefiting morethan 600,000 students in 130 cities and counties across 25
provinces and regions.
Following the launch of the “Yili Nutrition 2020” project, Yili's student milk products team, which had mainly
dealt with distributors on a commercial basis, got in directcontact with consumers. In some areas, the team developed health profiles for children, kept track of their healthconditions, and used collected data to facilitate Yili's product development, thereby introducing better products andservices for children. This virtuous circle deepened theunderstanding of social responsibility among members of
the team, and encouraged them to integrate social responsibilities into business decision-making.

Photo courtesy of Yili Group

Photo courtesy of Yili GroupThrough this project, Yili also mobilized more government and social resources toward supporting poor areas.
Such efforts have been contributing to the national strategy of targeted poverty alleviation, and the achievement of“no poverty” “zero hunger” and other SDGs. In 2018, Yili
donated ¥11.5 million worth of powdered milk through the“Yili Nutrition 2020” program, a poverty alleviation throughnutrition enhancement campaign benefiting 73,000
people.
“Yili Ark” , launched in 2012, is a project for childsafety education and training. As of 2018, seven campus
safety workshops were organized under the project for
more than 300 campus safety managers from 40 counties
and districts across 25 central and western provinces (municipalities and autonomous regions). In addition, morethan 70 safety education events were organized for children throughout the country, delivering safety skills andmaterials to more than 200,000 children. In 2016, Yili
launched China's first campus safety assessment index
system “Yili Ark Holograms” to help schools identify
campus security risks and develop solutions.

Photo courtesy of Yili Group

Photo courtesy of Yili Group065

CEIBS Corporate Social Responsibility White Paper

CSR Practices of CEIBS Alumni Companies

CSR Indicator System

Conservation of Biodiversity
As a signatory to the Convention on Biological Diversity's Business and Biodiversity Pledge, Yili not only invested
resources and took actions at home and abroad to protect wildlife and wetlands, but also identified six aspects of its production and operations that had a major impact on biodiversity and took management measures to conserve biodiversity.
In addition, Yili invited consumers to join in its protection efforts. On World Wetlands Day 2018, Yili launched the“4.6 Square Meters Wetland Protection” campaign, promising that for every box of Satine organic milk sold, Yili would
donate the needed money for conserving 4.6 square meters of wetlands. This creative marketing campaign lasted 3days, and product sales surged 496%. By the end of 2018, the wetlands that Yili conserved was almost as big as thesize of New Zealand.
In November 2018, Yili released its first biodiversity conservation report to share conservation results with the restof the world.

While performing its CSRs through concrete actions, Yili also developed an indicator system for the assessment of
the economic, environmental and social impact.
On the economic front, Yili developed two categories of secondary indicators for measuring direct and indirect economic impact of its CSR performance, which include a number of tertiary indicators each. The direct economic impact
indicators are designed to measure economic interests of shareholders, investors and the government, while the indirect
economic impact indicators include Yili's R&D investment and patent licensing. R&D investment reflects how much Yili
has invested in providing communities and consumers with better quality products and services. Patent licensing measures how Yili performs the responsibility of protecting intellectual property rights to enhance its own competitiveness.
On the environmental front, Yili's first and foremost goal is to minimize the negative impact of its operations. In
order to achieve this goal, Yili developed four secondary indicators, i.e., risks, climate, waste, and resources. The
resources category includes the largest number of tertiary indicators. In particular, green packaging and green transportation reflect Yili's emphasis on the selection, reduced energy consumption and minimized use of packaging materials, and on reducing transport energy consumption.
On the social front, Yili's indicators, centred on managing relationships with stakeholders, include five secondary
elements—employees, products, supply chain, industry and communities.
The above indicators are classified into 77 qualitative indexes and 65 quantitative ones.
On September 19, 2019, Yili was one of the few companies in the dairy industry to be recognized as a “Corporate
Social Responsibility Model” by the United Nations Food and Agriculture Organization's representative office in China
and the China Association for the Promotion of International Cooperation in Agriculture (CAPIAC). In the past 12 years,
Yili has been consistently performing its CSRs in line with the vision of becoming the world's most trusted health foodprovider. As it transitioned to green growth on multiple fronts, from the corporate level through to the industrial chain,both at home and internationally, Yili has become a pioneer and role model for green development.

Wetland protection/Photo courtesy of Yili Group

Nutrition and HealthThis action was aimed at the goals of “zero hunger” and “good health and wellbeing” .
Yili has been conducting breast milk research for 16 consecutive years since 2003. In 2018, it upgraded the Maternal and Infant Research Center to the Institute for Maternal and Infant Nutrition, which produced two white papers on
China's breast milk research informing the R&D of infant formula in China. Based on the institute's research findings, Yili
pioneered the development of different types of low-lactose products using lactose hydrolysis, fermentation, membrane
filtration and other techniques. It also conducted research into the effect of interventions on lactose intolerance and theclinical efficacy of low-lactose functional products. The findings were recognized by authoritative organizations.
Yili has been advocating for healthy living based on its expertise. As the first dairy sponsor of the Olympic Gamesin China, Yili has been working with Olympics committees for 13 years. In 2017, it created the “Vitality Winter Olympics
Academy” in conjunction with the Beijing Organizing Committee for the 2022 Winter Olympic Games. Free and open to
the general public, the Academy is intended to encourage more people to learn about the Winter Olympic Games. By
the end of 2018, the Academy had attracted more than 85 million online visitors.

Photo courtesy of Yili Group066

Economic
Performance

CSR
Indicator
SystemEnvironmental
Performance

SocialPerformance

Photo courtesy of Yili Group067

Phoenix Contact China: A Forcefor Good Creating Mutually
Beneficial Outcomes““If a profit-making company is not creating real value
or making positive contribution to the community inwhich it operates, it is not a truly successful business.
There may be many businesses out there earning great
profits at the cost of society, but Phoenix Contact China
is definitely not one of them. ””— Gu Jiandang
President of Phoenix Contact China,
CEIBS EMBA2006 Alumnus

By Cao Zhijing, CEIBS Case Centern 2018, Phoenix Contact (China) Holding Co., Ltd. ( ‘Phoenix Contact China’ )held a networking event for employees to which it invited a special guest. The
guest was a young woman called Zubaidaimu Memet who hailed from China's western province of Xinjiang. Zubaidaimu was a former student at the Phoenix Contact
Project Hope Primary School, an institution funded by Phoenix Contact China to
improve education for poverty-stricken children. Back in 2006, when the school was
first established, Zubaidaimu was in the third grade, and was a beneficiary of the
project. In 2007, Phoenix Contact China's founder Li Musong and current president
Gu Jiandang invited teachers and student representatives at the school to attend an
exchange event in Nanjing to learn about automation technologies. Zubaidaimu wasselected to join the delegation. After returning from the Nanjing trip, Zubaidaimu
resolved to study hard and improve her Mandarin so that she could secure a placeat university. Her dream finally came true in 2016 when she was admitted to Henan
University of Economics and Law. Inspired by Zubaidaimu's success, her two sisters
also worked hard, and received high school and university diplomas respectively,
before embarking on their own journey to realize their dreams.

I

Photo courtesy of Phoenix Contact China

This is one of many heart-warming stories to come out of charitable projects
organized by Phoenix Contact China. Building Hope primary schools represented
Phoenix Contact China's first attempt at CSR. Although the company's early CSR
projects had nothing to do with its business operations, it has gradually incorporated
CSR practices in its business models. The company's president, Gu Jiandang,believes that charitable projects have allowed Phoenix Contact China to better
define its mission and helped the management team form a strategic focus for the
future, i.e., laying the groundwork for smart manufacturing and Industry 4.0 throughsupport to education. Over the past 26 years, Phoenix Contact China has been
searching for more comprehensive and meaningful ways to implement corporate
responsibility. That involves exploring a number of issues: how to achieve rapid
growth in China, how to implement modern management practices, and how tocreate value for society while ensuring sustainable development—one of the mostfundamental tenets of CSR.

CEIBS Corporate Social Responsibility White Paper

About Phoenix Contact China
Founded in 1923, Phoenix Contact Group ( ‘Phoenix Contact’ ) is a global
leader in electrical connectors and interfaces, and industrial automation solutions. The Group produces over 60,000 types of product that span the energy,
process manufacturing, automotive, wind power, telecommunications, railtransport, water treatment, machinery, industrial electronics, building automation and many other sectors.
Phoenix Contact China was established in Nanjing in 1993. By 2019, Phoenix Contact China had grown to become Phoenix Contact's largest overseas
R&D and manufacturing base, and a regional headquarters comprised of six
wholly-owned companies and one joint venture; it employed over 2,000 employees and generated over ¥3 billion① in annual sales.
Phoenix Contact China is a shining example of fruitful Sino-German cooperation and the company is committed to promoting the development of ‘Industry 4.0’ in China. In 2014, Phoenix Contact China launched its ‘Connecting
Smart World’ smart strategy, which set out a four-pronged roadmap to roll out
Industry 4.0 and smart manufacturing. Phoenix Contact China is also accelerating its digital transformation and harnessing its own strengths to create synergies with partners.

Bridging Sino-German Cooperation andLeading the Development of Intelligent Industrial Rcology

CSR Practices of CEIBS Alumni Companies

A Force for Good
Established almost 100 years ago, Phoenix Contact has fostered a corporate culture that stands for independence, innovation, and trust in partners; this provides strong impetus for the company's sustainable development. ‘Independence’ stands for the company's commitment to self-relianceand its determination not to rely on public share listings or bank loans. ‘Innovation’ means using innovative technology, products, solutions, and business models to boost efficiency, drive sustainable development, and create
value for customers. ‘Trust in partners’ means building relationships of trustwith employees and other stakeholders that are based in mutual dedication,
friendship, and integrity; shaped by shared, long-term interests; and seek togenerate shared growth.

Trust = Responsibility

Phoenix Contact China has inherited the corporate values of ‘friendship,
tolerance, trust, responsibility, and goodwill’ from its parent company. In
addition, unlike many foreign companies that operate in China, Phoenix
Contact China has adhered to a policy of only employing local staff andmanagers throughout its 26 years in China, which is yet another aspect of its‘independent’ approach. As the company has built up its operations in
China, it has developed a deep connection with the local market that hasgiven it unique insights into CSR. Since its inception, the company has
made trust a key responsibility and devoted itself to advancing Chinese
industry. Phoenix Contact China believes that implementing trust mechanisms shouldn't be a box-ticking exercise, but a strategic interaction thatreflects a deep understanding of the company's responsibility and mission.
Trust and responsibility are embedded in everything a company does,
whether in relation to society, customers, employees, or investors. Rather
than forming short-term partnerships, companies should seek to combine
trust and responsibility in long-term relationships, where partners each havea stake in the other's reputation.
In addition, the company's management, including former president Li
Musong and current president Gu Jiandang, agree that the fundamental
mission of Phoenix Contact China is to create value for society. As Gu puts
it, “In our view, a profitable company is still a failure if it doesn't create value
for, or otherwise advance society. Phoenix Contact China will never seek
success at society's expense, even if such a business model should exist.”
Guided by its mission of creating value for society, Phoenix Contact China
believes that CSR goes beyond charitable activities or investments in a specific field. Yi Shubo, a PR manager at the company, argues that in the narrow
sense of the term, CSR means charity or serving the public interest, ranging
from donating to schools, supporting orphanages, providing earthquake relief
to chipping in to help fight Covid-19. However, Phoenix Contact China interprets CSR more broadly to mean generating value for supply chains, businessecosystems, the natural environment, and for all stakeholders.
The company places education at the heart of its CSR activities
because it is convinced that education can change the world and people's destiny. Whether it's supporting Project
Hope schools and vocational education, or partnerships between academia and industry, Phoenix Contact China's
investment in education has assumed a number of forms over the years. Today, its commitment to education has
moved beyond charitable donations to become a strategic corporate focus that goes hand-in-hand with its businessmodel and technological progress.
Phoenix Contact China knows that the investments it has made to spur industry and social progress may not yield
immediate returns, but believes that it will be rewarded for its work in the long run.

①: ¥ = CNY = Chinese yuan renminbi; ¥1 = approximately US$0.14 on December 31, 2019.

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CSR Practices of CEIBS Alumni Companies

Creating Educational Models For the Future

From Project Hope To Comprehensive Educational Aid

Phoenix Contact China first became involved in Project Hope shortly after it was established in 1994, when it invested in its first charitable project. According to Gu Jiandang, the project was quite small, but it nonetheless embodied thecompany's core values: “It doesn't matter if your company's small or cash-strapped. What matters is that you want tocreate value for society and do your bit for Project Hope schools, or similar schools that need help.”
In 1999, Phoenix Contact China formed a team that was charged with the mission of giving back to society. In
2003, it began sponsoring the construction of Project Hope primary schools, and since then it has helped construct
eight such schools in the provinces of Jiangsu, Ningxia, Gansu, Yunnan, Shandong, Qinghai, Inner Mongolia, and Xinjiang. It has also supported two schools in the remote and impoverished city of Nagqu in Tibet, as well as two schools forthe children of migrant workers in Nanjing. In 2007, Phoenix Contact China joined the ‘Realize Your Dream’ aid program
initiated by Jiangsu Province's② Youth Development Foundation, which has since helped nearly 400 students fromunderprivileged backgrounds to fulfill their dreams of going to college. In 2011, the Musong Charity Fund was set up
with an endowment from Li Musong, Gu Jiandang, and the company's young management team, and Phoenix Contact
China also used earmarked funds to establish the ‘Giving Back to Society Fund.’ Together, both funds committed toinvest ¥10 million over the following ten years to reinvest in society.
In addition to providing financial aid to underprivileged areas and students, Phoenix Contact China has invested
considerable resources in promoting modern educational practices, and has harnessed its influence in the industry to
popularize professional skills and knowledge. Since 2001, the company has established over ten automation laboratories, handed out scholarships, and sponsored campus events at over ten universities in China, including Nanjing University, Huazhong University of Science and Technology, Southeast University, Tongji University, and Zhejiang University. As this cooperation has expanded, universities have started to directly recommend some of their top students to
Phoenix Contact China, and the company has also overhauled its talent development program.
On the subject of Phoenix Contact China's mutually-beneficial cooperation with stakeholders, Gu Jiandang
remarks: “At Phoenix Contact China, our main goal is not to pursue absolute success. Instead, we view trust as a
responsibility and seek to create symbiotic relationships with our stakeholders to achieve mutual success. This principle
underpins our core philosophy and values and informs our approach to social responsibility.”

Phoenix Contact Project Hope Primary School in Huzhu County,
Qinghai Province/Photo courtesy of Phoenix Contact China

Inauguration of the Musong Charity Fund and ‘Giving Back toSociety Fund’/Photo courtesy of Phoenix Contact China②: The “Dream to Reality” program is a public welfare program initiated by the Project Hope Office of Jiangsu Province. The program raises funds to help freshmen with financial
difficulties to fulfill their dreams of a university education.

072

Underpinning the high quality of the company's innovative products is Germany's advanced vocational education,
which is known as a “dual system” that combines apprenticeships with vocational education in various cities. In addition to learning theoretical and cultural knowledge at part-time vocational schools, students enrolled in the “dualsystem” also receive vocational skills training in enterprises. According to the German Federal Ministry of Education
and Research, the proportion of students in dual vocational education in Germany in 2017 was 51.7%.③ The dual
system is the mainstream choice because it meets the needs of Germany's manufacturing industry. After receiving professional training in a company, job candidates are equipped with practical skills and a sense of responsibility andidentity with the profession.
In 1994, a programmatic document on Sino-German cooperation in the field of vocational education was introduced. Since then, China has been piloting the German dual education system in various cities. However, due to ashortage of school infrastructure and funding, China's vocational education remains unbalanced and deficient. At thesame time, as vocational education lags behind industry needs, enterprises are reluctant to cooperate with vocational
schools. Yet despite other companies’ disinterest in vocational education, Phoenix Contact China has chosen to commit
itself to this cause. In particular, the company has worked to promote the dual education system, with a view to reforming China's approach to vocational education and improving learning to better meet the needs of society.
Since 2006, Phoenix Contact China has been an active proponent of Sino-German cooperation in vocational education. It has tried to introduce Germany's dual education system to China and promote vocational education in the
country by hosting and supporting the Sino-German Vocational Education Conference. For example, it has establisheda smart training platform, intelligent manufacturing academy, and dedicated classes geared for Phoenix Contact China
at Nanjing Jiangning Higher Vocational and Technical School to bring advanced technology into the classroom. It has
also designed training programs comprised of various elements, including sandwich courses, on-the-job training,industrial placements, and company visits, among others. Students who pass the final assessment are offered achance to work full-time at Phoenix Contact China subject to mutual consent.
From providing scholarships and training, to introducing cutting-edge industrial technology to students, Phoenix
Contact China has made full use of its unique position as a ‘hidden champion’ in the industry to explore effective modes
of industry-university cooperation. As far as students are concerned, this is the true definition of ‘sustainable value.’

Phoenix Contact's smart tech solutions and applications/Photo courtesy of Phoenix Contact China③: A look at Germany's dual education system, 2018-08-22, https://www.sohu.com/a/249433151_497772

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Investing in Education For the Future

In 2013, Germany unveiled its “Industry 4.0” initiative, i.e., promoting application of Internet technology in factories,
machines, equipment and products to make its manufacturing industry fully connected. The full connectivity and integration of value chains, product life cycles, production processes and management information would greatly enhance
the competitiveness of the manufacturing industry. Meanwhile, the corresponding changes on the demand side would
pressure device suppliers like Phoenix to make strategic, product and organizational upgrades.
According to Gu, the core driving force of Phoenix Contact China's digital transformation was the integration of
information technology (IT), operational technology (OT), and digital technology (DT) to reinvent customer value. The
key to implementation was local innovation and building a platform organization. Gu believed that the company should
not aspire to transition to smart manufacturing single-handedly, but rather should leverage the capabilities of supply
chain partners. Therefore, the company has been committed to promoting Sino-German cooperation in the era of Industry 4.0. For instance, it's been supporting the World Smart Manufacturing Summit; it initiated the establishment of theIntelligent Manufacturing Research Institute and co-created the Eco-empowerment Co-Founding Club④ to invest in outstanding home-grown enterprises.
In addition, Phoenix Contact China increasingly recognizes the importance of talent development in this new age ofintelligent manufacturing. It wants to move beyond pro-forma activities and carry out meaningful CSR. Specifically, thecompany's management aims to deepen its involvement in the education sector, where it hopes to pioneer a new business model. This will involve building a dedicated intelligent manufacturing educational platform that supports and empowers students and helps to create an intelligent education ecosystem.

CSR Practices of CEIBS Alumni Companies

Perseverance Yields SuccessPhoenix Contact China's CSR efforts have been questioned by many industry players, who doubt that they cangenerate positive returns for the company. Gu Jiandang believes that in today's fast-moving world, if the company canconsistently create value for society, then it stands to benefit in at least two ways. Firstly, the company can grow its sectorial and regional influence and gradually develop a more sustainable business model. Secondly, the company canestablish its own ecosystem. While supporting education and empowering individuals by building professional teams
may not generate immediate returns, it is certain to have a positive impact on the company's development on a longer
horizon.
Phoenix Contact China has already won considerable recognition for its commitment to corporate social responsibility. The company was handed the ‘Outstanding CSR Award for Chinese Companies’ in 2010, designated as a ‘Chinese Equipment Manufacturer with Leading CSR Practices’ in 2012, and in 2019 took home the ‘CEIBS Alumni CSRAward,’ just to name a few. As Gerd Eisert, former chairman of Phoenix Contact, commented during a visit to Phoenix
Contact China, “We have invested in more than 50 countries around the world, but there is nowhere in the world except
China—not even at our headquarters in Germany—where a road is named after our company. There is even an urban
landmark in China—the Phoenix Terrace—that is dedicated to our company.” Phoenix Contact China believes that if it
can ‘connect dots into lines and lines into networks,’ then the company's goodwill will unlock more possibilities and help
it to build a brighter future.

The first plank of this strategy is the establishment of an intelligent education empowerment platform. As early as
2007, Phoenix Contact established the EduNet International Education Network, an automation education and researchplatform designed to promote the development of the automation industry and automation education. In 2018, Phoenix
Contact China also established the Intelligent Manufacturing Academy, whose mission is to harness industry to support
education and develop an intelligent education empowerment platform. Phoenix Contact China is also seeking to integrate industry and education in an intelligent manufacturing ecosystem that boasts its own dedicated institute, education system, courses, and laboratory to cultivate intelligent manufacturing talent.
The second plank is the organization of competitions that encourage creative thinking. Phoenix Contact has beenorganizing the global ‘xplore New Automation Award’ competition since 1998, while Phoenix Contact China has been
holding a competition for intelligent technology innovations and applications since 2014. In 2018, the company
received over 180 entries from students in more than 70 Chinese universities, all of which used PLCnext, a flexible,
next-generation control platform developed by Phoenix Contact. Phoenix Contact China provides the products, technology, and professional guidance to help participants transform their creative ideas into reality.
The third plank is the establishment of intelligent laboratories and smart factories. In 2014, Phoenix Contact China
and the Chinese-German School of Applied Sciences at Tongji University jointly established China's first Industry 4.0
smart factory laboratory. Since then, several other similar laboratories have been opened at Huanghuai University, Xinjiang Vocational University, Tongji University's School of Telecommunications, Zhejiang University, Heilongjiang Instituteof Technology, Harbin Engineering University, Tianjin Sino-German University of Applied Sciences, and Nanjing Technical Vocational College. Textbooks have been developed to support teaching at these labs. The laboratories serve as
educational and training platforms for intelligent manufacturing and play to the strengths of local industry. By combining
teaching, training, and research functions, the laboratories provide intelligent, digital, and modular educational facilities
with a practical, forward-looking perspective.
On the organizational front, Phoenix Contact China has created two teams that are responsible for CSR and intelligent education respectively. The CSR team promotes charitable cooperation programs on behalf of the company, while
the intelligent education team provides educational equipment and products.
Gu Jiandang believes that the intelligent education promoted by Phoenix Contact China has a commercial andindustrial dimension, while also contributing to corporate social responsibility. Products and demonstration productionlines offered by the company to universities and research institutions come under its intelligent manufacturing andindustrial solutions; equipment purchases made by universities and research institutions drive the company's business;and long-term partnerships with universities to provide scholarships, training, curriculum design, or the construction oflaboratories help to meet Phoenix Contact China's CSR commitments.
④: The Eco-Empowerment Co-Founding Club was established by Phoenix Contact China together with a group of hidden champions. Its mission is to bring together industry,
academia, research and users to create an intelligent industry ecosystem with mutual benefits and synergy.

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Ⅳ

CEIBS CSRRESEARCH

The Adoption of Green Practices
by Chinese Firms: Assessing theDeterminants and Effects of Top
Management Championship
By Li Yina, South China University of Technology
Ye Fei, South China University of Technology
Dai Jing, The University of Nottingham China
Zhao Xiande, China Europe International Business School (CEIBS)Sheu Chwen, Kansas State University“

In order to achieve sustainable competitive advantages in the
global market place, business enterprises must improve theirenvironmental and social performance as well as economic performance. To improve environmental performance, companies must
adopt green supply chain and operations management practices.
Government policy incentives and customer pressure can positively
influence top management's championship for environmental
management (EM). Top management's commitment to EM is criticalfor firms to adopt proactive operate environmental strategy andpractices.
We hope that our studies will help top management to formulate strategies and implement environmental management practices
to enhance their competitive advantages. We also suggest thatpolicy makers should employ effective incentive policies to help
firms take green initiatives.
— Zhao, Xiande
Professor of Operations and Supply Chain Management, CEIBS

esponding to concerns regarding global
warming and energy scarcity, many firms
have taken action to develop and enhanceenvironmental management (EM). Althoughearlier research has investigated how firms
manage their relationship with the naturalenvironment and what factors influence a firm's
choice of green initiatives, exploring external
institutional forces and internal organisational
factors together may help resolve some of theinconsistency in previous studies.

R

In order to learn more about the factors
influencing Chinese companies’ EM activities, wesurveyed 148 senior managers from manufacturing firms in the Pearl River Delta (PRD) region,
Guangdong province, China. The PRD region
represents more than 85 percent of Guangdong
province's GDP and 9 percent of China's GDP in
2015. It is among the top three regions in China interms of economic development and the mostimportant manufacturing base for electronics
products in the world. However, it is also one of
the most polluted regions in China.

This article was adapted from a paper published in the May 2019 issue of the Journal of International Journal of Operations & Production Management: The adoption of green practices by Chinese firms: Assessing the determinants and effects of top management championship. Visit https://www.emerald.com/insight/content/doi/10.1108/IJOPM-12-2017-0753/full/html.

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CEIBS Corporate Social Responsibility White Paper

CEIBS CSR Research

Theoretical Overview
Government Pressure: Command and Control Policy vs. Incentive Policy
Government pressure has typically been viewed as the most important external force for an organisation's green
initiatives. Two kinds of government policies can be distinguished: command and control policy vs. incentive policy.
Command and control policy refers to a mandatory compliance approach that forces firms to take on similar shares ofthe pollution-control burden, regardless of the cost, such as emission standards and product bans. Incentive policy
refers to market-based approaches that encourage firms to undertake pollution control efforts that are in their own interests and that collectively meet policy goals, such as subsidies, taxes and tradable quotas.
In practice, government might simultaneously exert both command and control policy (“stick”) to ensure compliance, and incentive policy (“carrot”) to offer reward. However, for government pressures to be successful in influencing
a firm's strategy, they need access to and the attention of top management. Even if government pressure is strong, it is
the top management that ultimately makes the decision to be green or not.

Customer Pressure: Overseas Customers vs. Domestic Customers
Customer pressure is another institutional force that exerts impositions or inducements on firms to adopt green
practices. With the strong green consciousness across society, customers (including both end consumers and downstream supply chain partners) have developed a preference for green products.
In China, customer pressure comes from two different sources, overseas customers and domestic customers, andthese may exert different forces on top management. Many overseas customers, especially those from developed
countries/regions, for example, have built green barriers and exert stringent environmental pressure on Chinese firms,
typically surpassing domestic requirements. Customer pressure from these buyers has been shown to be an effective
way to improve the environmental performance of Chinese companies.
On the other hand, at least one previous survey reported that, although Chinese customers’ environmental consciousness has increased greatly, their willingness to pay for green products is still very low. Another survey confirmed
that, in China, higher prices are a major obstacle to the purchase of green products.

Internal Pressures and Top Management Championship:
Resources and Capability to Change
Many studies have recognised that the implementation of green initiatives is likely to require changes in technology, processes or routines. Such changes can be difficult for firms to undertake, as they are forced to reconsider thepattern of activities that they perform. In the traditional economic view, any environmental improvement effort transfers acost previously borne by society back to the firm. Green practices are perceived as costly and time-consuming activities that require additional resources. Thus, resources are necessary for firms to respond to the institutional pressures
to adopt green practices. As such, the top management's decision regarding the adoption of green practices likely
depends on whether a firm possesses the required resources, and recognises the profit available from such initiatives.
Another factor affecting top management's championship of EM is capability to change, measured as organisational inertia (or how quickly a firm can be reorganised when faced with threats and opportunities in the environment).
Organisational inertia exists in most organisations and the stronger the inertial force, the slower organisations change
when faced with environmental changes. Unfortunately, organisational inertia routinely stymies any response to environmental change, and is viewed as a key barrier to fostering institutional willingness to develop and implement strategicchanges.
If a firm's response to environmental change is slow, and it is not capable of adapting in a timely manner, it will be
unable to respond either to external pressure or to internally driven demands for change. Therefore, when top managers consider whether to adopt green practices, they will need to assess whether the firm's speed of response can becommensurate with the temporal patterns of the environmental challenges the adjustment to their structure is designed
to overcome.

Top Management Championship, Green Culture and Green Practices
The upper echelon theory posits that firms’ strategic decisions are areflection of the top management's values and cognitive bases. Top management championship is also suggested to be a very important interpreterof a firm's response to environmental issues, and it affects the scope andspeed of adoption of green practices.
For green strategies, champions with stronger ecological stewardshipare more likely to frame green issues as opportunities, and will expend moretime and resources on green initiatives to inspire collective commitment andadvocate action than those with a low level of concern. As a whole, top managers are responsible for establishing EM vision and goals, providing
resources and training, and stimulating implementation and improvement.
Top management can affect the success of a firm's new initiatives
through the promotion of employee involvement and empowerment, as well
as by instituting reward and incentive systems to direct employee behaviour.
In other words, to implement environmental programmes effectively, a firmmust foster a green culture. While it is top management that initiates any EM
effort, a green philosophy must be embraced by the entire organisation, atthe operational and employee levels.
With the support of a green company culture, employees will be motivated to participate in green practices with an understanding of how the firm's
environmental performance can affect and be affected by their duties anddecisions. Accordingly, a green culture is expected to be conducive to
instructing and motivating the firm's employees to conduct green practices.

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Results and Discussion
Government and Customer
Our survey revealed that different types of governmental pressures and different customer sources of green
demand have differential direct effects on top management championship for green practice. Specifically, we foundthat incentive policy implemented by government and green demand from overseas customers are positively associated with top management championship, while the effects of command and control policy and domestic customer
demand are not significant.
Evidently, top management in China is more motivated by incentive policies than by command and control policies,at least in relation to green practices. On one side, while the Chinese government has developed many environmental
mandatory regulations, their enforcement has been weak and ineffective. This leads to firms frequently ignoring environmental regulations. On the other side, from an economic perspective, poor enforcement of command and control policy
in China means there is no effective economic sanction (i.e. loss to the firm), while incentives mean there is a positive
economic contribution to the firm.
Though both overseas customers and domestic customers want environmentally friendly products, our finding alsosuggests there are different levels of green demand between overseas and domestic customers. That is, overseas customers have a higher level of green demand. The different levels of green demand, in turn, lead to different responses
from top management. Specifically, top management displays a higher level of enthusiasm toward meeting green
demand from overseas customers than from domestic customers.

Resources Pressure and Organisational Inertia
As expected, there was a significant negative influence of resources pressure on top management championship.
Contrary to our expectations, however, we found no significant influence of organisational inertia on top management
championship. The nonsignificant relationship between organisational inertia and top management championship could
be attributable to the role of power distance in Chinese culture, where decision making is a top-down process and top
management has the power to break established paradigms and make changes. In the case of EM, it seems that top
management in China could easily overcome resistance to change and initiate green practices.

CEIBS CSR Research

Managerial Implications
Our study also offers several implications to supply chain managers and policy makers. First, it is important for
managers to realise that green championship of top management in Chinese supplier companies may be bounded by
the firm's institutional environment. In a market with a strong cultural and legal commitment to EM, legitimate would beconsidered an efficient and effective driver for EM. However, in emerging markets such as China that are characterised
by relatively low domestic environmental awareness and weak legal enforceability, firms may perceive limits of command and control policy. Thus, getting the environmental commitments can be difficult.
Our study further suggests a task list for public policy makers in emerging markets. Governments in these countries should transform institutional environments in a way that facilitates top management championship in firms. Our
results indicate that although the Chinese government tends to favour command and control policies over incentive policies, top management are more motivated by incentive policies. Therefore, the policy makers should take note andreview the current environmental policies, with a view to strengthening the enforcement of command and control policy,
otherwise more generally to increase the use of incentive policy.
In addition, our study confirms a negative influence of resources constraints on top management championship.
Since the implementation of green practices initially involves additional costs, while the payback period is relatively
long, scarcity of resources hinders top management from engaging in green practices. From the green supply chain
management perspective, supplier development initiatives by buyers could be an important practice to promote andhelp suppliers in China to cultivate the necessary capability to implement green practices. Meanwhile, policy makers
should employ effective incentive policies (e.g. subsidies and preferential tax policies) to overcome the scarcity ofresources and help firms to take green initiatives.
Third, our study informs managers of the importance of top management championship and green culture. Our
results suggest that a firm can best respond to green pressure when top management is in support of these initiatives
and employees are fully understood and motivated. Specifically, a firm's top managers and their commitment to EM area critical component to a firm's ability to achieve green supply management success. Employees’ understanding of andtraining in the green management approach are key to the success of implementing environmental initiatives, as employees are often the initiators and recipients of the activities. Thus, top management may need to develop systems to
involve employees in the development of a firm's environmental strategy or decision-making process.

Top Management Championship and Green Culture
Finally, the findings of our study suggest that the impact of top management championship on green practices ispartially mediated by green culture. To implement EM successfully, top management championship serves as a goodstarting point and builds the basis for EM programmes, but follow-up actions taken by employees at the operational
level ultimately determine the effectiveness of the implementation. Thus, cultivating green culture within organisations is
an important and effective mechanism to achieve green practices implementation. Fostering an environmentally friendly
organisational culture, as an extension of top management championship, is critical to the success of green practices.

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n recent decades, industrial sectors have beenheavily pressured by relative stakeholders to
improve their environmental performance. In
response, a growing number of firms have developed environmental strategies to guide and communicate their environmentally friendly vision, direction,
and actions. The literature on environmental management suggests that proactive environmental
strategy is an important topic receiving increasing
interest. Some studies suggest that firms with a proactive environmental strategy enjoy higher performance, however, some contradictory empirical findings indicate that proactive environmental strategy
does not necessarily lead to performance improvement. These inconsistent findings may lead to confusion regarding the roles played by proactive environmental strategy in supporting the realization of environmental goals and may impede the utilization ofproactive environmental strategy in practice.

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Effects of Proactive
Environmental Strategy on
Environmental Performance
By Zhang Shanshan, South China University of Technology
Wang Zhiqiang, South China University of Technology
Zhao Xiande, China Europe International Business School (CEIBS)The study constructed and tested a researchmodel linking two implementation variables of a proact ive envir onm ent al st r at e gy , gre e n h u ma n
resource management (GHRM) and environmental
legitimacy (EL), and environmental performance. The
mediating roles of the implementation of green operational practices (GOP) and the potential moderatingroles of operational barriers (OB) and managerial
barriers (MB) were further examined. The proposed
hypotheses are empirically tested using a dataset of
260 sample plants in 11 countries/regions. In summary, this study aims to explore the following
research questions:
Q1: What are the effects of GHRM and EL on
environmental performance?
Q2: What are the roles of the implementation of
GOP in the relationships explored in Q1?
Q3: How do OB and MB affect the links between
GHRM, EL and the implementation of GOP?

This article was adapted from a paper published in the June 2019 issue of the Journal of Journal of Cleaner Production: Effects of proactive environmental strategy on environmental performance: Mediation and moderation analyses. Visit https://www.sciencedirect.com/science/article/pii/S095965261932181X.

CEIBS Corporate Social Responsibility White Paper

CEIBS CSR Research

Theoretical Overview
Green Human Resource Management and Environmental Legitimacy
This study examines the effects of GHRM and EL on environmental performance with the aim to clarify the effects
of proactive environmental strategy on environmental performance from a strategy implementation perspective.
The natural-resource-based view (NRBV) suggests that both an internal competitive approach and external legitimacy are necessary for sustained competitive advantage. This study identifies two implementation variables of proactive environmental strategy, green human resource management (GHRM) and environmental legitimacy (EL), which areinternal and external approaches, respectively.
GHRM represents a key internal approach to pursue the success of a proactive environmental strategy. Key elements of GHRM include green training, teamwork, employee empowerment, performance appraisal and rewards.
These key factors could develop valuable, rare, imperfectly imitable and non-substitutable green human resources andwork as crucial predictors of competitive advantage. Firms that attribute importance to green human resource factors
can accumulate the necessary tacit and ambiguous resources and knowledge that enable firms to identify environmental problems and solve them effectively.
External legitimacy-based processes and activities also appear to be important for environmental strategy, as firms
cannot separate themselves from the resource support from the external environment. According to resource dependence theory, organizational legitimacy can help a firm source resource support from related stakeholders. EL indicatesthe extent to which a firm's environmental initiatives are congruent with regulations, societal norms and the firm's expectations or outcomes. Since environmental initiatives are complex and innovative, EL can help address “the liability of
newness” . A clear link between an environmental project and regulations indicates a firm's congruency with the environmental requirements or expectations of the government and its agencies. This helps firms obtain access to institutional support, such as funding and staff, and in turn result in competitive advantage.

The Implementation of Green Operational Practices
This study further proposes that the implementation of GOP might work as a transformation mechanism throughwhich GHRM and EL impact environmental performance. By doing so, this study reveals the mechanism through which
proactive environmental strategy contributes to higher environmental performance.
It is suggested that a proactive environmental strategy contributes to performance improvement with the development of managerial and manufacturing processes. The implementation of GOP captures the extent to which a firm hasapplied green operational initiatives. The implementation of GOP includes the usage of environmentally friendly
designs, packaging and raw materials as well as cleaner production, among
other practices. It is suggested that green operational management can provide a solid foundation for externally oriented green practice implementationand has great potential for performance improvement.
GHRM and EL reflect what firms want to do, whereas the implementationof GOP indicates what firms actually do. The former is a firm's rhetoric surrounding proactive environmental strategy, while the latter indicates the realityof its proactive environmental strategy. Based on the strategy–action–performance paradigm, the implementation of GOP can serve as a crucial mediatorin the links between GHRM, EL and environmental performance. Firms emphasizing the importance of GHRM and EL may be more capable of identifying
environmental issues and integrating new internal and external resources toaddress these issues. In doing so, they can ensure the successful implementation of GOP, which predicts improved environmental performance.

Operational Barriers and Managerial BarriersThis study proposes the impacts of GHRM and EL on the implementation of GOP might be moderated by operational barriers (OB) and managerial barriers (MB). By studying the moderating role of OB and MB, this study reveals theconditions influencing the effectiveness of proactive environmental strategy.
As the implementation of proactive environmental strategies is highly complex and comprehensive, it is easy forfirms to encounter obstacles that might hinder the effectiveness of environmental strategies. These obstacles or barriers
might result in a misfit between the firm's proactive environmental strategy and its structures, leading to a weakened
effectiveness of proactive environmental strategy. Operational and managerial barriers (OB and MB, respectively) represent two important categories of barriers encountered by firms in environmental management.
OB are related to constraints within operations management systems,
such as the relatively high costs and the lack of sufficient technology,
processes or materials in realizing successful environmental management. According to contingency theory, the success of proactive environmental strategy is context dependent. A high level of OB can hinder theprocess of GOP implementation and reduce the effectiveness of GHRM
and EL in facilitating the implementation of GOP.
MB are another concern in the implementation of green practices or
projects. They reflect the insufficiency of structures and procedures that
inhibit the firm's environmental operation and strategy uptake. A high levelof MB implies a lack of environmental commitment, such as poorcross-functional and top management commitment and a hostile culture
for environmental management. This inefficient organizational culture
makes environmental strategy less useful in facilitating environmental
actions by management.

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Results and Discussion

From a managerial perspective, this study provides the following
meaningful practical insights.
Highlight the importance of green human resource factors whendeveloping a proactive corporate environmental strategy. Managers
can promote green training and teamwork for environmental issues toprovide guidance on knowledge and capabilities accumulation and tosupport proactive corporate environmental strategy.
▲

The findings confirm a significant positive relationship between GHRM and environmental performance but fail to support the proposed positive link between EL and environmental performance. These findings imply that not all dimensionsof proactive environmental strategy support environmental performance improvement. This findings empirically clarifies
that the way strategy is defined matters in exploring the link between proactive environmental strategy and performance.

Insights▲

Direct Effects of Green Human Resource Management andEnvironmental Legitimacy on Environmental Performance

CEIBS CSR Research

Bear in mind that just stressing EL is not sufficient for improved
environmental performance. Firms need to make essential investments
and develop capabilities, such as green supply chain collaboration, togain from environmental strategy.

The first plausible explanation could be the coexistence of positive and negative influences of EL, leading to an
insignificant relation between EL and environmental performance. Although firms that tend to be environmentally
focused can obtain access to necessary resources and efforts from their relevant stakeholders, they also have tochange or switch from their existing processes and buy new devices and materials. This increases firms’ waste generation and resource consumption.

Be aware that without certain actual environmental practices
and implementation, it is not possible to benefit from proactive environmental strategy. They might consider and encourage integrating environmental thinking into their operations to support higher environmental
performance.

The second explanation could be that the contributions of EL to environmental performance depend on the translating role of crucial organizational capabilities, such as green supply chain process and green product design capabilities. These are necessary to translate a proactive environmental strategy into performance improvement.

Be aware of threats from barriers to environmental management. In particular, they should consider taking a broad and lifecycle
perspective on environmental initiatives rather than focusing on
short-term performance and consider fostering top management commitment as well as cross-functional buy-in.

▲

Another explanation could be that crucial obstacles in environmental management make EL meaningless for competitive advantage achievement. As demonstrated in this study, high costs and poor technology could reduce theeffectiveness of EL in facilitating crucial antecedents of improved environmental performance.

▲

The insignificant finding on the link between EL and environmental performance seems contrary to the existing literature that suggests a positive link between EL and environmental performance. There are a few explanations for theseconflicting findings.

Mediating Role of The Implementation of Green Operational Practices
This study identifies an important mechanism, the implementation of GOP, through which a proactive environmental
strategy impacts environmental performance. The results in this study confirm that the implementation of GOP fully mediates the effects of GHRM on environmental performance, suggesting that the implementation of GOP works as animportant mechanism through which GHRM enhances environmental performance. This finding indicates that firms thatemphasize the importance of human resources management in environmental issues are more likely to adopt GOP,
which is an important predictor of high environmental performance.
This results in failing to support the mediating role of the implementation of GOP between EL and environmental
performance. One reason could be that firms emphasizing the importance of EL prefer to engage in externally oriented
activities, such as green supply chain practices, rather than internal operational practices. This is because the main
purpose of EL is to indicate congruency with the requirements and expectations of stakeholders, and external environmental activities may be more effective in enhancing a firm's environmental reputation.

Moderating Roles of Operational Barriers and Managerial BarriersThis study takes a contingent perspective and analyzes the moderating roles of OB and MB. The results demonstrate their different roles in influencing the effectiveness of GHRM and EL. OB reduce the effectiveness of EL in facilitating the implementation of GOP. When the level of OB is high, firms who emphasize the importance of environmental
congruency may be less likely to implement GOP successfully because of the expected high uncertainty in environmental management and the low return to investment.
MB negatively moderate the links between GHRM and the implementation of GOP. Therefore, a high level of MB
might result in a low efficiency of the implementation of GOP for firms emphasizing the strategic importance of GHRM in
environmental management.

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“
Corporate Social Responsibility
and Collective Organisational
Citizenship Behaviour

As firms consider spending time and resources on socially
responsible activities, my research shows that the corporate social
responsibility (CSR) activities can provide additional benefits to thefirm through its positive impact on employee attitudes and behaviors. My research identifies the pathways through which CSR can
encourage employee behaviors that help the firm. Results show that
employees pay careful attention to the social responsibility activitiesof their firm and are proud when the firm make a positive contribution to society. In return, employees will reciprocate within a firm willcollectively reciprocate by taking actions that help the organization.
In this way, CSR can create a virtuous cycle through its employeesthat benefits society as well as the firm itself.
— Byron Y. Lee
Assistant Professor of Management, CEIBS

lthough evidence has shown a positive relationship between
collective organisational citizenship behaviour (OCB) andorganisational performance, the antecedents of collective OCB
are still understudied. OCB is defined as “individual behaviour
that is discretionary, not directly or explicitly recognised by theformal reward system, and that in aggregate promotes the effective functioning of the organisation” . Previous studies suggestthat in top-performing companies, it is a norm that employees display OCB in their daily work, such as helping and supporting
each other, in order to do the best work possible.

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By Wang Xiao-Hua (Frank), Beijing Normal University
Yang Jun, University of North Carolina at Greensboro
Cao Rujiao, University of Maryland
Byron Y. Lee, China Europe International Business School (CEIBS)

Although the time spent by managers and employees in OCB
behaviours has increased by more than 50% over the past two
decades, recent data has revealed that the distribution of OCB isoften extremely lopsided, with 20%-30% of OCB coming from
3%-5% of employees. This finding highlights the importance ofstudying the antecedents of collective OCB, as organisations
would benefit much more from collective OCB rather than lopsidedly distributed individual OCB.
Previous studies have reported that top management's ethical leadership and a high-performance work system are firm-level
antecedents of collective OCB. Extending this line of research, wesurveyed more than 1700 employees, HR directors and CEOs
from 160 firms in China to learn more about how corporate social
responsibility (CSR), defined as a company's discretionary
actions and policies that appear to advance social well-being
beyond its immediate financial interest and legal requirements,
might serve as another important antecedent of collective OCB.

This article was adapted from a paper published in the December 2019 issue of the Journal of Frontiers in Psychology: Corporate Social Responsibility and Collective OCB: A Social Identification Perspective. Visit https://www.frontiersin.org/articles/10.3389/fpsyg.2019.02720/full.

In addition, we also sought to advance a theoretical modelthat elucidates the mechanism through which CSR may impact
employees’ collective OCB at the firm level. Specifically, we proposed that perceived external organisational prestige and employees’ collective organisational identification (OI) would mediate
the relationship between CSR and collective OCB.

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CEIBS CSR Research

Theoretical Overview
CSR and the Company's Organisational Prestige

Collective Organisational Identification and Collective OCB

Organisational prestige is defined as employees’ beliefs about how other people outside the organisation, such as
customers, competitors, and suppliers, view or evaluate their organisation. Prior to conducting our study, we predictedthat CSR would act as an important antecedent of organisational prestige for the following reasons:Collective OCB is defined as the extent to which employees of an organisation collectively engage in OCB. Firm-level collective OCB may emerge throughtwo processes:(1) CSR promotes an organisation's visibility to the public. Such efforts are often recognised and valued by thecommunities that are the direct beneficiaries of the CSR initiatives. As a result, organisations’ CSR actions help themobtain respect and trust from the communities;(1) Employees working in the same firm are exposed to the same organisational factors, such as organisational culture, top management leadership, andCSR practices. As a result, they are likely to develop a shared understanding
with regard to the normative level of their OCB; and,

(2) An organisation's engagement in CSR may have a positive impact on other stakeholders’ (e.g., government,
customers, suppliers) judgments about that organisation, which also influence its prestige; and,
(3) Although CSR practices mainly focus on external stakeholders, they can also influence organisational prestige
as perceived by the internal employees because employees seek information about how outsiders view or evaluate
their organisation through word of mouth and public media.

Organisational Prestige and Collective Organisational Identification(2) Organisations that expect their employees to display a high level of OCB
tend to attract and hire individuals who are willing to engage in such behaviour.
Those employees who do not fit into such an environment will eventually leave
the organisation, resulting a homogenous level of OCB within the firm.
Additionally, in conducting our study, we further anticipated that employees’
collective OI would be positively related to their collective OCB for the following
reasons:

In beginning our research, we also anticipated that organisational prestige would be positively related to employees’ collective organisational identification, which is defined as the extent to which employees hold a shared feeling of
attachment and belonging to their organisation. Being a member of an organisation that has positive and sociallyrespected characteristics makes employees believe that they also hold those positive and socially respected characteristics. Therefore, employees who identify with prestigious organisations obtain a corresponding sense of personal status.

(1) When employees identify with their organisation, they regard the goals of
the firm as intrinsically motivating and are likely to exhibit self-sacrificial andorganisation-oriented behaviours. Collectively, employees who share high levels
of OI have stronger commitment to organisation goals and, therefore, are more
likely to devote greater effort to their tasks and display higher levels of OCB; and,

Organisational prestige may also promote employees’ OI by creating a sense of belongness for the employees.
Research has shown that employees tend to hold prosocial values and expect those values to be practiced in theorganisations they work for. When employees perceive their company as possessing higher organisational prestige,
they will feel that outsiders believe their organisation demonstrates a strong commitment to important social values,
such as contributing to the community and preserving the natural environment. Thus, employees may perceive that thevalues of the organisation are aligned with their personal values. Such a feeling of value congruence may create asense of belongness and motivate employees to identify more strongly with the organisation.

(2) When employees identify with an organisation that practices CSR, these
employees are more likely to activate and reinforce their self-images as altruisticand helpful. This alignment occurs because their sense of self is consistent withthe organisation's goals and values. Therefore, the employees are motivated todisplay higher levels of collective OCB, as this behaviour will help them maintaintheir social identity as typical members of the organisation.

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CEIBS Corporate Social Responsibility White Paper

CEIBS CSR ResearchMediating Effects of Organisational Prestige andCollective Organisational Identification

Results and Discussion
Furthermore, we anticipated that organisational prestige and collective
OI may sequentially mediate the link between CSR and collective OCB. In
particular, we proposed that organisational prestige may mediate the positive impact of firm-level CSR on employees’ collective OI. Firm-level CSR
was expected to be positively related to organisational prestige for threereasons:(1) CSR practices promote the organisation's visibility to the public, andhence help the organisation obtain respect and trust from the communities;(2) CSR initiatives result in positive evaluations from external stakeholders (e.g., government and customers) because those initiatives satisfy thosestakeholders’ expectations for modern organisations to advance social welfare; and,
(3) Those external stakeholders’ positive evaluation and judgment
about the focal organisation will also boost the internal employees’ perceived organisational prestige.
Organisational prestige, in turn, was expected to boost employees’ collective OI for the following two reasons:(1) Identifying with a prestigious organisation can enhance employees’
self-worth and fulfill their need for self-enhancement; and,(2) Organisational prestige may enhance employees’ collective OI by
creating a sense of belongness for the employees.
Collective OI was also expected to mediate the positive effect of organisational prestige on employees’ collective OCB for the following reasons:(1) Employees with high OI perceive their organisational successes as
their personal successes, and therefore tend to exhibit self-sacrificial andorganisation-oriented behaviours;(2) Employees, who identify with an organisation that practices CSR,
are more likely to activate and reinforce their self-images as altruistic andhelpful, and thus are motivated to display higher levels of collective OCB.

The results of our survey showed that CSR did infact have a positive effect on organisational prestige,
which in turn had a positive effect on collective OI. Collective OI was positively related to collective OCB. Our
study thus contributes to the OCB literature by identifying CSR as a firm-level antecedent of collective OCB.
Specifically, our results indicate that, at the firm level,
CSR practices may enhance employees’ collective OCB
by promoting organisational prestige and collective OI.

Practical Implications
Our study has important practical implications. In
particular, top management of organisations should beaware that their CSR practices may influence both external and internal stakeholders simultaneously. First, CSR
may help create competitive advantages for the organisation by boosting its external prestige. External stakeholders tend to believe that more socially responsible
companies are more credible and trustworthy, and thus
perceive these companies more favourably in terms ofprestige and reputation. By making their CSR initiatives
visible to the public, organisations may receive positive
regard and enjoy a more favourable reputation with key
external stakeholders, such as customers and competitors. Therefore, organisations should actively engage incorporate communications about their CSR activities via
advertisements, promotions and CSR reports, which canhelp the organisation build a positive image amongexternal stakeholders.
Second, our results suggested that CSR practices
may also influence internal stakeholders—that is, employees—by promoting their collective OI and subsequently their collective OCB. If top management wishes
to foster greater collective OI and collective OCB among
the firm's employees, an effective strategy could be
actively communicating the positive impacts of CSR
activities to those employees and help them understandenhanced external prestige resulted from those CSR
practices. Taken together, our findings provide goodreasons for organisations to adopt social responsibility
as a firm-level strategy to gain competitive advantages.

094

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Ⅴ

RESEARCH ON CSRREPORTS OF A-SHARE
LISTED COMPANIES2019
Research on CSR
Reports of A-share
Listed Companies“

Corporate social responsibility is not just about corporatecharity. The concept of CSR clearly goes beyond that: it should
serve to improve a company's culture, and boost its core competitiveness and strategic decision-making. Ultimately, it helps a company conform to societal expectations, and achieve sustainable
development.
— RUI Meng
CEIBS Professor of Finance and Accounting,Director of CEIBS Centre for Wealth Management

Center for Wealth Management, CEIBS
Centre for Accounting and Financial Big Data Research, Shanghai University of Finance and Economics

INTRODUCTIONCONTENTS
Subjects
2018 Annual CSR Reports published by A-share listed companies between January and June, 2019.

Abstract

Methods

Overview of CSR Report Disclosure of A-share
Listed Companies

The 2019 Research on CSR Reports of A-Share Listed Companies was compiled by reference to the CSR indicator design in China and abroad, and the authoritative CSR report guide, with a focus on Chinese social con-

Analysis of Companies Disclosing 2018 CSR
Reports

cerns, based on big data, in order to establish a distinctive CSR indicator system.

Analysis of Indicators in 2018 CSR Reports
Data Sources

Social Responsibility Management

Most data in the research were derived from digital CSR reports and annual reports of listed companies published on http://www.cninfo.com.cn. Other sources include the “CSR Database” , “Violation and Punishment Da-

Company Operations and Managementtabase” , and “Litigation and Arbitration Database” on the Chinese Research Data Services Platform, the “Com-

Product Quality and Innovationpany Violation” and “Company Litigation” sections in the WIND database, and relevant news in Baidu andGenius Financial Database.

Responsibilities for Employees
Diversity and Equal Opportunities

Data Processing
The research combined big data technology with manual correction:
1) Data mining: Distributed crawling was adopted to collect large amounts of raw data from the websites ofcompanies and regulatory authorities, and mainstream search engines.
2) Data cleaning: The data were deeply cleansed to put right erroneous value, and eliminate duplicates and out-

Environmental Responsibility
Social Contribution and Charity
Year-on-Year Comparison of Indicators in CSR
Reportsliers to ensure consistency according to predefined rules.
3) Data matching: The required information was precisely identified from a large number of social responsibility
reports, news reports and announcements.
4) Data mining and visualization: Manual processing and machine learning were combined to extract and minerequired data from mass data (e.g., text information), and visualize relevant findings.

Analysis of Economic Value of CSR Reports
APPENDIX: Top 50 Companies Based on 2018
CSR Reports”CEIBS Corporate Social Responsibility White Paper

Research on CSR Reports of A-Share Listed Companies

Abstract

As a centerpiece of non-financial information released by a listed company in the capital market, the CSR report
can help us analyze and track its performance and figure out how it maintains corporate image. The CSR report also
improves the company's information environment so that external investors can make better decisions. Since CSRC,
Shanghai Stock Exchange (SSE) and Shenzhen Stock Exchange (SZSE) rolled out CSR guidelines in succession, an
increasing number of companies have disclosed CSR reports, which expand in both length and content year by year.
Companies that release CSR reports vary considerably in industry, region, type of organization, and board. This
research collects and evaluates financial and non-financial information released by listed companies to forecast theirprospects in order to help investors make decisions better.
The research classified the indicators in the CSR report into seven groups, with the following findings: (1) Social
responsibility management: A low proportion of companies performed social responsibility management that tends toincur high costs. For lack of mandatory requirements, only a few companies engaged a third party for CSR reportassurance. (2) Company operations and management: A growing number of companies have attached more importance to strategic sharing as the Belt and Road Initiative was rolled out. The regulatory authorities have been tightening
their grip on companies in terms of anti-corruption and compliance, especially in the financial industry susceptible tocompliance risks. (3) Product quality and innovation: Both the number of patents and the amount of R&D expenditure
edged up; companies in East China were the best performers in R&D innovation. (4) Responsibility for employees:
Companies are focusing more on employees’ rights and benefits. Over 80% of the listed companies disclosed remuneration incentives, among which private businesses were the most active and state-owned enterprises (SOEs) were mosthighly motivated to disclose their supplementary employee benefits. (5) Diversity and equal opportunities: The status
and voice of female directors, supervisors and executives have yet to be improved. The non-discriminatory policy,
which was underappreciated, varied greatly among all types of organizations. (6) Environmental responsibility: SOEs
and foreign-funded enterprises were more active in fulfilling this responsibility, while private enterprises had a weakersense of environmental responsibility. Thanks to the national tough battle of “pollution prevention and control” , all “environmental responsibility” indicators went up significantly. (7) Social contribution and charity: Listed financial companies and SOEs showed a sharp sense of social responsibility, as evidenced by their strong engagement and generous
donations. Owing to the gloomy job market in 2018, however, the “job creation” indicator went down, while the “layoff”
indicator went up.
The CSR report is based on the combination of mandatory disclosure and voluntary disclosure, with a low proportion of third-party assurance. Though less reliable than financial statements, the CSR report contains non-financial information that is a worthy addition to financial information and influences investors’ decisions. To examine the economic
value of the CSR report, the researchers built an investment portfolio based on the report information and analyzed its
profitability. The research found that after buying the companies with the highest CSR scores and selling those with thelowest scores according to their 2018 CSR reports, the portfolio generated accumulative excess return of 3.12% in thefollowing three months, i.e., an annualized rate of 12.48%. Moreover, among the components of social responsibility,
social responsibility management, company operations and management, product quality and innovation, and responsibility for employees played an instrumental role in boosting the profitability of investment strategies.
This research has probed into CSR reports at length to help regulatory authorities better understand CSR disclosure in the capital market, and enable investors, intermediaries and securities analysts to improve their investment decisions. This research aims to boost the efficiency of the economy by optimizing resources allocation in the capital
market, and facilitate decisions on pollution control and economic transformation.

100

As a part of information disclosure by listed companies, CSR disclosure has captured growing attention from the
top management. As a result, the number of disclosed CSR reports is increasing year by year. Except for 2008 and2009, when three types of companies① were subject to SSE's mandatory disclosure policy, the number of companies
that published CSR reports for the first time remained stable in other years. In 2019, 942 companies listed on SSE andSZSE disclosed 2018 CSR reports (including sustainability reports), 86 more than the previous year (up 10.05%
year-on-year). Among them, 94 companies published CSR reports for the first time, more than 78 in the previous year.
But it is noteworthy that only one-fourth of A-share listed companies released CSR reports. Overall, the disclosure rate
was still at a low level, with much room for improvement.
1000

942

1000

856
792

800

800

743
642

671

704

582

600

600

530
459
400

400

369

332
200

200

0

Number of CSR Reports Disclosed for the First Time

Presently, CSR report disclosure enables companies to stay on good terms with stakeholders, maintain a soundcorporate image and a reasonable valuation, and make public their annual fulfillment of social responsibility. The
research looks at the definition of the CSR report, companies unveiling their CSR reports, and indicators and theirimpact on stock prices in the secondary market.

Number of Disclosed Reports:
The number grew steadily, but the disclosure rate was still at a low level.

Number of Disclosed CSR Reports

In order to implement the decisions of the CPC Central Committee and the State Council on promoting the steadyand sound development of China's capital market, and push listed companies to regulate their operations, improve corporate governance, and safeguard the legitimate rights and interests of investors, China Securities Regulatory Commission (CSRC) unveiled the revised Codes of Corporate Governance of Listed Companies in September 2018, which aims
to motivate listed companies to play a leading role in environmental protection and social responsibility, and establish abasic framework for environmental, social responsibility, and corporate governance (ESG) information disclosure. As aresult, some companies will upgrade their CSR report to ESG report in the next two years.

Overview of CSR Report Disclosure of A-Share Listed Companies

19

42
34

2006

2007

116

2008

2009

85
2010

67

75

51

55

63

78

94

42

2011

2012

2013

2014

2015

2016

2017

2018

0

Number of Disclosures:
Nearly half of the companies made a CSR disclosure at least nine times,
while a few companies did so only once.
Between 2007 and 2019, a total of 1,110 A-share listed companies disclosed their annual CSR reports. The qualityof these reports varied greatly, due to a pronounced gap in companies’ awareness of disclosure. To be specific: 1) A
few companies failed to make a full disclosure. Except for 94 companies that disclosed CSR reports for the first time in
2019, 61 companies made a disclosure only once between 2007 and 2019; 2) Nevertheless, a fair number of companies were active in CSR disclosure. Nearly half of the companies published CSR reports at least nine times in the same
period; 3) A small number of companies took the lead in CSR disclosure. Around 21 companies released CSR reports
12 times; seven companies kept doing so for 13 years in a row.
Moreover, the length of a CSR report can reflect the amount of disclosed information to some extent. We havefound that compared with the reports with fewer pages, those with more pages cover more diversified forms of social
responsibility and more specific ways of fulfillment. The average number of report pages increased annually from 2012
to 2018. The reports averaged 33 pages in 2018, slightly more than 29 in 2017.

①: In December 2008, SSE released the Notice on Listed Companies’ Preparation for 2008 Annual Reports, which mandated CSR report disclosure for three types of listedcompanies (firms included in the SHSE Corporate Governance Index, firms that issued foreign-funded shares listed overseas, and financial firms).

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CEIBS Corporate Social Responsibility White Paper

Research on CSR Reports of A-Share Listed Companies

Analysis of Companies That Disclosed 2018 CSR Reports
Distribution of Companies by Industry:
The manufacturing industry saw the largest number of reports,
but overall, the disclosure rate was still at a low level.

255

250

Of all 942 CSR reports published in 2018, the number varied hugely across industries②. Manufacturing companies
released the largest number of reports (484), around 51.38% of the total; overall, however, the disclosure rate was still
lower, as only 22% of A-share listed manufacturing companies disclosed CSR reports. The financial industry showed
the highest disclosure rate as 80 financial companies published CSR reports, making up 85% of A-share listed enterprises in the financial industry. This owed much to SSE's mandatary disclosure requirement for financial companies.

Number of companies

200

155

150

112

107
100
74

57

56

50

55

22%

484

Manufacturing

76

69

66

85%

80

Finance
Real estate

52

Information transmission, software and IT services

50

Wholesale and retail

44

Transportation, warehousing and post

49

Production and supply ofElectricity, heat, gas, and water

48

41%

21
7

19%

0
1

2

3

4

5

6

7

8

9

10

11

12

According to the statistics on the pages of CSR reports between 2012 and 2018: 1) The proportion of the reports
with no more than ten pages remained the largest between 2012 and 2015, but it decreased annually until it was lower
than the proportion of the reports with 11–20 pages in 2016; 2) Between 2012 and 2018, the report length increased
significantly as the proportion of the reports with more than 20 pages was on the rise (above 50% for the first time); 3)
The report length varied significantly from company to company. The longest report released in 2018 contained 170
pages, while the shortest one had only three pages.

Construction

27

Culture, sports and entertainment

23

Agriculture, forestry, animal husbandry and fishery

11

Water conservancy, environment andpublic facilities management

1121-30 pages

31-50 pages

44%
44%
28%
40%
28%
22%
21%

30
0

11-20 pages

48%

33

MiningOthers10 pages or below

27%

13

100

200

300

400

500

0

Number of companies that disclosed reports

Over 50 pages

20%

40%

60%

80%

100%

% of companies that disclosed reports in this industry

29%

17%

15%

14%

13%

17%
12%

15%

14%

14%

13%

11%

15%
11%

15%

14%

13%

13%

13%

11%

20%

19%

22%

25%

28%

29%

21%

24%

29%

27%

30%

Proportion

26%

30%

30%

34%
32%

36%

40%

Distribution of Companies by Region:
The majority was concentrated in East China;
the disclosure rate was the highest in Fujian Province.
Of all 942 CSR reports published in 2019, the number varied hugely across regions.

10%(1) Companies in East China released the most reports (662), while those in Northeast China the least (36). Except
for Northeast China, around 26% of listed companies in each region disclosed reports, with small regional differences.

0%
2013

2015

2017

2013

2015

2017

2013

2015

2017

2013

2015

2017

2013

2015

2017

②: Companies were classified by industry based on The Guidelines for Classification of Listed Companies by Industry issued by China Securities Regulatory Commission.

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CEIBS Corporate Social Responsibility White Paper

Distribution of Companies by Type of Organization:
SOEs were in majority, with the proportions of private enterprises andforeign-funded enterprises on the rise.

26.74%

27.31%

Number of companies

25.00%

26.29%

662
600

20.00%

20.57%

15.00%

400

Proportion

800

Research on CSR Reports of A-Share Listed Companies

Of all 942 CSR reports published in 2019, SOEs published 520 reports (55.20%), a slight decrease from the previous year; private enterprises released 364 reports (38.64%) and Chinese-foreign joint ventures 54 (5.73%), with the proportion of both on the rise.

10.00%
200
127

117

5.00%

2014

61.65%

0.00%

2015

61.24%

36
0
East

CentralWest

Northeast
SOEs 2016(2) By province③, A-share listed companies in Beijing published the most reports (127), followed by Guangdong
and Shanghai; as for the disclosure rate, Fujian topped the ranking, with 67 reports (51%), followed by Yunnan (48%)
and Henan (46%).

127

Beijing21%

107

Shanghai

38%

87

Zhejiang

36

Hubei

22

Liaoning

20

2015

34.19%

Private enterprises 201634.72%

37.38%

2018

46%

19%
22%

38.64%

2014

3.98%

2015

4.04%

Chinese-foreign joint ventures 2016

4.29%

2017

4.44%

27%

Tianjin

19

Hunan

17

Yunnan16

Xinjiang

15

Hebei

15

Jiangxi

1428%

Shaanxi

13

27%

Chongqing

12

Hainan12

033.66%

27%

23

Sichuan

2014

23%

28

Anhui

55.20%

16%

45

Henan

2018

2017

51%

63

JiangsuShandong

57.71%

20%

67

Fujian

2017

40%

120

Guangdong

60.10%

2018

38%

5.73%

16%
2014

0.71%

2015

0.54%

Others 2016

0.88%

2017

0.47%

2018

0.42%

48%
27%
35%

24%
39%

50

100

150

0%

10%

20%

30%

40%

50%

60%

0%

10%

20%

30%

40%

50%

60%

70%

% of disclosed reports

Number of companies

Proportion③: For the sake of comparability, the provinces with fewer than 10 reports are not included here.

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CEIBS Corporate Social Responsibility White Paper

Research on CSR Reports of A-Share Listed Companies

Analysis of Indicators in 2018 CSR Reports

Distribution of Companies by Board: 60% of the companies were listed on
SSE; the disclosure rate was lower among
the companies listed on ChiNext, but it was on the rise.

Indicators in 2018 CSR reports fall into seven categories:

Of all 942 CSR reports published in 2019, 569 (60%) came from the companies listed on SSE; 373 (40%) camefrom the companies on SZSE, among which 144 were listed on the Main Board, 164 on the SME Board, and 65 on
ChiNext. Overall, 39.35% of A-share companies listed on SSE and 17.64% of those on SZSE disclosed CSR reports.
Among the three boards of SZSE, the Main Board saw the highest disclosure rate (30.97%), followed by the SME Board(17.85%) and ChiNext (8.89%).

569

SSE A-Share

17.64%

30.97%

144

1) SZSE Main Board(2) Company operations and management(5) Diversity and equal opportunities(3) Product quality and innovation(6) Environmental responsibility(7) Social contribution and charity

To evaluate the companies’ CSR awareness and performance, this research analyzed each indicator in the above
categories.

(1) Accounting irregularities

17.85%

164

2) SZSE SME Board(4) Responsibility for employees

It is noteworthy that different from the CSR indicators released by other institutions, the above indicators are basedon various big data research methods and data processing procedures, including data collection, cleansing, andmining. For instance, we adopted distributed crawling to access CSR reports of listed companies, and their annual
reports, penalty information and company news from their websites, websites of regulatory authorities, and mainstream
search engines. We cleansed these data according to predefined rules and identified required information from a seaof CSR report texts and news reports. Big data technologies were also used for data mining and visualization. In conclusion, big data thinking and methods were adopted throughout the research, specifically in the following areas:

39.35%373

SZSE A-Share(1) Social responsibility management(5) Share of R&D personnel(9) All-male directors, supervisors and executives(2) Disputes over product quality and safety (6) Disputes over staff health and safety (10) Environmental penalties
8.89%

65

3) ChiNext
0

100

200

300

400

500

600

0%

10%

Number of companies

20%

30%

40%

50%

% of companies listed on each board(3) Patents(7) Female executives(11) Donations(4) R&D expenditure(8) Female directors(12) Layoff

CSR Indicator System

According to 2014-2018 statistics, A-share companies listed on SSE contributed an increasing proportion of annual
CSR reports over the years, while the SZSE saw a slight decline in its share of reports, except ChiNext, where the proportion of the companies disclosing CSR reports rose from 4.55% in 2014 to 6.90% in 2018.

SSE A-Share2014

58.81%

2015

59.49%

2016

59.72%

201760.40%

201860.40%2014

SZSE Main Board

17.68%

2017

16.82%

201817.41%

2014

18.32%

2015

17.63%

2016

16.79%

Company operations
and management

1) strategic cooperation and sharing
2) anti-bribery and anti-corruption3) business integrity4) commendation for sound governance5) accounting irregularities
6) financing disputes

Product quality and innovation

1) quality management2) commendation for super quality
3) after-sales service4) customer satisfaction5) disputes over product quality and safety6) patents7) R&D expenditure8) share of R&D personnel9) share of technical personnel

Responsibility for employees

1) remuneration incentives2) supplementary benefits
3) on-the-job training
4) communication with employees5) staff care6) safety management system
7) training on production safety8) occupational health and safety certification
9) disputes over staff health and safety

Diversity and equal opportunities

1) female executives4) vulnerable groups2) female directors5) equal opportunities
3) all-male directors, supervisors and executives

Environmental responsibility1) environmental benefits2) energy conservation
3) reduction in three types of waste4) circular economy5) green office6) environmental protection
and public welfare7) environmental certification
8) environmental commendation
9) environmental penalty

Social contribution and charity

1) donations
2) social contribution value per share3) charitable activities
4) contribution to education
5) volunteering6) international aid7) job creation
8) contribution to economic growth9) layoff

16.24%

201815.29%

2014

4.55%

2015

5.92%

2016

5.81%

2017

6.54%

2018

6.90%
0%

10%

20%
% of disclosed reports

1064) report assurance5) report inclusiveness16.96%

2016

2017

ChiNext

1) website column
2) leading team3) education and training

18.32%2015
SZSE SME Board

Social responsibility management

30%

40%

50%

60%

70%

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CEIBS Corporate Social Responsibility White Paper

Research on CSR Reports of A-Share Listed Companies

Social Responsibility Management
This part includes:(1) Website column(2) Education and training(3) Leading team(4) Report assurance(5) Report inclusiveness(4) Report assurance: 40 companies had their 2018 CSR reports assured by a third party, accounting for only 4.25%of the total. For lack of a mandatory disclosure requirement, only a few companies sought a third party for report assurance. Of 40 companies, 18 were engaged in the financial industry, making up half of the companies with assured reports.

These five indicators are used to evaluate the companies’ CSR management in terms of awareness and performance.
Among the 942 companies that disclosed 2018 CSR reports④:(1) Website column: 468 companies opened a CSR column on their official website that conveyed information concerning CSR fulfillment, accounting for 49.68% of the total, up 3.89% year-on-year. By industry, 77.78% of the companies in the construction industry⑤ launched a CSR column, accounting for the highest proportion; by type of organization, 55.56% of the foreign-funded companies opened a CSR column, making up the highest proportion, around 10%
higher than private enterprises. By region, a significantly higher proportion of companies in East and West China ran a
CSR column than those in Northeast and Central China.

403149.68%

40%
28.15%
30%

4

Mining2

Wholesale and retail

2

Production and supply of electricity, heat, gas and water

1

Real estate1

Public health and social work

1

Total

40

10

2016

2017

2018

28.98%
23.67%

23.11%
17.76%

17.55%

20%

Transportation, warehousing and post

(5) Report inclusiveness: 85.88% of the 2018 CSR reports conveyed a full range of CSR information, thanks to the
Guidelines for Preparation of the “Report on Fulfillment of CSR” promulgated by SSE. More foreign-funded companies
passed muster in terms of report inclusiveness than SOEs. The proportion of the companies with inclusive reports was
similar in East, Central, and West China, higher than that in Northeast China.

Leading team
45.79%

1129

041.47%

18

Manufacturing(3) Leading team: 223 companies set up a leading team dedicated to CSR management, accounting for 23.67% of
the total, up 5.91% year-on-year. By industry, 39.39% of the mining companies built a CSR team, making up the highest
proportion; by type of organization, 40.74% of the foreign-funded companies established such team, accounting for thehighest proportion, 24% higher than private enterprises; by region, the proportion of the companies with a CSR teamwas the highest in West China (29.06%) and the lowest in Northeast China (5.56%).

50%

Finance30

20

Education and training

Number of companies

40(2) Education and training: 273 companies provided CSR training in the fields of anti-corruption, compliance andCSR awareness, accounting for 28.98% of the total, up 0.83% year-on-year. By industry, 42.42% of the mining companies delivered CSR training, representing the highest proportion; by type of organization, 30.19% of the SOEs carriedout such training, making up the highest proportion, around 3% higher than private enterprises; by region, a significantly higher proportion of listed companies in West China offered such training than those in other regions.

Website column

By industry - 2018

Report assurance

10%

Report inclusiveness

0%
2016

2017

100%

2018

89.14%
By industry - 2018

Website column

Education & training

Leading team

Mining54.55%

42.42%

39.39%

Wholesale and retai

54.55%

38.64%

25.00%

Finance51.25%

36.25%

32.50%

By organization type - 2018

Website column

Education &training

Leading team

SOEs

51.35%

30.19%

26.92%

Chinese-foreign joint ventures

55.56%

29.63%

40.74%

Private enterprises

46.15%

27.20%

16.76%

By region - 2018

Website column

Education &training

Leading team

84.70%

77.78%

33.33%

33.33%

Manufacturing

49.17%

32.64%

22.11%

Real estate

61.54%

21.15%

19.23%

Production and supply of electricity,heat, gas and water

50.00%

16.67%

27.08%

Transportation, warehousing and post

36.73%

16.33%

28.57%

Information transmission,
software and IT services

30.00%

14.00%

16.00%

Culture, sports and entertainment

39.13%

0.00%

4.35%

West

47.86%

32.48%

29.06%

0%
2016

East

52.27%

28.70%

23.87%

Northeast

38.89%

27.78%

5.56%

Central40.94%

27.56%

22.83%

2017

Proportion

Chinese-foreign joint ventures

90.74%

Private enterprises

87.91%

SOEs

84.04%

By region

Proportion

West

88.89%

East

86.40%

Central

83.46%

Northeast

75.00%

85.88%

50%

Construction

By organization type - 20182018④: The samples for analysis were 942 companies that disclosed 2018 CSR reports; the same below.
⑤: The comparison of CSR reports in 2018 by industry does not cover the industries with fewer than ten reports (the same below).

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Conclusion and Analysis of “Social Responsibility Management”

According to the classical economics theory, enterprises should play a social role of utilizing resources as efficiently as possible to launch products and services, and sell them at the prices consumers are willing to pay. As the market
economy is evolving, large multinational companies are mushrooming and gradually going beyond simply providing the
public with products and services. Enterprises are required to play a more positive role in terms of environmental protection, employee entitlements, and public welfare projects.
The “social responsibility management” indicators reveal how much a company values social responsibility. Soundsocial responsibility management is not only the prerequisite for a high-quality CSR report, but also the bedrock for thecompany's active role in addressing social concerns and fulfilling CSR responsibility. From the lowest cost of execution
to the highest, these indicators are “website column” “education and training” , and “leading team” . The share of thecompanies fulfilling these indicators decreases as the cost of execution rises. That reveals that companies lean toward
the CSR practices that incur lower cost.
SOEs and Chinese-foreign joint ventures did better in fulfilling these indicators than private enterprises. CSR is
inseparable from business ownership and control. Therefore, companies of different types and with different stakeholders vary greatly in the CSR philosophy and management. To live up to higher CSR expectations from the government
and the general public, SOEs chose to take on CSR voluntarily as a part of their strategic vision; thanks to foreign capital injection, Chinese-foreign joint ventures were highly motivated to assume social responsibility because they had asharper sense of CSR and a more urgent need to project a sound corporate image than other types of enterprises in
China. As enterprises played a leading role in fulfilling social responsibility, their impressive performance as measured
by social responsibility management indicators reflected well on their massive investment in social responsibility management; private enterprises, by contrast, showed the weakest awareness of social responsibility management as they
were at the bottom.
The “report assurance” indicator saw the lowest fulfillment rate in this part. For lack of a mandatory disclosure
requirement and the high cost of execution, only a few companies (mostly SOEs and financial companies) engaged athird party to audit their CSR reports, while over 90% of the reports were published without third-party assurance, andtheir credibility was cast into doubt. External auditing, a special way of economic control, is an effective supervisory
mechanism for corporate governance. As auditing grows more sophisticated, non-financial information is covered by
the auditing system. As the quality of the CSR report, a centerpiece of non-financial information, is capturing growing
attention from the public, it will be an inevitable trend for listed companies to have their CSR reports audited.

Research on CSR Reports of A-Share Listed Companies

Company Operations and Management
This part includes the following six indicators that reveal the companies’ positive performance and negative attention they received in terms of company operations and management:(1) Strategic cooperation and sharing(4) Commendation for sound governance(2) Anti-bribery and anti-corruption(5) Accounting irregularities(3) Business integrity(6) Financing disputes.

(1) Strategic cooperation and sharing: 38.00% of the companies disclosed in their 2018 CSR reports that they had
worked with business partners in setting up strategic sharing mechanisms and platforms, including the long-term strategic cooperation agreement, joint laboratory, and shared database, up 3.54% from the previous year. By industry,buoyed by the Road and Belt Initiative, more listed construction companies set their sights on the international market
for in-depth strategic collaboration; 44.44% of the construction companies disclosed their strategic cooperation withpartners, making up the highest proportion. By type of organization, there were small differences in the disclosure rate
among different types of companies; private enterprises had a slightly higher disclosure rate. By region, the disclosure
rate was higher in East China than in other regions.
(2) Anti-bribery and anti-corruption: 53.50% of the companies revealed in their 2018 CSR reports their measuresagainst commercial bribery and corruption, and precaution against non-compliance. By industry, 66.25% of the financial companies disclosed their anti-corruption measures, accounting for the highest proportion, thanks a great deal to
the strict compliance requirement for the financial industry. By type of organization, 61.11% of the foreign-funded companies and 60.00% of SOEs disclosed such measures, making up a significantly higher proportion than private enterprises. By region, the proportion in East China was similar to that in Central China, but lower in West China and Northeast China.
(3) Business integrity: 81.21% of the companies disclosed their adherence to business integrity and fair competition both in business philosophy and practice, indicating a slight decrease from the previous year. Construction companies delivered a remarkable performance in this indicator, with 96.30% of them laying an emphasis on business integrity; by region, there were only mild differences among companies of different types.

Strategic cooperation and sharing

The “report inclusiveness” indicator saw the highest fulfillment rate in this part, thanks mainly to official CSR guidance, including the Guidelines for Social Responsibility of Listed Companies released by SZSE, and the Notice on
Strengthening Listed Companies’ Social Responsibility Fulfillment and on Issuing the “Guidelines on Listed Companies’
Environmental Information Disclosure” and Guidelines for Preparation of the “Report on CSR Fulfillment” by SSE. As
stipulated in these documents, listed companies are encouraged to establish a sound social responsibility system andcheck up on its implementation on a regular basis. Based on these guidelines, the regulatory authorities have also
improved CSR regulations so that listed companies can refer to them and disclose a wider range of information when
preparing a CSR report.

2017

It has been no longer a choice for enterprises, but their responsibility to create social value in the fields of environment, society and management, and take the lead in addressing many social concerns. Listed companies in China still
have a long way to go in social responsibility management. SOEs and foreign-funded companies are playing an exemplary role. Progress in CSR management will depend on heightened CSR awareness and guidance offered by the regulatory authorities.

By industry - 2018110

Anti-bribery and anti-corruption

Business integrity

29.67%
30.81%

201684.85%
34.46%
48.71%
83.41%
38.00%
53.50%

2018

81.21%
0%

20%

40%

60%

80%

100%

Strategic sharing

Anti-bribery and anti-corruption

Business integrity

By organization
type - 2018

Strategic sharing

Anti-bribery andBusiness integrity
anti-corruption

Construction

44.44%

59.26%

96.30%

Private enterprises

39.01%

43.41%

81.04%

Manufacturing

39.67%

51.03%

83.06%

38.89%

61.11%

88.89%

Transportation, warehousing and post

38.78%

48.98%

79.59%

Chinese-foreign
joint ventures

Wholesale and retail38.64%

65.91%

86.36%

SOEs

37.50%

60.00%

80.38%

Information Transmission,
Software and IT Services

38.00%

58.00%

80.00%

Finance

35.00%

66.25%

78.75%

Strategic sharing

Anti-bribery andanti-corruption

Business integrity

Production and supply of electricity,heat, gas and water

33.33%

60.42%

85.42%

East

40.18%

54.98%

80.82%

Culture, sports and entertainment

30.43%

30.43%

69.57%

West

35.90%

49.57%

86.32%

Mining30.30%

54.55%

75.76%

Central30.71%

55.12%

79.53%

Real estate

28.85%

51.92%

80.77%

Northeast

30.56%

33.33%

77.78%

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CEIBS Corporate Social Responsibility White Paper

Research on CSR Reports of A-Share Listed Companies

Conclusion and Analysis of “Company Operations and Management”(4) Commendation for sound governance: 250
companies, around 26.54% of the total, were commended for sound governance and presented withawards like the Best BOD Award for Listed Companies and the Best Corporate Governance PracticeAward. By type of organization, 28.65% of SOEs
and 22.22% of the foreign-funded companies werecommended for sound governance, making up thehighest and lowest proportion respectively. By
region, listed companies in East China had the highest rate of receiving commendation at 30.21% and
the Central region the lowest at 16.54%.

By type of organization - 2018

Commendation for sound governanceSOEs

28.65%

Private enterprises

24.18%

Chinese-foreign joint ventures

22.22%

By region - 2018

Commendation for sound governance

East

30.21%

West

19.66%

Northeast

16.67%

Central16.54%

Total

26.54%(5) Accounting irregularities: When searching
through the open database for information about accounting irregularities and penalties, we find that 90 companies disclosed accounting irregularities in 2018, accounting for 9.55% of the total, up 0.44% than that of previous year. By
industry, the proportion of accounting irregularities was the highest—up to 22.00% in the IT service industry. By region,
the proportion of accounting irregularities was the highest (16.67%) in Northeast China, while that in East China was thelowest (8.61%); by type of organization, private enterprises had the highest rate at 10.71% and foreign-funded companies the lowest at 7.41%.
(6) Financing disputes: By referring to litigation and penalty information in open databases, we find that 101 companies had financing disputes in 2018, accounting for 10.72% of the total and increasing by 0.67% from the previous year.
31.25% of financial companies disclosed financing disputes, the highest among all industries. 15.38% of companies inWest China were involved in such disputes, higher than other regions; by type of organization, SOEs reported the highest proportion of financing disputes, up to 12.12%.

Accounting irregularities

Financing disputes
By industry - 2018

Accounting irregularities

Financing disputes

Finance17.50%

31.25%

Real estate

5.77%

21.15%

Mining3.03%

15.15%

Wholesale and retail11.36%

13.64%

Information transmission, software and IT services

22.00%

8.00%

Manufacturing

8.68%

7.23%

Production and supply of electricity, heat, gas and water

6.25%

6.25%

Culture, sports and entertainment

21.74%

4.35%

Transportation, warehousing and post

2.04%

4.08%

Accounting irregularities

Financing disputes

10.35%
2016
9.22%

9.11%
2017
10.05%

9.55%
2018
10.72%

0%10%

Accounting irregularities

Financing disputes

West12.82%

15.38%

By organization type - 2018

Northeast

16.67%

11.11%

Private enterprises

10.71%

9.07%

East

8.61%

10.72%

SOEs

9.04%

12.12%

Central

9.45%

6.30%

Chinese-foreign joint ventures

7.41%

9.26%

By region - 2018

Company operations and management is the foundation for a company to assume social responsibility and better
corporate governance can ensure better fulfillment of social responsibility. According to Article 86 in the General Rulesof the Civil Law of the People's Republic of China promulgated in 2017, “A for-profit legal person who engages in business activities shall abide by business ethics, maintain transaction security, accept government and social supervision,and assume social responsibility.” Listed companies, as the backbone of for-profit legal persons, are closely watchedby the general public in terms of operations, management, and performance of social responsibility. The indicators inthis part have offered valuable references concerning company operations and management.
The “strategic cooperation and sharing” indicator went up from the previous year, thanks to the considerable contribution from some industries. As the Belt and Road Initiative (BRI) is rolled out, Chinese listed companies are confronted
with both opportunities and challenges. General Secretary Xi pointed out at a symposium marking the fifth anniversary of
the Belt and Road Initiative that the world is undergoing major development, changes and adjustments. We should havestrategic and global vision and stay alert to risks while keeping an eye on historic opportunities so as to navigate throughthis profound transformation unprecedented in a century. China keeps abreast with the times by proposing the Belt andRoad Initiative, in the hope of linking Chinese dream with the global dream and blazing a trail of peaceful development
and win-win cooperation. In this context, a growing number of listed companies have jumped at the opportunity to workwith business partners and share fruitful results. Among them, the industries favored by the policies were faced with newopportunities. A number of construction and transportation companies entered into strategic cooperation with upstream
and downstream companies to beef up their business chain and seek international collaboration.
“Anti-bribery and anti-corruption” is both a hot topic in the society and a major concern of the government. Since
the 18th National Congress of the Communist Party of China, especially after the Second and Third Plenary Sessions of
the 18th Party Congress, the CPC Central Committee has strengthened the initiatives to improve Party conduct andensure clean government and the campaign against corruption. For the sake of Party conduct, the authority has introduced the “eight-point decision” and over ten prohibitions to address the practice of formalities for formalities’ sake,bureaucratic practice, and privilege seeking and to stamp out extravagance with public funds. Corruption is also ahuge obstacle to company development. Anti-corruption and clean governance is the foundation for a company's competitiveness. SOEs have cracked down on corruption with growing intensity in recent years. The investigation of several
senior executives for serious violations of laws and regulations caused quite a stir in the society. Chinese-foreign joint
ventures are subject to policies and laws not only in China, but also overseas, such as the Foreign Corrupt Practices
Act in the US. Therefore, the anti-bribery and anti-corruption disclosures rate was higher in SOEs and foreign-funded
enterprises, but lower in private enterprises.
The financial industry topped all other industries in the proportion of anti-corruption measure disclosures, Nevertheless, the financial industry saw a higher proportion of “accounting irregularities” and “financing disputes” , on accountof huge compliance risks and increasingly stringent regulation in the industry. In April 2018, China Insurance Regulatory Commission and China Banking Regulatory Commission were merged, and China Banking and Insurance Regulatory
Commission (CBIRC) was inaugurated. The regulatory authorities still imposed tough punishments during the transition.
According to the online data available, in 2018, the CIRC and its regional branches issued over 4,000 fine tickets to thebanking industry, amounting to ¥2,156 million⑥; and 1,430 fine tickets to the insurance industry or ¥230 million in total,
up by more than 50%. The securities industry was also subject to strict supervision. The CSRC system made 310 decisions on administrative punishment throughout the year, up 38.39% year-on-year, with the fines and confiscations of up
to ¥10,641 million, up 42.28% year-on-year; 50 people were banned from entering the securities market, up 13.64%
year-on-year. These penalty measures ensured the sound operations of the capital market and safeguarded the investors’ legitimate rights and interests, advancing the sustainable development of the capital market in the new era. Stringent regulation across the financial industry has prompted financial companies to put compliance in the heart of business strategies, and make full use of the corporate governance structure to raise employees’ compliance awarenessand improve the compliance system.
In conclusion, company operations and management is not only a key factor affecting business development, butalso the solid bedrock for the fulfillment of CSR. Companies should keep up with the times and improve corporate governance so as to better perform CSR.

⑥: ¥ = CNY = Chinese yuan renminbi; ¥1 = approximately US$0.14 on December 31, 2019.

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Research on CSR Reports of A-Share Listed Companies

Product Quality and Innovation
This part includes nine indicators that mirror A-Share listed companies’ awareness and performance in terms of
product and service quality, after-sales services and customer satisfaction, and product R&D and innovation:
After-sales services(1) Quality management(4) Customer satisfaction(7) R&D expenditure(2) Quality commendation(5) Disputes over product quality and safety(8) Share of R&D personnel(6) Patents(3) After-sales service(9) Share of technical personnel

Customer satisfaction

39.27%
201629.17%

42.17%(1) Product and service quality

20171) Quality management: In 2018, 545 companies disclosed in their CSR reports the measures they had taken to
improve product/service quality, such as establishing quality management systems, accounting for 57.86% of the total,
up 3.07% from the previous year. Given the high standards and strict requirement on construction quality, the construction industry showed the highest level of disclosure as 70.37% of the construction companies described their quality
management systems or measures in the reports; the manufacturing industry came second, at 68.39%.

2018

35.05%

2) Quality commendation: In 2018, 608 or 64.54% of the companies disclosed in their CSR reports that they werecommended or accredited for product/service quality. Due to the features of the industry, the construction industry saw
the highest disclosure rate, as 88.89% of the companies listed their quality certificates or honors.

Quality management

Quality commendation
By industry - 201855.18%

2016
62.63%

54.79%
2017

Quality management

Quality commendation

Construction

70.37%

88.89%

Manufacturing

68.39%

66.74%

Wholesale and retail63.64%

61.36%

Mining60.61%

57.58%

Real estate

50.00%

61.54%

Finance43.75%

76.25%

42.36%
36.20%

0%

50%

2018
64.54%
0%50%

40.00%
38.78%

59.18%

Production and supply of electricity, heat, gas and water

29.17%

52.08%

Culture, sports and, entertainment

17.39%

56.52%

1) After-sales services: In 2018, 399 companies disclosed in their CSR reports the measures they had taken to optimize after-sales services, including an improvement in the after-sales feedback system, accounting for 42.36% of the total,a slight increase from the previous year. The financial industry put a premium on customer experience, as 58.75% of financial companies disclosed their improvements in after-sales services, the highest proportion by industry; by type of organization, foreign-funded enterprises had the highest proportion of disclosure at 61.11%, and SOEs the lowest at 39.62%.
2) Customer satisfaction survey: In 2018, 341 or 36.20% of the companies disclosed in their CSR reports the customer satisfaction investigation they had organized. By industry, the financial industry had the highest proportion of disclosure at 60.00%; by type of organization, foreign-funded enterprises had the highest proportion of disclosure at
44.44%, and private enterprises the lowest at 30.49%.

35.74%

Wholesale and retail47.73%

27.27%

Transportation, warehousing and post

42.86%

42.86%

Information transmission, software and IT services

36.00%

36.00%

Real estate34.62%

32.69%

Production and supply of electricity, heat, gas and water

27.08%

25.00%

Mining24.24%

51.52%

Construction

18.52%

25.93%

Culture, sports and entertainment

13.04%

4.35%

By organization type - 2018

After-sales service

Customer satisfaction

Chinese-foreign joint ventures

51.11%

44.44%

Private enterprises

43.41%

30.49%

SOEs

39.62%

39.62%

By industry-2016 - 2018
19

14

Product quality and safety disputes

Manufacturing

35

Finance4Wholesale and retail

4

Leasing and business services

2

Construction

1

Agriculture, forestry, animal husbandry and fishery

1

15

0
2016

(2) After-sales services and customer satisfaction

48.35%

Product quality and safety disputes
20

56.00%

Transportation, warehousing and post

60.00%

Manufacturing

By sorting the litigation and punishment information from public databases and news reports from mainstream
financial media, we have collected and summarized the incidents related to product disputes. Of the companies with
CSR reports disclosed, a total of 48 companies were embroiled in product disputes between 2016 and 2018, most ofwhich arose in the manufacturing industry; in 2018 alone, 19 companies were involved in product disputes.

10
Information transmission, software and IT services

Customer satisfaction

58.75%(3) Product quality and safety disputes

66.24%

57.86%

After-sales service

Finance

By industry - 2018

2017

2018

Culture, sports and entertainment

1

Total

48

(4) Product R&D and innovation
1) Patents: In 2018, the number of patents averaged 135, up about 11 from the previous year; by region, East
China topped all regions with 160 patents on average; Guangdong Province, in particular, came first with 294 patents.
2) R&D expenditure: The R&D expenditures averaged ¥612.11 million in 2018, which was ¥81.67 million higher thanthe previous year. East China reported the highest R&D expenditures of ¥724.60 million, of which, Beijing came firstwith ¥1,529.09 million on average.
3) Share of R&D personnel: In 2018, the average share of R&D personnel reached 14.36%, up nearly 1% from theprevious year. East China had the highest share of R&D personnel at 15.34%; Anhui Province, in particular, topped with18.70%.
4) Share of technical personnel: In 2018, the average share of technical personnel was 18.81%, up 0.37% from theprevious year. East China had the highest share of technical personnel at 20.27%; Beijing, in particular, topped with
23.76%.

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Research on CSR Reports of A-Share Listed Companies

Conclusion and Analysis of “Product Quality and Innovation”

Average number of patents

124

100

Average R&D expenditure(¥10,000)

61211.2

53043.87

2018

10%

13.37%

18.81%

18.44%

14.36%
10%

0

0

Average percentage of technical personnel
20%

135
50

2017

Average percentage of R&D personnel

0%
2017

0%
2017

2018

2017

2018

2018

Average number of patents

Average R&D expenditure

Average share of R&D personnel

Average share of technical personnel

East

160.4072,459.76

15.34%

20.27%

Central

99.96

40,273.28

14.60%

17.43%

West

60.82

31,652.02

8.78%

13.31%

Northeast

36.44

19,033.96

12.19%

14.78%

Total

135.1561,211.20

14.36%

18.81%

By region - 2018

In terms of the four indicators above, the construction industry reported 466 patents on average and ¥2682.16 million of R&D expenditure on average, topping all industries in these two indicators. The industry of information transmission, software and IT services had the highest shares of R&D personnel and technical personnel, at 44.26% and52.34% respectively, far above the average.
By type of organization, SOEs dwarfed all other types of enterprises, with 150 patents on average and ¥812.76 million in R&D expenditure; private enterprises had the highest proportion of R&D personnel and technical personnel, at
17.46% and 20.95% respectively, but they came in at the bottom of the ranking in terms of average R&D expenditureand number of patents.

By industry - 2018

Average number of patents

Average R&D expenditure

Average share of R&D personnel

Average share of technical personnel

Construction

465.70268,215.93

16.58%

33.36%

Mining328.03

137,272.69

8.12%

12.33%

Manufacturing

188.1963,699.87

14.22%

18.85%

Information transmission, software and IT services

91.78

48,121.28

44.26%

52.34%

Production and supply of electricity, heat, gas and water

43.71

6,336.31

5.69%

17.88%

Transportation, warehousing and post

24.22

13,367.19

3.37%

9.14%

Culture, sports and entertainment

20.43

9,204.33

8.05%

11.41%

Wholesale and retail

18.98

28,654.89

4.24%

10.89%

Finance

16.64

13,171.80

2.20%

4.89%

Real estate

11.92

4,497.51

8.64%

23.57%

By organization type - 2018

116

Average number of patents

Average R&D expenditure

Average share of R&D personnel

Average share of technical personnel

SOEs

149.96

81,275.53

11.76%

17.64%

Chinese-foreign joint ventures

125.31

78,351.87

13.52%

16.47%

Private enterprises

116.4035,641.93

17.46%

20.95%

With rapid economic and social development, continuous advancement of modern technology and upgrading ofpeople's consumption philosophy, product quality and innovation have increasingly become the lifeblood of corporate
development and a major indication of companies’ core competitiveness. Responsibility for product quality is a fundamental part of CSR, and responsibility for product innovation is a key guarantee of CSR.
As an integral part of CSR, product and service quality has drawn increasing attention of the general public. Companies, as the most common organizational form in society, provide people with various products and services to satisfy their clothing, food, housing and transportation needs. Excellent products will be granted honorable title and exempted from inspection once they win the recognition and trust of society; companies with product quality problems will becondemned and opposed by society, thus suffering huge economic and reputation losses. It is a basic requirement of
CSR for companies to attach high importance to their product/service quality.
In this part, the indicators related to product and service quality are ranked from the highest disclosure proportion
to the lowest as follows: “quality commendation” “quality management” “after-sales service” and “customer satisfaction” . The listed companies were more inclined to disclose external reviews rather than internal measures, and gave
lower attention to the after-sales feedback of products and services. More specifically, the construction industry topped
all industries with the highest disclosure of “quality commendation” and “quality management” . Construction quality is
not only decisive to the normal operation of a project and its return on investment, but also critical to the safety of people's life and property. Any quality problem can directly impair the interests and safety of people. Good performance onthese indicators reflects the great importance the construction industry has attached to quality and safety. The financial
industry showed the highest disclosure of “after-sales service” and “customer satisfaction” . As service providers,financial companies are frequently engaged in direct communication and interaction with customers. The experienceand feedback of customers are a major source of information for financial companies to improve their service quality.
Continuous improvement in after-sales feedback and customer satisfaction investigation enables financial companies tolisten to and understand the voices of customers and improve service quality accordingly. In 2018, the number of companies involved in product quality and safety disputes grew slightly from the previous year, but few of them were publicly named and shamed because few such scandals were covered by mainstream media.
In August 2016, the State Council issued the 13th Five-year Plan on National Scientific and Technological Innovation, explicitly putting forward the general requirement, development objectives, strategic tasks and reform measures
for China's scientific and technological innovation for the next five years. Product and service innovation, as an integral
part of CSR, is closely related to the healthy development of companies. For companies in the modern times, technological innovation is a major source of core competitiveness for survival in increasingly fiercer market competition. By
performing their responsibility of technological innovation, companies can build up their core competitiveness andbecome better prepared to take more CSR practices.
We observed the indicators related to R&D input, such as “R&D expenditure” “share of R&D personnel” and “shareof technical personnel” , as well as the indicator related to R&D output such as “the number of patents” so as to gain aclear picture about the listed companies’ performance on R&D innovation. All the four indicators in 2018 have been
improved to varying degrees compared with the previous year. East China with relatively developed economy outperformed other regions in terms of “R&D expenditure” “share of R&D personnel” and “share of technical personnel” , andalso had the highest average number of patents. By province, Beijing disclosed the largest amount of R&D expenditure
but its average number of patents was lower than that of Guangdong. By industry, the information transmission, software and IT services industry boasted the highest share of talented personnel, while the construction industry topped interms of R&D expenditure and the average number of patents. By type of organization, unlike the previous year, SOEs
with the highest R&D expenditure boasted the highest number of patents, indicating that their overall input-output efficiency improved markedly.
Product and service quality and innovation are an important part of CSR with large room for improvement as indicated by the data above. Companies should give more attention to this aspect so as to enhance their core competitiveness and sense of social responsibility.

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Research on CSR Reports of A-Share Listed Companies

Responsibility for Employees
This part includes(3) Staff safety and occupational health(1) Compensation incentives(4) Communication with employees(7) Training on safe production(2) Supplementary benefits(5) Staff caring(8) Occupational health and safety certification(3) On-the-job training(6) Safety management system(9) Disputes concerning staff health and safety

These nine indicators are used to evaluate the reporting entity's awareness and performance regarding staff compensation and benefits, improvement and caring, safety and occupational health, and disputes concerning staff healthand safety, etc.

1) Safety management system & 2) Training on production safety: In 2018, 69.21% of companies disclosed in their
CSR report that they put in place a safety management system, and around 68.79% of companies disclosed that they
had provided training on production safety. Both indicators saw an increase over the previous year. In particular, themining industry saw the highest disclosure rate—up to more than 90% in both indicators.
Safety management system

Training on safe production
By industry - 2018201868.79%(1) Staff remunerations and benefits
1) Remuneration incentives: In 2018, 85.99% of companies disclosed in their CSR report that they establishedremuneration incentives or launched an equity incentive program that aimed to encourage employees to engage in thecompany's business operations; 89.01% of private enterprises had taken incentive measures for employees, representing the highest disclosure rate, while SOEs had the lowest proportion, at 84.04%.
2) Supplementary benefits: In 2018, 49.15% of companies disclosed in their CSR report that they offered employees supplementary benefits, like supplementary pension funds and supplementary medical insurance; 61.73% of SOEs
offered employees supplementary benefits, representing the highest proportion of disclosure, while private enterprises
had the lowest proportion at 33.24%.
Compensation incentives

66.24%
2017
68.57%

57.20%

85.99%

49.15%
100.00%0.00%

Private enterprises

89.01%

33.24%

Chinese-foreign
joint ventures

88.89%

35.19%

62.50%
0%SOEs

84.04%

61.73%

2) Communication with Employees: In 2018, 54.14% of companies disclosed in their CSR report that they established channels for communication between executives and employees (e.g., regular conversations and general manager mailbox), up 4.02% from the previous year, indicating that enterprises attached growing importance to employee
feedback. By type of organization, the disclosure rate among SOEs and foreign-funded enterprises was higher, at
57.12% and 57.41% respectively, but was the lowest in private enterprises, at only 49.45%
3) Staff Care: In 2018, 92.57% of companies disclosed in their CSR report that they had staff caring schemes. For
instance, they organized physical checkup for employees and also cared about employees’ mental health. This indicator was virtually the same as that in 2017, reflecting companies’ growing concern for employee care. By type of organization, the proportion of disclosure between different types of companies differed slightly. SOEs had a higher disclosure rate.
Communication with employees

Staff care
93.81%

45.71%
89.14%
95.56%

201750.12%
92.64%
54.14%
92.57%
0%118

Production and supply of electricity, heat, gas, and water

85.42%

72.92%

Construction

85.19%

85.19%

Transportation, warehousing and post

81.63%

77.55%

Manufacturing80.17%

78.93%

Wholesale and retail72.73%

79.55%

Real estate

50.00%

48.08%

Culture, sports and entertainment

39.13%

34.78%

Information transmission, software and IT services

34.00%

44.00%

3) Occupational health and safety certification: In 2018, 23.67% of companies disclosed in their CSR report thatthey passed the certification with regards to occupational health, up by 1.71% year-on-year. Companies in the manufacturing industry had the highest proportion of disclosure at 34.92%.
Occupational safety certification

By industry - 2018

By organization
type - 2018

On-the-job
training

Communication with
employee

Staff care

SOEs

98.08%

57.12%

93.27%

Private enterprises

97.53%

49.45%

91.76%

Chinese-foreign
joint ventures

96.30%

57.41%

92.59%

23.67%

2018

21.96%

201716.29%

2016

Occupational safety certification

Manufacturing

34.92%

Transport, warehousing and post

20.41%

Construction

18.52%

Wholesale and retail18.18%

Information transmission, software and IT services

16.00%

Culture, sports and entertainment

13.04%

Mining12.12%

Leasing and business services

10.00%

Production and supply of electricity, heat, gas, and water

8.33%

Real estate

7.69%

20%

0%

4) Disputes concerning staff health and safety: We collected and summarized disputes concerning staff health andsafety by means of searching litigation and penalty information in public database and reporting of mainstream financeand business media. Among the companies disclosed their CSR report, 8 had disputes with employees between 2016
and 2018 and most of them were in the industries of manufacturing and mining. For 2018 alone, two companies had
disputes concerning staff health and safety.
Disputes with employees

2

3

By industry - 2016 - 20183

97.77%
2018

96.97%

50%

100.00%1) On-the-job Training: In 2018, 97.77% of companies disclosed in their CSR report that they provided on-the-job
training for employees, up 2.21% from the previous year, indicating that companies continued to value the improvementof employees’ vocational skills. Broken down by organizational type, the proportion of disclosure between different
types of companies differed slightly. More specifically, SOEs had the highest proportion of disclosure, followed byprivate enterprises and foreign-funded companies.

2016

93.94%

2016(2) Staff improvement and careOn-the-job training

MiningSupplementary benefits
By organization type - 2018 Compensation incentives Supplementary benefits

0.00%

Safety management system Training on safe production

69.21%

2
0
2016

2017

2018

Disputes with employees

Manufacturing

5

Mining

3

Total

8

50%

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CEIBS Corporate Social Responsibility White Paper

Conclusion and Analysis of “Responsibility for Employees”
Employees are an integral part of a company and a major force that supports business development. For the fulfilment of CSR, one of the priorities for the companies is to safeguard employees’ rights and benefits, because employees could directly impact sustainable development of the company, and even exert influence on the development andstability of our society. During the course of taking on responsibilities to employees, companies became more people-oriented and placed more focus on employees’ rights, benefits and development.
According to Opinions of the CPC Central Committee and the State Council on “Building Harmonious Labor Relationship” released in 2015, employers shall safeguard basic rights of employees in accordance with the laws, including
the rights to get paid, take rest, take leave, be protected for safety and hygiene, enjoy social insurance and accept
on-the-job training. In this part, indicators such as “compensation incentives” “supplementary benefits” “safety management system” “training on safe production” “occupational health and safety certification” “disputes concerning staff
health and safety” and “on-the-job training” reflect how the companies value and safeguard the rights and benefits of
employees. With regards to compensation and welfare, private enterprises put more emphasis on “compensation
incentives” , while SOEs, on “supplementary benefits” . This indicates that different types of companies have different
overriding focuses. And the findings are in line with our common understanding of SOEs and private enterprises. As for
employee safety, known for high risks at the workplace, companies in the mining industry had the highest proportion of
disclosure in terms of “safety management system” and “training on safe production” ; statistics show that in 2018, 224
mining accidents occurred across China, a decrease by two, leading to 333 deaths, a decline by 50, down 0.9% and13.1% respectively year-on-year. Though the situation is getting better, it's undeniable that mining remains the industry
where employees’ safety risks are the highest. Speaking of occupational health, not many listed companies disclosed intheir CSR report that they passed occupational health certification. Companies in the manufacturing industry had thehighest proportion of disclosure in this regard. Nevertheless, in 2018, most disputes concerning staff health and safety
stemmed from the industries of manufacturing and highly risky mining. When it comes to employee improvement,“on-the-job training” saw the highest fulfillment rate, which proved that listed companies valued employees’ skills. As
employees are a valuable asset to a company, on-the-job training can make it more competitive, driving its sounddevelopment.
It was also stressed in the “Opinions of the CPC Central Committee and the State Council on Building Harmonious
Labor Relationship” that employers shall improve democratic management system, as well as the mechanism regarding
the mediation of labor disputes, thereby creating a pleasant work environment featuring harmonious labor relationship.
Moreover, employers shall enhance communication with employees and place more focus on humanistic care for employees. In this part, the indicator “communication with employees” embodied the communication mechanism between
executives and employees. On the whole, about half of all the companies disclosed their communication channels; nevertheless, the proportion was still lower. By type of organization, SOEs and foreign-funded enterprises attached importance to communication with employees, because they had a higher disclosure rate than private enterprises in thisregard. “Staff care” ranked second only to “on-the-job training” in terms of disclosure rate. This indicator saw a consistently high fulfillment rate, which revealed that listed companies laid a continuous emphasis on employee care.
Besides, taking on responsibilities to employees and emphasizing the happiness and improvement of employees
could help a company cultivate a good corporate image. A good corporate image is the company's intangible huge
fortune and could help boost the company's competitiveness; meanwhile, proactively taking on responsibilities to employees is quite meaningful to our society as it could also help address social issues, improve life satisfaction of people
from across the country, and maintain social stability.
All in all, safeguarding the rights and benefits of employees and fulfilling the responsibilities to employees can havea positive impact on the company itself and the society. The companies and the government need to work together todrive the development of both employees and the companies in the context of a harmonious society, thereby making
sure the companies’ fulfillment of CSR concerning employees.

Research on CSR Reports of A-Share Listed Companies

Diversity and Equal Opportunities
This part includes:(1) Female executives (2) Female directors (3) All-male directors, supervisors and executives (4) Vulnerable groups (5) Equal opportunities
These five indicators are used to evaluate the reporting entity's awareness and performance regarding diversity
and equal employment opportunities.

(1) The ratio of women in the top management was still lower,with the gender gap differing sharply across industries.
1) Female executives: In 2018, 62.63% of companies had female members on their executive team, i.e. 352 companies didn't have any female member on their executive team; Average number of female executives per company
was merely 1.02, and there were only 23 companies had over three female executives; Broken down by industry, only
39.39% of companies in the mining industry had female executives and average number of female executives per
mining company was 0.64, representing the lowest proportion of any industry; by organizational type, 57.50% of SOEs
had female executives and average number of female executives per SOE was 0.90, representing the lowest proportionof any organizational type.
The proportion of female executives

Average number of female
executives per company

Mining39.39%

0.64

Production and supply of electricity, heat, gas, and water

43.75%

0.67

Construction

44.44%

0.67

Transportation, warehousing and post

61.22%

0.82

Manufacturing

62.60%

1.00

Information transmission, software and IT services

64.00%

1.10

100%
0.98
60.98%

1.02

0.95
62.63%

59.64%

0%
2016

2017

2018

The proportion of
female executives

Average number of female
executives per company

Finance61.25%

1.14

SOEs

57.50%

0.90

Culture, sports and entertainment

73.91%

1.17

Private enterprises

68.13%

1.15

Real estate

78.85%

1.25

Chinese-foreign joint ventures

74.07%

1.20

Wholesale and retail75.00%

1.57

By organizational
type - 2018

2) Female directors: In 2018, 72.93% of companies had female members on the board of directors, i.e., 255 companies didn't have any female director, while the average proportion of female directors was merely 14.10%, and only in
two companies, women held more than half of the board seats; by industry, 9.24% of companies in the mining industry
had female directors, representing the lowest proportion. Companies in the industries of construction and transportranked second from the bottom; by type of organization, 12.07% of SOEs had female directors, representing the lowest
proportion. Foreign-funded companies ranked second with 13.61% had female directors, while 17.04% of private enterprises had female directors, representing the highest proportion.
The proportion of companies that have female directors
By industry - 2018

The average proportion of female directors
50%

0%13.38%

14.10%

13.55%
2017

2018

Average proportion of female directors
SOEs

12.07%
17.04%

Private enterprises
Chinese-foreign joint ventures
0%

The average proportion of female directors

Mining9.24%

Construction

9.63%

Transportation, warehousing and post

9.91%

Production and supply of electricity, heat, gas, and water

12.01%

Finance13.92%

Information transmission, software and IT services

14.18%

Manufacturing

14.46%

Wholesale and retail14.90%

Culture, sports and entertainment

15.17%

Real estate

17.18%

72.93%

70.44%

68.94%

2016

120

The proportion of
female executives

By industry - 2018

Average number of female executives per company

13.61%
10%

20%

121

CEIBS Corporate Social Responsibility White Paper

Research on CSR Reports of A-Share Listed Companies

Conclusion and Analysis of “Diversity and Equal Opportunities”

3) All-male directors, supervisors and executives: In 2018, 43 companies didn't have any female directors, supervisors and executives, accounting for 4.88% of all the companies that disclosed CSR reports that year; Broken down byindustry, 22 companies in the manufacturing industry didn't have any female directors, supervisors and executives, representing the highest proportion, followed by companies in the financial and mining industries; by type of organization,
31 SOEs didn't have any female directors, supervisors and executives, representing the highest proportion, followed byprivate enterprises and foreign-funded companies.
All-male directors, supervisors and executives
50
46

40

The number of companies that have nofemale directors, supervisors and executives

By industry - 201843

Manufacturing

22

Finance

6

Mining4

Production and supply of electricity, heat, gas, and water

3

Transportation, warehousing and post3

Construction

1

Scientific research and technical services

1

Agriculture, forestry, animal husbandry and fishery

1

Wholesale and retail

1

Culture, sports and entertainment

1

0
2016

2017

2018

10

Private enterprises
Chinese-foreign
2
joint ventures

20

0%

40

(2)Less attention was paid to non-discriminatory policies,
with huge differences among different type of organizations.
1) Vulnerable groups: In 2018, 113 companies disclosed that they adopted the non-discrimination employment
policy concerning vulnerable groups (disabled persons and those who had been released after undergoing labor education) in their CSR report, accounting for 12.00% of all the companies that disclosed CSR reports that year, up by
1.49% year-on-year; non-discrimination employment policy was most frequently mentioned by Chinese-foreign joint
ventures yet least frequently mentioned by private enterprises.

The employment of vulnerable groups

10%
8.33%

10.51%

12.00%

2016

2017

2018

By organizational type - 2018

Proportion

Private enterprises

9.89%

SOEs

12.69%

Chinese-foreign joint ventures

20.37%

0%2) Equal opportunities: In 2018, 234 companies stressed equal opportunities between different nationalities, religions and countries in their CSR report, accounting for 24.84% of all the companies that disclosed CSR reports thatyear, up 3.58% from the previous year; equal opportunities were most frequently mentioned by Chinese-foreign joint
ventures yet least frequently mentioned by private enterprises.
Equal opportunities

20%
19.57%

21.26%

24.84%

2016

2017

2018

0%

122

Females play a non-negligible part in corporate governance and the fulfilment of CSR. Research shows that a company's fulfilment of CSR cannot be achieved without the implementation of an array of decisions made by executives anddecision-makers. And one important mechanism to facilitate a company's fulfilment of CSR is to adopt effective corporate
governance. The diversity of executives and the board of directors, who lie at the core of corporate governance and decision-making, has been an important topic in relevant research. Gender diversity is undeniably a topic hotspot. Some
research shows that compared with males, females usually have higher moral standards, so a diversified board of directors
comprising a specific number of female directors could contribute to a more balanced decision-making mechanism that
could ultimately facilitate the fulfilment of CSR.
In this part, indicators including “female executives” “female directors” and “all-male directors, supervisors and executives” measure the say females have in the management team of the listed companies that disclosed their CSR report. In
2018, relevant indicators showed that the average number and proportion of female executives/directors per company
remained small (the average number was around 1). Considering no significant change in the level of this indicator compared with the previous year, women were still in a weak position in the top management of the listed companies that disclosed CSR reports, without much say. Take female directors as an example, indicators show that among the companies
that disclosed their 2018 CSR report, nearly 30% didn't have any female director, and most of them only have one to two
female members on the board of directors. As a result, female directors could only play an insignificant role. Some scholars
called this “symbolic effect” — the number of female directors was so small that they might not actively participate in board
discussion, or they might feel their opinions were not valued, which in turn led to their growing unwillingness to share theirideas. Under the circumstances, the decision-making of the board of directors and corporate governance could be negatively affected. To put it another way, females could not give full play to their potential regarding corporate governance andthe company's fulfillment of CSR.

31

SOEs

With the advancement of modern society, diversity and equal opportunities have become one of the much-talked-about
topics of our times. Equality is one of the cornerstones for the competition and development of any company. Hence, companies should adopt an inclusive attitude towards talent, allow them to compete equally, and take on CSR regarding equal
opportunities. This is commonplace in developed countries and regions, and should not be ignored in China, especiallywhen the country is going through a rapid development process.

By organizational type - 2018

Proportion

Private enterprises

20.05%

SOEs

27.69%

Chinese-foreign joint ventures

29.63%

Non-discrimination toward and care for vulnerable groups are also crucial to a company's CSR fulfillment. Non-discrimination employment policy pertaining to vulnerable groups is an important way to help those people get accustomed to thissociety effectively and strive to be stronger and more independent. Providing vulnerable groups including the disabled persons with suitable jobs can not only alleviate the pressures on the government and the society, but also set a good example
for the company's staff to learn from. Therefore, this measure could be crucial to the cultivation of a healthier corporate culture and work atmosphere. Not to mention, the company itself has the obligation and responsibility to adopt a non-discrimination attitude toward vulnerable groups. According to The Law on the Protection of Disabled Persons of People's Republicof China and The Regulations on the Employment of Disabled Persons, etc., employers have the obligation and responsibility to employ a specific proportion of disabled persons. But the indicator “vulnerable groups” show that only nearly 10%
companies disclosed their employment policy pertaining to vulnerable groups including disabled persons in their CSR
report. Worse still, as the implementation of their employment policy failed to be quantified, we didn't know whether they
met the specific proportion as stipulated in the laws and regulations.
Offering equal opportunities is a key indicator of a company's values of equity and justice, as well as its fulfilment of
CSR. According to the Report to the Eighteenth National Congress of the Communist Party of China, we should “establish indue course a system for guaranteeing equality in society featuring, among other things, equal rights, equal opportunities
and equal rules for all; and foster an equal social environment and ensure people's equal right to participation in governance and to development.” Nowadays, social conflicts have become more prominent, “equal rights, equal opportunities
and equal rules for all” proposed by the Eighteenth National Congress of the Communist Party of China were in line withpublic opinions and thus won favor among the general public. In response to “equal rights, equal opportunities and equal
rules for all” , companies may offer equal opportunities for different nationalities, religions and countries. The indicator“equal opportunities” showed that less than one-quarter of the companies emphasized equal opportunities, withforeign-funded companies accounting for the highest proportion and private enterprises for the lowest proportion. This situation will need to be improved.
Creation of an inclusive and equal society calls for support of all individuals. At present, it is common that the listedcompanies in China don't attach great importance to the fulfilment of CSR in this regard. In their CSR report disclosed, mostof the content concerning equal opportunities is recapitulative text, lack of substantial information and quantified data. The
government, the public and the company itself should pay more attention to it and set higher requirements accordingly.

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CEIBS Corporate Social Responsibility White Paper

Research on CSR Reports of A-Share Listed Companies(5) Green office: In 2018, 39.70% of companies disclosed environmentally friendly measures they took in day-to-day
work, like water-saving and power-saving measures and paperless office, up 3.37% from the previous year. 83.75% ofcompanies in the financial industry disclosed their relevant measures, representing the highest disclosure rate.

Environmental Responsibility
This part includes the following nine indicators, reflecting the concerned companies’ performance regarding environmental responsibility:(1) Environmental benefit(4) Circular economy(7) Environmental certification(2) Energy saving(5) Green office(8) Environmental commendation(3) Reduction of the three wastes(6) Environmental protection and(9) Environmental penalty(waste gas, waste water and industrial residue)(6) Environmental protection and public welfare: In 2018, 21.13% of companies disclosed that they took part in
activities concerning environmental protection and public welfare, like forest planting and garbage clearing. The proportion rose by 4.07%, compared with the previous year, showing companies’ growing emphasis on environmental protection. 47.73% of companies in the wholesale and retail industries disclosed their relevant actions, representing thehighest disclosure rate.
Environmental protection

Green officepublic welfare

39.70%(1) Environmental benefit: In 2018, 49.15% of companies disclosed that they exploited or utilized environmentally
beneficial products, services, equipment or technologies. The industries for electricity and heat production and supply
had the highest disclosure rate; 77.08% of them focused on the development of clean and renewable energy and theuse of environmental equipment; the financial industry came in second, with 72.50% of financial companies gradually
stepping up their support for green financial products and services.
(2) Energy conservation: In 2018, 45.97% of companies disclosed their energy-saving performance. Companies
engaged in electricity, heat, gas and water production and supply represented the highest disclosure rate, with 62.50%
disclosing their energy-saving measures and effectiveness in the report; companies in the transportation and mining
industries came in second. On the whole, compared with those in the light industry and service industry, companies in
the heavy industry attached more importance to this indicator.
Environmental benefit by industry - 2018

Proportion

Energy saving by industry - 2018

Proportion

Production and supply of electricity, heat, gas, and water

77.08%

Production and supply of electricity, heat, gas, and water

62.50%

Finance72.50%

Transportation, warehousing and post

61.22%

Transportation, warehousing and post

69.39%

Mining51.52%

Real estate

67.31%

Manufacturing

51.24%

Construction

66.67%

Wholesale and retail47.73%

Manufacturing

43.60%

Construction

40.74%

Mining39.39%

Real estate

40.38%

Wholesale and retail29.55%

Finance32.50%

Information transmission, software and IT services

28.00%

Information transmission, software and IT services

14.00%

Culture, sports and entertainment

21.74%

Culture, sports and entertainment

8.70%

Indicator ratio

49.15%

Indicator ratio

45.97%

201821.13%

36.33%
2017
17.06%

38.01%
2016
15.66%
0%

20%

40%

124

Proportion

Mining93.94%

Mining57.58%

Production and supply of electricity, heat, gas, and water

75.00%

Construction

44.44%

Manufacturing

70.45%

Manufacturing

40.91%

Construction

66.67%

Transportation, warehousing and post

32.65%

Transportation, warehousing and post

57.14%

Real estate

28.85%

Wholesale and retail50.00%

Production and supply of electricity, heat, gas, and water

27.08%

Real estate

30.77%

Wholesale and retail22.73%

Finance25.00%

Finance12.50%

Culture, sports and entertainment

17.39%

Culture, sports and entertainment

10.00%

Information transmission, software and IT services

8.00%

Information transmission, software and IT services

4.35%

Indicator ratio

57.75%

Indicator ratio

33.65%

Finance83.75%

30.00%

Information transmission, software and IT services

74.00%

10.00%

Wholesale and retail56.82%

47.73%

Culture, sports and entertainment

52.17%

17.39%

Construction

44.44%

7.41%

Transportation, warehousing and post

40.82%

26.53%

Real estate

40.38%

34.62%

Production and supply of electricity, heat, gas, and water

31.25%

31.25%

Manufacturing

27.89%

15.70%

Mining21.21%

24.24%

Environmental certification
Environmental
certification

Environmental
commendation

Construction

66.67%

44.44%

Real estate

23.08%

40.38%

Mining39.39%

36.36%

Manufacturing

69.42%

33.06%

Production and supply of electricity, heat, gas, and water

18.75%

31.25%

Transportation, warehousing and post

22.45%

20.41%

Wholesale and retail36.36%

15.91%

Culture, sports and entertainment

26.09%

4.35%

Information transmission, software and IT services

36.00%

4.00%

By industry - 2018

100.00%0.00%

Environmental commendation

28.77%
0.00%

Circular economy by industry - 2018

Environmental protection(8) Environmental commendation: In 2018, 28.77% of companies disclosed that they were cited for environmental
protection efforts and earned the honor of “green enterprise” and “demonstration enterprise in energy saving and emission reduction” , etc. 44.44% of companies in construction industry disclosed their environmental commendation, representing the highest proportion of disclosure.

(3) Reduction in three types of waste & (4) Circular economy: In 2018, 57.75% and 33.65% of companies disclosed
their efforts to reduce emissions of three types of waste and develop the circular economy respectively; among them,the mining industry had the highest disclosure rate, at 93.94% and 57.58% respectively, reflecting mining companies’
efforts to lower pollution emissions and recycle resources; in general, due to the characteristics of the industry, theheavy industry paid more attention to the discharge of three types of waste and the circular economy than the lightindustry and the service industry.
Proportion

Green office(7) Environmental certification: In 2018, 48.94% of companies disclosed that they received environment management system certification, e.g. ISO14001. 69.42% of companies in the manufacturing industry disclosed their relevant
actions, representing the highest disclosure rate. The construction industry came in second, with the disclosure rate of
66.67%.

48.94%

Reduction of the three wastes by industry - 2018

By industry - 2018

100.00%Among the eight indicators above, SOEs ranked top in three indicators and second in two; foreign-funded enterprises ranked first in five indicators and second in one; private enterprises ranked at the bottom in four indicators, which
revealed their weak awareness of environmental responsibility.

Environmental
benefit

Energy-saving
performance

Reduction of
the three wastes

CirculareconomyGreen officeEnvironmental
protection andpublic welfare

Environmental
certification

Environmental
commendation

SOEs

52.88%

51.35%

60.77%

33.46%

38.65%

23.27%

42.50%

31.35%

Private enterprises

45.05%

36.81%

51.10%

32.69%

39.84%

18.13%

57.14%

26.65%

Chinese-foreign joint ventures

40.74%

53.70%

72.22%

42.59%

48.15%

22.22%

57.41%

18.52%

By organizational type125

CEIBS Corporate Social Responsibility White Paper

Research on CSR Reports of A-Share Listed Companies(9) Environmental penalty: We collected and summarized incidents regarding environmental penalty by means ofsearching litigation and penalty information in public database and reporting of mainstream finance and businessmedia. Among the companies that disclosed CSR reports, 21 suffered environmental punishment in 2018, a sharp
increase from the previous year; most of them were manufacturing and mining companies.
Environmental penalty
Environmental penalty by industry - 2018
20
21
0

1
2016

4
2017

2018

Environmental penalty

Manufacturing

18

Mining

3

Total

21

Social Contribution and Charity
This part includes:(1) Donations(4) Contribution to education(7) Job creation(2) Social contribution value per share(5) Volunteering(8) Contribution to economic growth(3) Charitable activities(6) International aid(9) Layoffs

These nine indicators are used to evaluate the reporting entity's awareness and performance of social contribution
and corporate charitable activities.

(1) Donations to social welfare programmes

Conclusion and Analysis of “Environmental Responsibility”“Environmental responsibility” has been a topic that draws great public attention. The Communist Party of China
expounded on “ecological civilization construction” in the 19th National Congress, stressing that companies should be
an integral part of ecological civilization construction. In addition, the Communist Party emphasized that companies
should adhere to the principle of “respecting nature, conforming to the iron laws of nature and protecting nature” , pursuing “modernization on the basis of harmonious coexistence of human and nature” as healthy economic development
cannot be achieved without ecological civilization improvement, and above all, play a pioneering role in ecological civilization construction.
In recent years, the losses incurred by the ecological environment degeneration resulted from pollution have beenhuge, and economic losses caused by a destroyed ecosystem have also been on the increase with each passing year.
Undeniably, environmental pollution has become a major issue that affects economy and people's wellness. Reducing
pollution and adopting sustainable development has become an imperative for all of us. The development of companies somewhat relies on social environment whilst the business of companies impacts all aspects of our society, particularly our ecological environment. Nowadays, as sustainable development is valued more by our society, companies
are expected to shoulder more responsibilities with regards to environmental protection.
In 2018, the Chinese government stepped up its efforts in ecological protection by fighting the tough battle of air,water and soil pollution prevention and control. On June 13, 2018, the executive meeting of the State Council adopted
the “Three-Year Action Plan for Blue Skies” , in which China's air pollution measures were further refined and expanded.
In the same month, the Opinions of the CPC Central Committee and the State Council on Comprehensively Strengthening Ecological Protection through the Battle against Pollution specified the action plan for seven battles for blue skies,
clear water, and clean soil, including pollution prevention and control in the Yangtze River Economic Belt.
To cope with environmental issues and take on greater environmental responsibilities, it is crucial for companies to
produce environment-friendly products, save energy and reduce emissions, promote circular economy and green
office, and participate in more activities regarding environmental protection and public welfare. In this part, comparedwith the disclosure rates for “circular economy” “green office” and “environmental protection and public welfare” , thatfor “environmental benefit” “energy-saving performance” and “reduction of the three wastes” are higher. In terms ofindustry, for those with severer pollution, the disclosure rate of indicators concerning clean production, energy-saving
performance and emission reduction is higher, while for the service industry, the disclosure rate of indicators concerning green office and environmental protection and public welfare is higher. By type of organization, SOEs andforeign-funded enterprises performed well in terms of environmental indicators, while private enterprises were poor performers. Environmental certification and commendation aim to recognize and encourage companies to address environmental issues and shoulder greater environmental CSR. Compared with the previous year, all indicators improved,
revealing that environmental efforts paid off in 2018.
Under the background of “battle against pollution” , environmental punishments extracted from the open database
surged in 2018. The punishment was imposed mainly on the manufacturing and mining industries. Among the companies that issued CSR reports, 21 were punished for violating the Water Pollution Prevention and Control Law of the People's Republic of China and Atmospheric Pollution Prevention and Control Law of the People's Republic of China. This
underscores the Chinese government's commitment to fighting the tough battle of pollution prevention and control

126

In 2017, 775 companies disclosed their donations, the mean and the median of which amounted to ¥6,706,600 and¥658,900 respectively. In 2018, 789 companies made a disclosure of their donations, the mean and the median ofwhich hit ¥9,598,800 and ¥1,038,000 respectively. These data indicated that the donations by A-Share listed companies improved markedly.
Number of companies disclosing donations

Mean of donations

Median of donations
959.88

1,000

775

760
573.14789
670.66500
103.80

65.89

41.50
0
2016

2017

2018

Among the companies that disclosed their donations: 1) more than half donated over ¥1 million each, a significant
increase from the previous year; 2) 121 donated more than ¥10 million, accounting for 15.34% of the total; 3) the donations by 27 companies exceeded ¥50 million, the highest of which throughout the year was ¥516.18 million.
Distribution of donations
200

192
200
150
103
79

100

78
55
39

50

16

27

0

¥0

k

100

¥0~

0k

k~5

¥10

m

k~1

¥50

~5m

m

~10

¥1m

¥5m

20m

m~

¥10

50m

m~

¥20

m

50
＞¥

By type of organization, foreign-funded enterprises and SOEs made the largest average donation, which hit¥12.1521 million and ¥11.7382 million respectively, while the median of the donation was relatively lower, at ¥1.3168
million and ¥1.0799 million respectively; West China topped all regions with the donation of ¥11,277,300 on averageand ¥1,221,000 by median.
By organization type - 2018

Mean of donations Median of donations

By region - 2018

Mean of donations Median of donations

Chinese-foreign joint ventures

1,215.21

131.68West

1,127.73

SOEs

1,173.82

107.99East

997.55122.1098.29

Private enterprises

677.65

93.17

Central

731.92113.01Other enterprises

73.91

65.82

Northeast

398.99

41.90

Total

959.88103.80Total

959.88103.80127

CEIBS Corporate Social Responsibility White Paper

Research on CSR Reports of A-Share Listed Companies

2) Mean of SCVPS
By industry - 2018

Mean of donations

Median of donations

Mining

4,561.42

254.36

Real estate

2,628.91

143.71

Finance

2,005.05

676.40

Production and supply of electricity, heat, gas and water

1,951.14

100.00Agriculture, forestry, animal husbandry and fishery

1,043.30

137.08

Culture, sports and entertainment

1,037.94

97.34

Construction

730.8290.47

Wholesale and retail556.64125.00

Manufacturing407.8670.57

343.50Transportation, warehousing and post
Water conservancy, environment and public facilities management268.47151.24

Information transmission, software and IT services

86.05

Scientific research and technical services

80.00
90.00
14.06

In terms of industry, the average
donations of the mining industry wereahead of all other industries with
¥45,614,200, but their median was
merely ¥2,543,600, indicating a huge
gap between companies within theindustry; the financial industry had thehighest median at ¥6,764,000, withthe donations averaging ¥20,050,500,
second only to the mining and realestate industries. Overall, the donation by the financial industry was
higher, with a smaller gap among
financial companies.

29.33

The mean of SCVPS disclosed in 2018 stood at ¥2.74, ¥0.28 per share higher than in the previous year. By industry,
the financial industry showed the highest mean at ¥4.41, significantly outperforming other industries; the manufacturingindustry had the highest number of companies disclosing the value, and the mean of their SCVPS was merely ¥2.32.

Mean of SCVPS
3

2.74

2

2.46

2.30
1

0

(2) Social contribution value per share20161) Number of companies disclosing SCVPS: Social
contribution value per share (SCVPS)⑦, brought up by
the SSE, measures companies’ overall contribution tosociety with economic benefits. In 2018, the number ofcompanies disclosing their SCVPS reached 128, roughly the same as that in the previous year, accounting for13.59% of the total CSR reporting companies.

2017

2018

By industry - 2018

Mean

Finance

4.41

Scientific research and technical services

4.14

Mining3.90

Construction

3.10

Culture, sports and entertainment

2.47

Real estate

2.44

Information transmission, software and IT services

2.42

Wholesale and retail

2.40

Manufacturing

2.32

Leasing and business services

2.25

Water conservancy, environment and public facilities management

1.79

Transportation, warehousing and post

1.41

Production and supply of electricity, heat, gas and water

1.41

Number of companies disclosing SCVPS

100

124

By type of organization, foreign-funded enterprises had the highest mean of SCVPS, at ¥2.86, while private enterprises the lowest, at ¥2.44. By region, Companies in East China had the highest mean of SCVPS at ¥3.03, and those in
Northeast China the lowest at ¥1.40.

130

128

2017

2018

0

Mean of SCVPS
2016

Of these companies, 123 were listed on the SSE, accounting for 96.09% of the total; only 5 or 3.91% were from theSZSE, including 2 from the Main board and 3 from the SME board; the manufacturing industry topped all industries with59 companies disclosing their SCVPS; the disclosure rate in the leasing and business service industry and the financial
industry was higher, at 30.00% and 27.50% respectively.

2.82

SOEs

Northeast

1.40

3.03

East
2.44

Private enterprises

2.01

West
By industry - 2018

Number of companies disclosing SCVPSSZSE SME Board
3 (2.34%)SZSE SME Board
2 (1.57%)
Markets
ChiNext
SSE A ShareSZSE SME BoardSZSE Main Board
SSE A Share
123 (96.09%)

Proportion of companies Number of companies

Manufacturing

12.19%

59

Finance27.50%

22

Transportation, warehousing and post

18.37%

9

Mining24.24%

8

Real estate

15.38%

8

Wholesale and retail13.64%

6

Production and supply of electricity, heat, gas and water

6.25%

3

Construction

11.11%

3

Information transmission, software and IT services

6.00%

3

Leasing and business services

30.00%

3

Culture, sports and entertainment

8.70%

2

Scientific research and technical services

14.29%

1

Water conservancy, environment and public facilities management

9.09%

1

Total

13.94%

128

2.86

Chinese-foreign joint ventures

02

Central

2.28

0

2

4

(3) Performance of social contribution
1) Charitable activities: In 2018, 39.17% of the companies launched either independent charitable programs suchas dedicated charitable foundations, or charitable activities in collaboration with other organizations, representing an
increase of 6.46% from the previous year.
2) Contribution to education: In 2018, 62.42% of the companies made contributions to education, including funding
the establishment of schools, Hope Project and the schooling of poverty-stricken students, representing an increase of
1.56% from the previous year.
3) Volunteering: In 2018, 53.08% of the companies organized volunteer activities, including visiting elderly carecenters and orphanages, up 3.55% from the previous year.

⑦: Calculation of SCVPS: SCVPS = (economic contribution + social contribution - other social costs such as environmental pollution) ÷ capital stock, wherein: “economic contribution = net profit + gross tax + interest expense + payroll” ; “social contribution = total spending on employee benefits and social security + total spending on employee training +total donations” ; other social costs, such as environmental pollution, shall be calculated based on the sum of the sewage charges and the fines imposed for environmental
violations in the year.

128

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Charitable activities

Research on CSR Reports of A-Share Listed Companies

Contribution to education

5) Job creation: In 2018, 37.39% of the companies disclosed their job creation efforts or measures, representing adecrease from the previous year. By type of organization, 48.15% of foreign-funded enterprises disclosed their job creation, making up the highest proportion; the proportion of SOEs was virtually the same as that of private enterprises, at
36.92% and 37.36% respectively; 44.44% of the companies in Northeast China disclosed their job creation efforts,
accounting for the highest proportion, while companies in Central China the lowest, at 36.22%.

Volunteering

60%
62.42%

60.86%
55.93%

40%

53.08%

49.53%

49.24%

39.17%
32.71%

20%
25.88%

6) Contribution to economic growth: In 2018, 27.92% of the companies disclosed that their business operations
facilitated local economic development or their corporate policies (e.g., localized procurement policy) stimulated local
economy. By type of organization, SOEs had the highest proportion of disclosure at 33.27%; by region, companies inWest China had the highest proportion of disclosure at 41.03% and companies in Northeast the lowest at 16.67%.

0
2017

2016

2018
Job creation

By industry, the financial industry showed the strongest performance by topping all the three indicators at 73.75%,
96.25% and 72.50% respectively, reflecting financial companies’ emphasis on public welfare; by type of organization,
private enterprises engaged in charitable activities and educational aid most actively, while SOEs were most active involunteering; by region, companies in East China played the most active part in charitable activities and volunteering,and companies in West China made the largest contribution to education.

Job creation

Contribution toeconomic growthSOEs

36.92%

33.27%

Chinese-foreign joint ventures

48.15%

27.78%

Private enterprises

37.36%

20.60%

By region - 2018

Job creation

Contribution toeconomic growthWest

40.17%

41.03%

Central36.22%

33.86%

By organization type - 201837.69%
0.00%

100.00%Contribution to economic growth
By industry - 2018

Charitable
activities

Contribution toeducation

volunteering

Finance73.75%

96.25%

Real estate

57.69%

63.46%

Wholesale and retail45.45%

65.91%

63.64%

Information transmission, software and IT services

44.00%

60.00%

36.00%

Manufacturing

35.54%

58.47%

46.07%

Construction

33.33%

66.67%

66.67%

Transportation, warehousing and post

30.61%

48.98%

69.39%

Mining24.24%

78.79%

Culture, sports and entertainment

17.39%

65.22%

Production and supply of electricity, heat, gas and water

10.42%

58.33%

By organization type - 2018

Charitable
activities

Contribution toeducation

Volunteering

72.50%

Private enterprises

46.70%

64.84%

43.68%

61.54%

Chinese-foreign joint ventures

44.44%

59.26%

53.70%

SOEs

33.27%

61.15%

27.92%

East

37.16%

25.08%

Northeast

44.44%

16.67%

Total

37.69%

27.92%

59.62%
0.00%

By region - 2018

Charitable
activities

Contribution toeducation

Volunteering

East

42.60%

62.08%

56.19%

51.52%

West

36.75%

70.09%

51.28%

43.48%

Central29.13%

62.20%

43.31%

66.67%

Northeast

19.44%

44.44%

36.11%

100.00%7) Layoff: We have collected reports on company layoffs from mainstream financial media. Among the companies
that disclosed CSR reports, there were 16 news reports relating to layoffs in 2018, a slight increase over the previous
year. Among them, the financial industry triggered the most reports on company layoffs, with nine companies shedding
jobs, followed by the real estate industry.

Number of companies laying off employees
By industry - 2018

4) International aid: In 2018, 69 companies offered international aid, accounting for 7.32% of the total, a slightincrease from the previous year; the construction industry participated in international aid most actively, as 37.04% ofconstruction companies disclosed their international aid; 11.11% of foreign-funded enterprises participated in international aid, accounting for the highest proportion and private enterprises the lowest at 5.49%.

20

10

5%

5.81%

6.78%

7.32%

0%
2016

130

2017

Proportion

Construction

37.04%

Mining21.21%

Finance

7.50%

Manufacturing

7.02%

Wholesale and retail

4.55%

Transportation, warehousing and post

4.08%

9

Real estate

3

Manufacturing2

Construction

1

16

0
By industry - 2018

Finance26

12International aid

Number of companies laying off employees

2016

2017

2018

Leasing and business services

1

Total

16

2018

By organizational type - 2018

Proportion

Chinese-foreign joint ventures

11.11%

Production and supply of electricity, heat, gas and water

2.08%

SOEs

8.27%

Information transmission, software and IT services

2.00%

Private enterprises

5.49%

Real estate

1.92%

131

CEIBS Corporate Social Responsibility White Paper

Conclusion and Analysis of “Social Contribution and Charity”
Chinese government has been promoting charitable activities among businesses in recent years. In the Charity Law
of China promulgated in 2016, the Article 5 says that “the government encourages and supports natural persons, legal
persons and other organizations in legally carrying out charitable activities that represent the core values of socialism
and promote the traditional morals of the Chinese nation.” And the Article 76 specifies that “natural persons, legal persons or other organizations that donate property for charitable activities are eligible for tax benefits.” The Opinions of theState Council of the CPC Central Committee on Building a Healthy Growth Environment for Entrepreneurship and Encouraging Entrepreneurs to Play a Better Role ( “The Opinions” ) was officially launched in September 2017, and it was thefirst time for the CPC Central Committee to make clear the status and value of entrepreneurship by issuing such an official document. According to The Opinions, it is important to encourage entrepreneurs to take the initiative to fulfill theirsocial responsibilities, to grow a stronger sense of mission and honor regarding CSR, and to play an active part in charitable donations. These laws and regulations play a positive role in promoting the CSR practices of companies.
Companies are the most important participants and leaders of charitable activities nowadays. They can take advantage of their human, material and financial resources to make charitable activities more successful and influential. Charitable activities thus organized can play an inestimably significant role in relieving disadvantaged groups and alleviating
the economic burden of the country. While running or participating in charitable activities, companies can not only promote the concept of charity, but build up their image as responsible corporate citizens and further improve their brandvalue and reputation. As beneficiaries of social development, companies have the responsibility to give back to society.
Looking into the donation amount of listed companies with CSR reports disclosed, we can find that there are still some“penny pinchers” making no donations at all in 2018. More than half of the companies that disclosed their donations
donated over ¥1 million, a significant increase from 2017; by type of organization, Chinese-foreign joint ventures and SOEs
actively participated in donation activities, playing an exemplary and pivotal role in charity. The SCVPS, initially put forward
by the SSE in 2008, is not subject to mandatory disclosure and its calculation standards are vague. As a result, only a few
companies, more specifically, mainly companies listed on SSE, disclosed their SCVPS. To this end, more detailed description and mandatory requirements should be put in place to ensure the comparability of data. In 2018, the performance oflisted companies in various charity and social contribution indicators is ranked from highest to lowest ratio as follows:“contribution to education” “volunteering” “charitable activities” “job creation” “contribution to economic growth” and“international aid” . Financial companies showed the strongest performance and played an exemplary role in fulfillingsocial responsibilities. Compared with the previous year, “job creation” was the only indicator that declined. Besides,
media reports on redundancies in some listed companies in 2018 laid bare the pain in the job market.

Research on CSR Reports of A-Share Listed Companies

Year-on-Year Comparison of Indicators in CSR Reports(1) Overall indicator score
In 2018, the average CSR indicator score was 46.38 (out of 100), which was 2.67 higher than the previous year and
up by 6.11%. The score is not very high, which means the overall level of CSR disclosure needs to be improved. By
industry, construction companies scored the highest at 53.26, while companies in the cultural, sports and entertainment
industries scored the lowest, at 31.32. Compared with 2017, the CSR indicator score for wholesale and retail companies recorded the highest increase—9.65%, while that for cultural, sports, entertainment and construction companies
decreased slightly. By type of organization, foreign-funded enterprises scored the highest at 51 and private enterprises
scored the lowest. By region, companies in East China had the highest average score at 47 and those in the Northeast
had the lowest. Compared with 2017, except for Northeast China, companies in various types of organization andacross regions saw a slight rise in the score, but the growth rate varied slightly.
Overall indicator score
50
46.38

43.71

41.52

0
2016

2017

CSR total score

SOEs

2018

Private enterprises

Chinese-foreign joint ventures

By industry

2018

2017

PercentagechangeCulture, sports and entertainment

31.32

31.83

-1.58%

Construction

53.26

53.99

-1.34%

Transportation, warehousing and post

45.71

44.39

2.98%

Production and supply of electricity, heat, gas and water

44.76

43.37

3.20%

Mining

48.85

47.02

3.89%

Information transmission, software and IT services

38.26

36.65

4.40%

Real estate

44.20

41.59

6.27%

Finance

49.17

46.01

6.87%

Manufacturing

47.56

44.43

7.04%

Wholesale and retail

48.59

44.42

9.65%

CSR total score

60

Northeast

East

West

Central

50
40

40
47

51
45

45

47
41

30
43

44

47

47

45

43

43

38

38

43

41

41

40

34

39

20

20

Charity work makes up an important part of CSR. Charity stands for a long-term undertaking which is an integrated
embodiment of benevolence and attitude towards wealth. Charitable contributions can bring about “multiple benefits” tocompanies, though they may be marked as expenditures in the short run. In the longer run, by making charitable contributions, companies can increase their overall competitiveness, gain social recognition, and highlight their corporate
culture and values, all of which will in turn build up their “soft strengths” and foster a more favorable social environment
for their steady and sustainable development.

(2) Indicator score by category

To sum up, although some listed companies have played an exemplary and leading role in fulfilling social responsibilities, there is still a long way to go before all Chinese listed companies can be highly dedicated to charity and publicwelfare. Listed companies must integrate CSR into their corporate culture and values, always bear CSR in mind in their
daily operating and production activities, regard charity work as an inseparable part of their social responsibilities.

In 2018, the responsibility for employees had the highest score of 67.64%, while social contribution and charity,social responsibility management and environmental responsibility had much lower scores at around 40%, reflecting
the differences in the degree of fulfillment of different groups of CSR indicators. Compared with 2017, the “environmental responsibility” score recorded the highest increase—5.23%. The detailed analysis is as follows:

10
0

0
2018

Indicator category

132

2017

2018

2016

2018 score

2017

2016

Difference

2017 score

Product quality and innovation

49.73%

49.12%

0.61%

Social contribution and charity

37.65%

35.71%

1.94%

Social responsibility management

38.49%

35.96%

2.53%

Company operations and management44.75%

42.00%

2.75%

Responsibility for employees

67.64%

64.78%

2.86%

Diversity and equal opportunities

41.93%

39.08%

2.88%

Environmental responsibility

40.35%

35.12%

5.23%

133

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Research on CSR Reports of A-Share Listed Companies

Environmental Responsibility:(3) Top 50 with the highest overall indicator scores

In 2018, the Chinese government stepped up its efforts in ecological protection by fighting the battle against air,water and soil pollution in an all-round way. In the same year, a series of government policies, including the Three-Year
Action Plan for Blue Skies and the Opinions of the CPC Central Committee and the state Council on Comprehensively
Strengthening Ecological Protection by Fighting the Tough Battle of Pollution Prevention and Control, set clear targets
and specified measures for China's environmental protection. When collecting and sorting out the report data in 2018,
we optimized the data sources for some environmental indicators. As a result, the Environmental Responsibility scorerose significantly from the previous year. By type of organization, SOEs scored the highest at 41.54%, while Chinese-foreign joint ventures scored the lowest at 38.05%. By region, companies in East China scored the highest at
41.52%, while those in Northeast China scored the lowest at 30.90%. Compared with 2017, the environmental responsibility scores for SOEs, private enterprises and companies in Eastern, Western and Central China rose sharply. By
industry, construction companies scored the highest at 47.69%. Compared with 2017, the scores for the manufacturing,
and wholesale and retail industries increased significantly—by 7.00% and 6.29% respectively.

Among the top 50 companies with the highest overall scores in 2018 (see the Exhibit), 32 were engaged in the
manufacturing industry, eight more than that in the previous year, and five in the financial industry, down by two compared with the previous year. There were 28 SOEs, 14 private enterprises, and 8 foreign-funded enterprises; comparedwith the previous year, the number of SOEs decreased, while that of private enterprises and foreign-funded enterprises
increased; 43 companies were located in East China, accounting for nearly 90% of the top 50 companies, a slightdecrease from the previous year.

2017

Accounting year

2018
4
4

Mining2017 Environmental responsibility score

38.05%

40.63%
36.64%

32.27%

36.22%

41.13%
40.13%

41.52%
36.95%

32.64%

29.31%

14

3

5

Chinese-foreign joint ventures

8

1
4
1

1

Northeast
7
5

43
4

West

1
1

Information transmission,
software and IT services

45

East

2
2

Wholesale and retail31.10%

9

Private enterprises

Finance30.90%

36
28

3
3

Transportation,
warehousing and post

41.54%

2018

SOEs

1

Construction

50%

2017

2

Production and supply ofelectricity, heat, gas and water
Real estate2018 Environmental responsibility score

Accounting year

24

Manufacturing
20

2Central

32
0

5

40

20

0

40

0
SOEs

Private enterprises

By industry

Chinese-foreign joint ventures

East

West

2018 score

Central2017 score

Northeast

Difference

Difference

43.57%

36.57%

7.00%

Wholesale and retail38.35%

32.07%

6.29%

Production and supply of electricity, heat, gas and water

44.27%

38.89%

5.38%

Mining44.32%

40.23%

4.08%

Real estate38.22%

34.44%

3.78%

Transportation, warehousing and post

41.33%

38.06%

3.27%

On the whole, the average score of top 50 companies in 2018 was 76.74 (out of 100), significantly higher than theoverall average of 46.38; the average score of top 50 in 2018 was 1.51 higher than that in 2017, up 2.00%, lower thanthe overall growth rate.
Among the Top 50 companies in 2017, 20 moved up in the ranking while 29 slipped down, 12 of which dropped
out of the top 50 in 2018. Among the companies that slipped in the ranking, ten were in the manufacturing industry, 4 in
the financial industry and 3 in the mining industry; among the companies that moved up the ranking, 14 were in the
manufacturing industry, 3 in the financial industry, 1 in the mining industry, 1 in the real estate industry, and 1 in thewholesale and retail industry. The overall change remained within the normal range of fluctuations.
Overall indicator score on average (Top 50)
Drop in the 2018
Overall ranking (Top 50)

80
Finance35.31%

32.43%

2.88%

Construction

47.69%

46.63%

1.05%
60

Information transmission, software and IT services

23.00%

22.45%

0.55%

Culture, sports and entertainment

19.02%

23.21%-4.19%

71.69

75.43

76.94

Mining 3

Manufacturing 10

Rise in the 2018
Overall ranking (Top 50)

Real estate 1
Mining 1

Finance 4

40

Finance 3

20

Other 8

0
2016

134

2017

Manufacturing 14

2018

135

CEIBS Corporate Social Responsibility White Paper

Research on CSR Reports of A-Share Listed Companies

Analysis of Economic Value of CSR Reports
The economic value of CSR reports is a major concern for investors in the capital market. This research looks into
this issue by constructing an investment portfolio according to the report information and checking its profitability. To be
specific, the researchers classify the companies based on CSR information, buy the companies with the highest CSR
scores and sell the ones with the lowest scores, and then examine the excess returns from this portfolio. The excess
return is defined as the stock's return in excess of the corresponding market index. For instance, the excess return of
the A-share in the SSE is its monthly return minus the Shanghai Composite Index. The accumulative excess return analyzed in this report is the total excess return during the three months from May 2018 after the report release.

(3) Classification by product quality and innovation
This part includes quality management, customer satisfaction, patents and R&D expenditure, etc. They have a significant bearing on the company's economic value because of their critical role in helping the company retain customers and acquire competitive advantages. After classifying the companies by the product quality and Innovation score,
the research finds the portfolio earns an accumulative excess return of 3.11% in three months, i.e. an annualized rate of
12.44%.

(4) Classification by responsibility for employees
Responsibility for employees represents the company's exclusive investment in employees. Employees constitute a
cornerstone for the company's development. A strong sense of responsibility for employees will contribute significantly
to the company's development in the long run. After classifying the companies by the Responsibility for Employees
score, the research finds the portfolio earned an accumulative excess return of 8.29% in three months, i.e., an annualized rate of 33.16%.

Excess returns from the arbitrage portfolio based on different indicators

Overall CSR Index

12.48%(1) Social responsibility
management

15.09%(5) Classification by social contribution and charity

24.87%(2) Company operationand management(3) Product quality
and innovation

Social contribution and charity includes donations, charity activities and educational aid. After classifying the companies by social contribution and charity, the research finds the portfolio earns an accumulative excess return of 4.27%
in three months, i.e., an annualized rate of 17.08%.

12.44%(4) Responsibility
for employees

33.16%(5) Social contribution
and charity
0.00%

17.08%
5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

Annualized excess return rate

Apart from the above indicators, other indicators, such as the R&D expenditure and number of patents, also produce a considerable impact on corporate value. R&D expenditure is a measure of the company's commitment to innovation. The number of patents is a measure of what a company has achieved in innovation. Based on classification by
R&D expenditure and number of patents, the research finds the portfolio earns a cumulative excess return of 1.68%
and 2.18% in three months, and annualized cumulative excess return of 6.74% and 8.74% respectively. Moreover, factors such as diversity and equal opportunities and environmental responsibility are all positively correlated with futureexcess return.

First of all, the research examines the economic value according to the overall CSR score, namely the total score of
the CSR indicator system. After dividing the companies into three groups based on their overall scores, the researchers
buy the group with the highest scores and sell the group with the lowest scores. Given that listed companies had torelease their 2018 financial reports before May 2019, the researchers calculate the accumulative excess return in thethree months between May and July 2019, which turns out to be 3.12%, i.e. an annualized rate of 12.48% (assuming the
cash dividends are reinvested). The research also finds the result remains unchanged when the samples are divided
into two, five or ten groups.
Specifically speaking, the overall CSR score is composed of seven groups of indicators, including social responsibility management, company operations and management, product quality and innovation, responsibility for employees, diversity and equal opportunities, environmental responsibility, and social contribution and charity. The researchfinds that the arbitrage portfolio can invariably earn positive accumulative returns whichever the indicator is adopted.
The detailed analysis is as follows:(1) Classification by social responsibility management
This part measures how much a company values social responsibility by looking into its performance in areas suchas education and training, report assurance, and report inclusiveness. Sound social responsibility management is theprerequisite for the good quality of the CSR report. After classifying the companies by this score, the research findssocial responsibility management has an obvious positive correlation with the accumulative excess return, which is
3.77% in three months, i.e. an annualized rate of 15.09%.

(2) Classification by company operations and management
This part includes the following six indicators: (1) strategic cooperation and sharing, (2) anti-bribery and anti-corruption, (3) business integrity, (4) governance commendation, (5) accounting irregularities, and (6) financing disputes.
This reveals that comprehensive corporate governance evaluation will deliver a boost to the development of the company. After classifying the companies by the company operations and management score, the research finds the portfolio
earns an accumulative excess return of 6.22% in three months, i.e. an annualized rate of 24.87%.

136

137

CEIBS Corporate Social Responsibility White Paper

Research on CSR Reports of A-Share Listed Companies“The essence of Great Learning is to foster/advance the bright virtue of mankind, tonature a people and to pursue the perfection of humanities.” — The Great Learning, oneof the "Four Books" in Confucianism.

APPENDIX: Top 50 Companies Based on 2018 CSR Reports

138

No.

Stock Code

Abbreviated Company NameNo.

Stock Code

Abbreviated Company Name

1000100TCL

26000513Livzon Pharmaceutical Group

2002202GOLDWIND

27000002

Vanke A

3

600619HIGHLY

28

000039CIMC

4600196FOSUNPHARMA

29

600380Joincare

5000050TIANMA MICROELECTRONICS A

30000338Weichai Power

6601238GAC GROUP

31

000069China OCT

7600104

SAIC Motor

32002460Ganfeng Lithium

8000725BOE A

33000423Dong-E-E-Jiao

9600887YILI

34601318PING AN

10000999

CR SANJIU

35000333Midea Group

11002594BYD

36600028SINOPEC

12002024suning.com

37

601939CCB

13601600

Aluminum Corporation of China

38

000726

LUTHAI TEXTILE A

14000963ECPC

39

600036China Merchants Bank

15

601899ZIJIN MINING

40002734

LIMIN CHEMICAL

16000858WULIANGYE

41002422KELUN

17600062

CR DOUBLE-CRANE

42600660Fuyao Glass

18

601857

PetroChina

43000729YANJING BEER

19002773

Kanghong Pharmaceutical

44

600098GDG

20001872China Merchants Port

45

601138Foxconn Industrial Internet

21601231USI

46601390CHINA RAILWAY

22600050China Unicom

47000001PING AN BANK

23001979CHINA MERCHANTS SHEKOU

48

600176

Jushi Group

24

601088China Shenhua

49600332BYS

25

601328BCM

50002042

Huafu Fashion

CEIBS is committed to producing responsible leaders well-versed in “China Depth,
Global Breadth.” This commitment represents a considerable responsibility that modern
society has placed on our shoulders. CEIBS derives inspiration from expanding teaching
and training locally and internationally, sharing best business practices, and exploring
how business schools can generate greater social value through CSR.
The CEIBS Corporate Social Responsibility White Paper is the culmination of
forward-looking CSR insights from CEIBS professors and research teams. It presents thelatest CSR trends and knowledge at home and overseas as well as CSR practices andactions on the ground in a well-organized framework designed to inspire and inform ourwide community of leaders. The document contains exciting stories of alumni who arebuilding upon the responsible business lessons acquired at CEIBS to upgrade and innovate their business operations and strategies. Their cases, in turn, enrich our CSR course
syllabi and thinking. Indeed, the virtuous circle of knowledge dissemination that leads toknowledge generation through practice makes the white paper an interesting read in theoretical, practical, philosophical, and technical terms.
This white paper is the third edition since 2018 and is the result of over six months ofhard work. We are grateful to school leaders for their continued support and unwavering
encouragement, which has enabled work to move forward smoothly. We also thank theCase Center, as well as the Marketing and Communications, Translation and Alumni
Relations departments for providing indispensable help.
We are especially indebted to the CEIBS Alumni Association for being a communityof responsible business leaders and active proponents of the CSR concept and activities
who contribute to our teaching and research by offering their latest cases and knowledge. Our thanks also go to alumni companies, such as ZBJ, Sinoeco, Better Life Group,
Yili Group, and Phoenix Contact (China). As stellar examples of responsible corporate
citizens, they actively supported the preparation of this white paper with compelling CSR
cases and results.
Going forward, CEIBS will, as always, stay abreast of the latest developments andserve as a model for academic rigor, innovation, and excellence. In the best interests of
the nation, we are committed to promoting and leading CSR development in China, inorder to help build a sound business environment and a community that encapsulates ashared future for all of humanity.
Editorial Committee
June 5, 2020

AFTERWORD

AFTERWORD139

DFJCT!XfDibu

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